H&R REIT has announced a significant move in its portfolio strategy, selling off $1.5 billion worth of retail and office assets across North America, including properties right here in the GTA. This divestment signals a major shift for the REIT and offers insights into the evolving landscape of Toronto’s commercial real estate market.
The sale includes 27 Canadian retail properties, a downtown Toronto office building at 145 Wellington Street (160,000 sq ft), and a fully leased suburban office property at 88 McNabb Drive in Markham (74,592 sq ft). These GTA assets are part of a larger strategy to simplify H&R’s portfolio, focusing on residential and industrial properties. According to H&R, these two sectors will now represent 83% of their total real estate assets, up from 35% in June 2021.
So, why the shift? H&R aims to reduce leverage and drive long-term value by focusing on higher-growth sectors. Proceeds from the sales will primarily be used to pay down debt. The REIT anticipates a pro forma debt-to-adjusted-EBITDA ratio of 8.7x following the transactions, with a goal to maintain it below nine moving forward. This strategic realignment comes after H&R reported a $322 million loss in Q3 2025, largely due to asset value writedowns.
What does this mean for the GTA real estate market? The sale of these assets could present opportunities for other investors looking to acquire well-located retail and office spaces. It also highlights the ongoing trend of REITs rebalancing their portfolios in response to changing market dynamics. While H&R’s Q3 2025 same-property net operating income saw $33.3 million from these assets, the move signals a broader industry recognition of the strength in residential and industrial sectors compared to retail and office, especially with evolving work-from-home trends impacting office occupancy.
H&R plans to market additional properties soon, so expect further activity in the GTA commercial real estate market as this strategy unfolds. Keep an eye on future announcements for potential investment opportunities and further shifts in the GTA’s property landscape.
