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H&R REIT Announces Receipt of Final Order and CRA Ruling in respect of Primaris Spin-Off; Timing for "Due Bill" Trading of H&R Units

Closing Date of Spin-Off to occur on December 31, 2021

TORONTO, Dec. 23, 2021 /CNW/ - H&R Real Estate Investment Trust ("H&R" or "the REIT") (TSX: HR.UN) today announced that the previously announced spin-off of its Primaris properties including all of its enclosed malls to a new stand-alone, publicly traded real estate investment trust ("Primaris REIT"), to be implemented by way of plan of arrangement (the "Arrangement"), has received the final order of the Court of Queen's Bench of Alberta approving the Arrangement, as well as a tax ruling from the Canada Revenue Agency.

As a result, the Arrangement will proceed to close as planned after markets close on December 31, 2021. Pursuant to the Arrangement, there will be a 4:1 consolidation of Primaris REIT units, such that holders of H&R units will ultimately receive one Series A unit of Primaris REIT ("Primaris REIT Units") for every four H&R units held.

Immediately after completion of the Arrangement, the previously announced contribution to Primaris REIT of eight retail properties by the Healthcare of Ontario Pension Plan ("HOOPP") is expected to close such that by the end of December 31, 2021, H&R unitholders and HOOPP will directly own approximately 74% and 26%, respectively, of Primaris REIT units issued and outstanding.

H&R has received conditional approval from the Toronto Stock Exchange (the "TSX") for the listing and posting for trading of the Primaris REIT Units. Listing of the Primaris REIT Units is subject to, among other things, satisfaction of the customary listing conditions of the TSX. Subject to satisfaction of these and other conditions, H&R anticipates the Primaris REIT Units will begin trading on the TSX under the trading symbol "PMZ.UN" on or about January 5, 2022.

H&R has been advised by the TSX that "due bill" trading will apply in connection with closing of the Arrangement. With both a record date and closing date of December 31, 2021, regular trading will apply to the units of H&R up to the close of trading on December 29, 2021. Beginning at the commencement of trading on December 30, 2021 through the close of trading on January 4, 2022, H&R unitholders who sell their H&R units will sell their units together with the Primaris REIT Units to be received pursuant to the Arrangement (referred to as a "due bill" entitlement), allowing H&R units to carry the value of the entitlement to the Primaris REIT Units until the Arrangement closes. In effect, January 4, 2022 is the payable date for the Primaris REIT Units that are being deposited with CDS Clearing and Depository Services Inc. and is the last date when H&R units trade with the above-noted attached "due bill" entitlement representing an entitlement to the Primaris REIT Units distributed pursuant to the Arrangement. "Ex-distribution" trading (i.e., where H&R units trade without the Primaris REIT Units to be distributed pursuant to the Arrangement) is expected to commence at the opening of trading on January 5, 2022, and the units of H&R will resume regular trading without any "due bill" entitlement, reflecting that the Primaris REIT spin-off has been completed and that the Primaris REIT Units will no longer trade together with the H&R units. Unitholders' accounts are expected to be credited to evidence the Primaris REIT Units received by unitholders pursuant to the Arrangement on December 31, 2021 within several days of closing. The due bill redemption date (i.e., the date when holders of due bill entitlements are expected to settle their entitlements) will be January 6, 2022.

Most H&R unitholders hold their H&R units through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the units in "street name," and ownership would be recorded on the bank's or brokerage firm's books. If an H&R unitholder holds H&R units through a bank or brokerage firm, the bank or brokerage firm will credit the unitholder's account for the Primaris REIT Units that the unitholder is entitled to receive in the Arrangement. If H&R unitholders have any questions concerning the mechanics of having units held in "street name," they should contact their bank or brokerage firm.

In connection with the Arrangement, all registered H&R unitholders holding physical unit certificates or units in book-entry form with H&R's transfer agent will receive Primaris REIT Unit certificates or confirmations of book-entry positions following completion of the Arrangement.

H&R's previously announced regular cash distribution $0.0575 per H&R unit, payable on January 12, 2022 to unitholders of record on December 31, 2021, and special distribution of $0.73 per H&R unit, payable in additional units ($0.63 per unit) and cash ($0.10 per unit) to all unitholders of record as at December 31, 2021, will not be subject to "due bill" trading, and will continue to be paid in the ordinary course.

About H&R REIT

H&R REIT is one of Canada's largest real estate investment trusts with total assets of approximately $13.1 billion at September 30, 2021. H&R REIT has ownership interests in a North American portfolio of high-quality office, retail, industrial and residential properties comprising over 40 million square feet. H&R is currently undergoing a five-year, strategic repositioning to transform into a simplified, growth-oriented company focusing on multi-residential and industrial properties to surface significant value for unitholders.

About Primaris REIT

Primaris REIT will become Canada's only enclosed shopping centre focused REIT, following its spin-off from H&R REIT and combination with a portfolio of properties contributed by Healthcare of Ontario Pension Plan (HOOPP) expected on or about December 31, 2021. Primaris REIT will own interests in primarily enclosed shopping centres aggregating 11.4 million square feet and valued at approximately $3.2 billion at Primaris REIT's share. Primaris REIT will be fully independent, with a differentiated low-leverage financial profile and a fully internal, vertically integrated, at-scale management platform.

Forward-looking Information

Certain statements in this news release contain forward-looking statements within the meaning of applicable securities laws (also known as forward-looking statements). These forward-looking statements include, but are not limited to statements with respect to the Arrangement, the expected timing of the Arrangement, the listing and trading of Primaris REIT Units, the closing of the transaction with HOOPP, the expected "due bill" trading of H&R units, the square footage and value of Primaris REIT's portfolio and other statements contained in this release that are not historical facts. Such forward-looking statements reflect H&R's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance or events and are based on H&R's estimates and assumptions that are subject to risks and uncertainties, including those set forth in H&R's management information circular dated November 5, 2021 and in H&R's materials filed with the Canadian securities regulatory authorities from time to time, which could cause the actual results and performance of H&R to differ materially from the forward-looking statements contained in this news release. Although the forward-looking statements contained in this news release are based upon what H&R believe are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. There can be no assurance that the proposed transaction will occur or that the anticipated benefits will be realized. The proposed transaction could be modified, restructured or terminated. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of today and H&R, except as required by applicable law, assumes no obligation to update or revise them to reflect new information or the occurrence of future events or circumstances.

SOURCE H&R Real Estate Investment Trust


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