H&r Real Estate Investment Trust Stock

Good morning, and welcome to H&R Real Estate Investment Trust 2026 Second Quarter Earnings Conference Call. Before beginning the call, H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts or projections and the remarks that follow may contain forward-looking information, which reflect the current expectations of management regarding future events and performance and speak only as of today's date.

Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in the forward-looking information.

In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures, which do not have a meaning recognized or standardized under IFRS or Canadian generally accepted accounting principles and are therefore unlikely to be comparable to similar measures presented by other reporting issuers.

Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same.

Additional information about the material factors, assumptions, risks and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements, together with details on H&R's use of non-GAAP financial measures are described in more detail in H&R's public filings, which can be found on H&R's website and www.sedarplus.com.

I would now like to introduce Mr. Tom Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter.

Thank you, and good morning, everyone. Before we dive into this quarter's results, I'd like to speak directly to the transaction we announced earlier this week because I know that's what's on everyone's mind. You heard from Stephen Gross, lead trustee for the REIT first on Tuesday, and that was deliberate.

The independent trustees ran a rigorous, exhaustive process entirely independent of management, and it was important that you heard about it from Stephen before hearing from me. While I wasn't part of that process, I am excited about the outcome, and I believe in the vision that the GO team is presenting and the opportunity it represents for our unitholders.

With that as a backdrop, I want to share my perspective. I've been listening, I have read the commentary and I understand the questions. Let me give you some context on how we got there. H&R is an incredible company, but it's also a very complex one. We operate across multiple jurisdictions, partnerships, joint ventures, industrial, residential, office, East Coast, West Coast. And at the end of the day, there is no natural single buyer for a portfolio of this breadth and complexity.

The structure you see with best-in-class partners, including Blackstone, Crestpoint, PSP and GO REIT is how we are maximizing value for H&R unitholders from this portfolio. Each partner was selected because they are the right buyer for their specific piece. Blackstone and Crestpoint for the income-producing industrial assets they know best, GO REIT for the residential platform they are building and CRAL for the noncore assets that require a long-term private market orientation. That's not a club deal by convenience. It's how you extract full value from a portfolio like ours.

Every alternative was considered, selling Lantower independently, retaining it and selling everything else, spinning it out as a stand-alone entity. The answer is that a stand-alone Lantower would have been a small cap company with limited liquidity, sizable tax leakage and no clear path to the institutional recognition this portfolio deserves. This transaction delivers all of that on a tax-efficient basis in one single step.

The compelling new value enhancement opportunity this represents is the combination of a long-term effort. We have been executing a strategic repositioning plan since 2021. We spun out Primaris. We sold over $2.6 billion in nonstrategic assets. We reduced leverage from 10 to 7x debt to adjusted EBITDA, which you saw reflected in our Q2 numbers.

We built Lantower a portfolio of 26 high-quality residential properties across 7 Sunbelt markets with an established brand and a proven operating track record. That work set the stage for what we are announcing today. What H&R unitholders are receiving $4.28 per unit in immediate cash, a tax-deferred rollover of the unit consideration for eligible Canadian resident unitholders and a 66.9% majority ownership stake in the combined platform that will be the second largest publicly traded residential REIT in Canada by enterprise value and seventh largest in the United States.

I want to say something about that GO REIT stake because I think it is being underappreciated right now. H&R unitholders are rolling into GO REIT and what we believe is an attractive entry point into a larger, stronger, better capitalized platform. This is a relative value trade. The combined platform with its scale, pure-play focus and expanded float creates the structural conditions to narrow the gap between their market and intrinsic values.

At 67% majority owners, H&R unitholders are positioned to benefit from that from day 1. The value is not only in what you are receiving today, it is where the combined platform is positioned to go. I've spent the last several months getting to know the GO team, their portfolio, their strategy and their approach. These are smart, disciplined buyers and managers with a singular residential mandate and a real track record. They are interested in building a growth business, and they have their own skin in the game. They are tough negotiators, which frankly is exactly what you want when they are now going to be stewards of what we've built. I trust them with Lantower, and I believe in what they are building.

On my participation in the transaction, let me be direct about my own role. As disclosed in our Q2 press releases, 44 million H&R units held by CRAL, a company controlled by members of my family, together with units held by certain of its affiliates and associates will be redeemed and canceled as part of this arrangement. Those units will not receive the $4.28 cash or the GO REIT units being paid to all of the other unitholders.

Some have asked why I'm not receiving GO REIT units like everybody else. The answer is that CRAL is acquiring REIT's noncore assets and the cancellation of those units is part of the consideration, I'm contributing to fund that acquisition. The structure is straightforward, and it will be fully detailed in the circular. What CRAL is acquiring are noncore assets, undeveloped land, suburban and secondary office properties and other assets that are more complex to value and trade than the income-producing industrial and residential portfolios being acquired by Blackstone, Crestpoint and GO REIT. These assets require a buyer with local knowledge and a long-term orientation.

At closing, I will have no role, no board seat and no equity interest in GO REIT. This transaction is the conclusion of my involvement with H&R as a public entity. I want to be clear about something. My commitment to this outcome does not end at closing. CRAL has committed to provide income support and other payments to GO of up to approximately $71 million over the first 2 years following close.

And as disclosed in our press release, CRAL will remain a joint venture partner with GO on River Landing going forward. I am leaving meaningful capital alongside this team because I believe in their ability to execute and what they are building, and that is not something I would do without conviction. Those commitments reflect my genuine conviction that this transaction is the right outcome for every H&R unitholder.

On the process, Stephen addressed this in detail on Tuesday's call, but I will add that CIBC has been working on this for close to 2 years, not selling individual assets here and there, but working to find the right comprehensive solution for the full portfolio. The independent trustees engaged National Bank as their own independent adviser, conducted a formal valuation of both H&R units and GO REIT units. Both advisers concluded this consideration is fair. The Board's recommendation was unanimous. That process and those conclusions will be fully done, and I would encourage every unitholder to read carefully.

I spent 30 years building this company. Lantower is not just a portfolio. It's something we built with care, asset by asset, market by market. Entrusting the majority of it to the GO team is not a decision I made lightly. I made it because I believe this next generation of management has the focus, the discipline and the capability to take what we built and turn into something that finally gets the recognition it deserves. This transaction accelerates what we have been working towards, creating a pure-play institutional scale multifamily platform with a focus and financial profile to create real lasting value for our unitholders.

The combined entity, 37 properties, over 13,300 residential units across 8 markets and 4 states with a $7.8 billion enterprise value is a fundamentally different and stronger entity than either company is today. It has the scale to attract institutional capital and the pure-play focus to trade at multiples more consistent with North American peers. Neither GO nor H&R gets there independently. With this combination, we do. We are proud of where this has landed, and we are genuinely excited about what it represents for unitholders going forward.

With that, I will turn the call over to Cheryl, who will walk us through an overview of our second quarter results.

Thank you, Tom, and good morning, everyone. Following $1.5 billion of retail and office property dispositions in Q1 2026, H&R continued advancing its repositioning strategy in Q2. Approximately $773 million of assets were classified as held for sale as at June 30, 2026, of which $124 million has been sold since quarter end.

On the development front, our 2 slate properties in Mississauga, Ontario, reached substantial completion in June 2026 and were transferred to investment properties. Both properties are fully leased at market rents to a single tenant for approximately 11 years. The lease at 560 Slate Drive commenced in March 2026, and the lease at 600 Slate Drive will commence in October 2026. Both leases include a 5-month rent-free period beginning at the commencement of their respective lease term.

Lastly, we expect our REDT properties under development to reach substantial completion next quarter. Our balance sheet remains in a strong position. Debt to total assets at the REIT's proportionate share was 41.8%. Debt to adjusted EBITDA at the REIT's proportionate share was 7.1x and our unencumbered assets to unsecured debt coverage ratio was 3.21x.

Corporate debt at June 30, 2026, consisted of $550 million of debentures, one unsecured term loan of $250 million and lines of credit at $225 million. In June 2026, we redeemed our $250 million Series R senior debentures upon maturity, which bore interest at 2.906% per annum. The redemption was primarily funded using unsecured operating lines of credit.

On the leasing front, we received a lease termination payment of approximately $15.7 million from Bell Canada at 200 Bouchard Boulevard in Montreal. We recorded a corresponding noncash adjustment to straight-lining of contractual rent of approximately the same amount.

Therefore, the 200 Bouchard lease termination payment had no impact on net operating income and FFO for Q2 2026. However, same-property net operating income cash basis and AFFO were positively impacted by $15.7 million as H&R deducts noncash items, including straight-lining of contractual rent in calculating these amounts.

In July 2026, the 200 Bouchard lease was further amended to advance the lease termination date to August 2026, which resulted in H&R receiving the final lease termination payment of $56.1 million in July 2026. Please refer to our press release and MD&A for further information on the expected accounting treatment for Q3.

FFO for Q2 2026 was $0.247 per unit compared to $0.314 per unit in Q2 2025, reflecting lower NOI from property dispositions, partially offset by reduced finance costs as a result of using the proceeds from property dispositions to repay corporate debt and an increase in finance income from our construction loan to the REDT JV.

Our FFO payout ratio was a healthy 60.7% for Q2 2026. Included in AFFO for the 3 and 6 months ended June 30, 2026, is the add-back of straight-lining of contractual rent relating to the 200 Bouchard lease termination payment equating to approximately $0.06 per unit.

Breaking down our same-property net operating income on a cash basis between the segments, residential was down 0.1% in U.S. dollars for Q2 2026 compared to Q2 2025. Emily will provide more details on Lantower's results shortly.

Our Industrial segment same-property net operating income on a cash basis decreased 0.7% in Q2 2026 compared to Q2 2025, primarily due to a decline in same-property occupancy during the 18 months ended June 30, 2026, from 98.9% at December 31, 2024, to 92.7% at June 30, 2026. This was partially offset by strong rental rate growth.

Our office segment same-property net operating income on a cash basis, excluding the Bouchard lease termination payment, decreased 6.5% in Q2 2026 compared to Q2 2025, primarily due to the expiration of the 188,526 square foot RBC lease at 330 Front Street in Toronto on December 31, 2025.

Our retail segment same-property net operating income cash basis in U.S. dollars decreased 5.9% in Q2 2026 compared to Q2 2025 due to a decrease in sundry income. Residential and industrial segments now comprise 86% of our real estate assets.

Our portfolio -- our office portfolio comprising 12 properties now accounts for 10% of our real estate assets. The only remaining retail asset in the commercial component is the commercial component of River Landing, which comprises 4% of our total real estate assets.

With that, I will turn the call over to Emily, who will walk us through operational performance across the Lantower Residential portfolio. Emily, please go ahead.

Thank you, Cheryl, and good morning, everyone. I'll begin with an overview of our second quarter performance and the operating environment across our multifamily platform before turning to market trends. For the 3 months ending June 30, 2026, same-property net operating income on a cash basis in U.S. dollars decreased 10 basis points compared with the respective 2025 period.

While near-term pressure remains in the Sunbelt, occupancy is improving and leasing activity and pricing trends are providing encouraging signs as we move through the second half of the year. Our second quarter results reflect continued improvement across the portfolio and encouraging performance in our first full quarter under Greystar Property Management.

Occupancy in the Sunbelt ended the quarter 145 basis points higher than Q1 and 70 basis points higher than Q2 2025 ended. Additionally, traffic and conversion metrics have also strengthened. Leasing inquiries increased 24% in Q2 compared with Q1, while traffic increased by 15%. Toured application conversion improved 540 basis points sequentially.

While pricing remains competitive in several Sunbelt markets, our operating indicators continue to move in the right direction. Net effective asking rents increased 30 basis points from Q1 to Q2 in the Sunbelt compared with an approximately 100 basis point decline over the same period in 2025. This improvement, together with rising occupancy, stronger conversion provides early evidence of improving pricing traction.

The broader fundamentals supporting our portfolio remain intact. Plainly stated, our markets are the places where people want to live. Sunbelt markets continue to benefit from domestic inflows, particularly Dallas, Austin, Charlotte and Raleigh, while gateway markets continue to demonstrate resilience despite shifting migration patterns.

Demand continues to benefit from the affordability advantage of renting relative to homeownership. As supply pressures moderate across many of our markets, we believe the combination of stronger traffic, improved conversion and rising occupancy positions the portfolio well for further improvement through the second half of the year.

Turning to development. Our Florida REDT project completed construction in July and received their TCOs. Leasing is underway with Lantower Bayside at 41 leases and Lantower Sunrise at 17 leases as of today.

In summary, our second quarter results show measurable progress across several key operating indicators. Occupancy is improving, leasing activity and conversion have strengthened and bad debt is at a historical low. Importantly, these trends are occurring alongside improvement in Sunbelt asking rents.

We are encouraged by the early results Greystar property management teams and believe the combination of stronger operating execution, improving market conditions and a more scalable platform positions Lantower well as we move through the balance of 2026.

Finally, I want to recognize our Lantower and Greystar teams for their continued partnership and execution during the transition. Their focus on leasing, customer service and operating discipline is only the beginning to continued improvement in portfolio performance.

And with that, I turn the conversation back to Tom.

Thank you, Emily. Before I close, I want to come back to this transaction one final time. I recognize that what I've shared today together with Tuesday's joint call and our press releases to not answer every question you have. There are things that will be appropriately disclosed in the management information circular, and we are committed to providing that detail fully and transparently when it is filed in the coming weeks.

For that reason, we are not opening the lines for Q&A today. I do not think it would be fair to put you in a position where the honest answer to most of your questions is that will be in the circular. In the meantime, I'm available. Please feel free to reach out directly. I'm happy to take your calls. Thank you for your continued interest in H&R and for your patience as we work through this process together.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning, and welcome to H&R Real Estate Investment Trust 2026 First Quarter Earnings Conference Call. Before beginning the call, H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts or projections and the remarks that follow may contain forward-looking information, which reflect the current expectations of management regarding future events and performance and speak only as of today's date.

Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in the forward-looking information. In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures, which do not have a meaning recognized or standardized under IFRS or Canadian generally accepted accounting principles and are therefore unlikely to be comparable to similar measures presented by other reporting issuers.

Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same.

Additional information about the material factors, assumptions, risks and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements, together with details on H&R's use of non-GAAP financial measures are described in more detail in H&R's public filings, which can be found on H&R's website and www.sedar.com.

I would now like to introduce Mr. Tom Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter.

Good morning, everyone, and thanks for joining us. Larry Froom, our CFO, is not available today. Cheryl Fried and Jason Burkin will be taking the questions. In light of that, we're going to bypass Larry's introductory comments and go right to Emily Watson, Head of our Lantower division, to bring us up to date. Emily?

Thank you, Tom, and thanks to all of you for joining us. I'll begin with status update on externalizing property management and some operational highlights, followed by an overview of our first quarter performance before turning to development progress. Q1 operating conditions progressed as we anticipated. We successfully transitioned property management to Greystar as of April 1. We are encouraged by our early post-transition indicators.

April lead volume increasing 18% over prior year. Completed tours were 13% higher than April of last year and approved leases increased over 70% year-over-year for the month of April. Additionally, our bulk WiFi projects are progressing well. 4 communities have launched and are expected to drive roughly $800,000 in revenue for 2026 with another 7 projects in the pipeline.

Greystar's early results paired with strong demand driven by steady wage growth, low rent-to-income ratios and high retention rates reinforce our confidence that we are well positioned to capitalize on a market recovery across our Sunbelt portfolio. Same-property net operating income on a cash basis from residential properties in U.S. dollars increased by 2.3% for the 3 months ending March 31, 2026, compared to the respective 2025 period.

This growth was primarily driven by the lease-up of Lantower West Love and Lantower Midtown, both in Dallas, Texas. The increase was partially offset by a decrease in rental income from H&R Sunbelt properties as a result of higher vacancies and concessions. Same asset occupancy ended the quarter at 90.9%, a decrease of 1.2% from Q4 and 30 basis points from prior year.

Sunbelt blended lease trade-outs were negative 3.5% in Q1, a 50 basis point decrease over Q4 and a 114 basis point decrease over Q1 of 2025. New lease trade-outs were negative 14.8%, and renewal lease rates increased 3.8%. Importantly, our Sunbelt resident retention remained strong at 58.3% in Q1.

Turning to developments. Our new REIT projects in Florida, of which H&R has a 29.1% ownership interest, continue to progress well and remain on budget. Sunrise in Orlando received their TCO this week, expecting first move-ins by June. We expect Lantower Bayside in Tampa, Florida, to receive TCO next week and also expect first move-ins in June.

Construction completion for both assets is expected by the end of June. Lantower currently has 9 Sunbelt developments in the pipeline totaling approximately 2,900 suites at H&R's ownership interest. Multiple sites are fully permitted and ready for construction, and we are advancing design, drawing and permitting on the remainder.

In summary, the partnership between the Greystar teams and our asset management, development and accounting teams has begun well. We believe this transition will result in long-term value creation through efficiency at scale, enhanced oversight and significant overhead savings. We are encouraged by the strong fundamentals in the multifamily sector and specifically our markets.

Improving market conditions, a laser-focused operating platform with buying power and market presence of our third-party management company has positioned our portfolio to take advantage of the recovery expected in the second half of this year. Short-term pricing power remains soft in a few regions, but the broader fundamentals for multifamily are gaining traction.

Supply pipelines are thinning and affordability continues to draw demand, and our early operational indicators under Greystar are moving in the right direction. I also want to recognize and thank our team for a successful transition to Greystar and for their continued partnership and drive to deliver strong performance across the portfolio.

And with that, I'll turn the call back to Tom.

Thanks, Emily. Operator, you can open up the call for questions.

[Operator Instructions] First question comes from Jimmy Shan with RBC Capital Markets.

So maybe just on Lantower, occupancy did decline sequentially, as you mentioned. I'm just kind of wondering sort of what do you think drove that? And where is occupancy sitting today?

Occupancy is right around that 90% mark, Jimmy, thanks for the question. I would not be surprised and obviously can't put an attribution to it, but the Q1 was our transition month to Greystar. So I think that we had a lot of operational focus on our websites transitioning our property, our folks learning new roles, just if you can remember back when you started a new job.

So I do think that had an effect. To what extent? I don't know. Is it 1%, 2%? Probably. But I do think that the April getting everybody marching in the right direction proves that everybody is kind of settling in and expect that number to continue to grow.

Okay. And the $5 million of savings, you still think that's going to be realized over the course of '26?

I do. Just our management fees alone is a big bump, and we just continue to get better savings on virtually almost every line item. I think I shared the painting, our discount last year or with -- on the last quarter was 40% and theirs is 85%. You extrapolate that group insurance alone for our employees is a 30% discount to what we were able to.

So just kind of in every corner, you just get better buying power when you're 1 million units versus 9,000 units. So yes, I feel very confident for our overhead costs and things that will -- are hitting the property that we'll see those savings.

Okay. And then just turning to a couple of kind of big leases. The industrial lease, the.

Former HBC. I'm wondering if there's any update on leasing that space and then the 330 Front Street, the RBC move out, kind of what's your expectation on re-leasing that space?

HBC is currently just leased out on a temporary basis to a film studio. I can't tell you which movie it is. And there's some activity. It's not -- it's a weak market, but we're optimistic. I hope by the end of the year, it will be leased out. The office in Front Street is seeing large demand from large users. So we have the financial institutions, as you'd expect.

Again, we're optimistic that we should see some leases signed this year, hopefully, this quarter actually for the RBC space that's currently available. I'm hoping that all of it will be taken by one tenant, but we are seeing, as I said, large user demand for Front Street.

Okay. And I guess just on Front Street asset sales, I suspect that's going to be pushed further out once you get the lease done. And maybe if you could also update us on some of the asset sales that you're working on right now?

So we're working -- so Front Street is not on the market. We're not going to be selling it until we get further ahead in leasing. So my guess is that it won't be put on the market this year. 26 Wellington is on the market. We expect to have signed a deal. We have an unconditional deal done -- conditional deal signed right now.

We're hoping that it gets signed up firm in the second quarter. 25 Sheppard, I can say the same thing. And Gowanus, we also hope to have something firm to be able to announce probably this quarter. So those 3 assets, I'm hoping this will be this quarter, maybe the next and Front Street off the market.

The next question comes from Tal Woolley with CIBC Capital Markets.

Just on the savings from the Greystar transaction, that's all going to be captured within operating expenses. There's no impact on the trust corporate expenses?

Yes, there will be considerable amount on the trust as well just from the overhead that we had in our property management vertical that is now on Greystar's payroll and not on ours and doesn't encumber our NOI at the property. So I can't tell you the split off the top of my head, but there was considerable savings on trust as well as the operational things that hit NOI.

Okay. And then, Tom, I think you have one unsecured bond issue coming due this year. I know when you were in the credit review process, you had looked maybe at using credit facilities more. I'm just wondering how you're thinking about addressing that maturity?

We have -- the asset sales that I talked about just now is -- should cover the unsecured that rolls. So we do not plan on issuing new unsecured right now.

Okay. And then just lastly, any comments on -- I think the fees this year, your management fees were sort of flat roughly year-over-year. Any sort of expected changes to those over the course of 2026?

[Operator Instructions] Next question comes from Sam Damiani with TD Cowen.

Maybe just looking at the top tenant list there, there's 2 or 3 with relatively short remaining terms to their maturity. Wondering if you could comment on the prospects for renewing some of those tenants. I'm thinking of Bell and O-I Canada Corp.

So the answer to the question is Bell, we -- I don't see why we would have Bell. The only Bell we have is Richelieu, and that comes up in the end of the year, we do not expect them to renew. That asset is being rezoned for residential townhouse use, not for high-rise residential. So we expect to demolish that building and convert it to residential and build a residential development on that. So that's -- we're not even talking to them about renewal of that asset. As far as the other one that you mentioned, we're in discussions.

Okay. And just on remaining -- some of the remaining office tower -- office buildings, you discussed a few, but there's the big one in Calgary and the big one in Long Island City.

Both those tenants are sticky tenants. We're not going to be selling them right now until we get -- until we negotiate some form of extension. As they're sticky, we're very optimistic that we will get an extension, but it won't happen. We will not do anything this year. We're not in discussions with either one of them at this point in time.

So when would you envision sort of entering into those discussions in order to extend the lease and then open the door to a sale?

In case of TransCanada, I'm pretty sure that they had some changes on the real estate side recently. I expect that they are very comfortable having renewal, right? So there's not exactly there's a gun to anybody's head to talk renewal. They are occupying the entire building. And so again, they're using it. They're using it fully. They work in the office 5 days a week. I don't expect them to have any reason to talk to us for another year or so.

I would say exactly the same thing with Tuthill. It's occupied by a tenant that uses the space 4 days a week. It's used fully. And I don't think -- I know that they don't like -- because of the nature of their use, they don't like to have other tenants within their buildings. So I expect optimistic results in discussing renewals over there as well. They have another 2 years to go before -- or just under 2 years to go before they have to give us notice and then they have a renewal for a 10-year option and the rent is only pegged 1.5 years after that.

So I don't expect to have any discussions with them for probably -- I don't see any reason to have for another 18 months or so, maybe 12 to 18 months. We would not be selling that asset either until we enter into those discussions. Again, they are sticky tenants, both of them. And as such, we're optimistic in getting renewals, and therefore, there'll be no point in taking a small chance that they'd be leaving and reducing the price and selling it.

Okay. Understood. And then just lastly, Emily, thank you very much again for the good overview of the business, and it's great to see that the transition has been smooth and is opening up some new opportunities. You did answer, I think, Jimmy's question on the occupancy, but would you say a similar response on the slight worsening in leasing spreads that, I guess, seem to occur in Q1?

I think they're going to stay stable in Q2. We see a lot of the supply really coming down in Q3 and Q4. So we see a much better pricing power. Probably the end of Q2, we'll start seeing a little bit of the new lease trade-outs get a little bit more favorable. But I do expect similar results for Q2, higher occupancy. And then Q3, Q4 should be much better positioned for really the multifamily market, but definitely, our markets should be stronger in Q3 and Q4.

The next question is a follow-up from Jimmy Shan with RBC Capital Markets.

Just in terms of capital allocation, should we expect the proceeds from further asset sales to go towards NCIB now that your leverage metrics has improved quite a bit?

Yes, you could expect us initiating NCIB activity once we hopefully get through the sales of the 3 assets that I mentioned.

Okay. And then maybe some big picture question on strategy. Like it's been 5 years since you did the last strategic plan. Office is now down to 10% or so of the portfolio. I could argue it's almost there. When should we expect or when should investors expect like a refreshed sort of strategic plan in terms of what the go-forward plan would be to close, continue to close that NAV gap?

Your question is very, very apropos and valid. We are pretty close to finishing our plan. The assets that I mentioned that we'll be keeping are probably not going to be sold at this point in time. So you can basically assume by the end of the year, the strategic plan will be completed, at which point in time we'll be really having industrial and Lantower.

At that point in time, we'll have to really figure out before the year is out is my guess, giving you some indication as to timing, figure out what is next, if it's going to be a rollout of one of the assets, keeping them or what we're going to be doing. But we're on top of it. We're having discussions among our trustees, and we hope to have a resolution later before the year is out.

The next question comes from Mario Saric with Scotiabank.

Maybe just coming back to Emily on the lease spreads for Lantower and the expectation of them getting better in the second half of the year. Where would you like to see kind of the new lease spread and the blended lease spread kind of end the year? Like how much upside do you think there is once the supply really tapers off, heading into '27?

Great question. I think that -- yes, Q3, I think that we should get back to kind of a flat -- well, by the end of Q2, early Q3, get back to a flat lease spread and see maybe positive 2%, positive 3% going into the end of the fourth quarter, which obviously has some seasonality, so I might be a little bit tepid there.

But yes, 2% or 3% favorable or positive on the blended should be where we have some inverted rent rolls out there, but we see concessions starting to taper down. We see folks starting to be a little bit more resilient that we want to get our pricing power for the leasing season and get really strong and then Q3, Q4 with the fundamentals really falling back into line, we should revert back to the pre-COVID leasing seasons that we've had historically.

Okay. And then last quarter, there was some discussion of potentially exiting some Lantower markets. Can you perhaps give us an update in terms of where that stands today?

The market that we're referring to is Austin. And at that point in time, last quarter, we told you that we're going to wait a quarter. We're still waiting a quarter. So that is the next target that we're putting on the market. I would tend to say probably later on this year, we probably were putting that on the market.

We also have the Hercules project with Ledcor, our JV in outside San Francisco that is on the market, and we hope to have -- be able to tell you the results of that asset sale this quarter.

Okay. And then just sticking to the asset sales, Tom, based on kind of the commentary with respect to some of the long lease duration office assets, is it fair to say the targeted $500 million to $1 billion plus that we talked about last quarter, maybe it's a bit lower than that? Or is that still the plan going forward?

$500 million is definitely achievable. $1 billion is probably not -- is not on the guaranteed horizon, but I'd be comfortable with it at the $500 level.

And how much of the $500 million would be attributable to the 3 assets that you highlighted?

Round numbers, 300-ish.

And is there a cap rate range you'd like to provide on the $500 million?

No. The cap rate would not be very relevant. I don't think it's relevant when you have a piece of this -- the largest part of that is a piece of land, which has no cap rate. So I can't really talk cap rate on that.

I guess I'm trying to understand the potential FFO impact associated with the $500 million.

Oh, I see. So on the 500, the Gowanus has 0, and therefore, the cap rate on the office buildings, I don't know, I would say probably around 8%, 7.5% in that range.

Okay. And sorry, last one for me, just on Caledon. Any update there in terms of a transaction?

We are in discussions, no updates. It's in their court to decide. My guess is we'll have something done by the end of the quarter as well. As far as what that is, the decision is I have 0 visibility because they haven't decided. All I can tell you is that they're building the highway, so something is going to happen. What it is, though, we really don't know.

We have no further questions. I will turn the call back over to Tom Hofstedter for closing comments.

Thanks, everybody. Have a great long weekend.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning, and welcome to H&R Real Estate Investment Trust's 2025 Fourth Quarter Earnings Conference Call. Before beginning the H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts or projections and the remarks that follow may contain forward-looking information which reflect the current expectations of management regarding future events and performance and speak only as of today's date.

Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in the forward-looking information. In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures, which do not have a meaning recognized or standardized under IFRS or Canadian generally accepted accounting principles and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers.

Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same.

Additional information about the material factors, assumptions, risks and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements, together with details on H&R's use of non-GAAP financial measures are described in more detail in H&R's public filings, which can be found on H&R's website at www.sedarplus.com.

I would now like to introduce Mr. Tom Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter.

Thank you, operator. Good morning, everyone. With me today are Larry Froom, our CFO; and Emily Watson, COO of Lantower. We'll jump right into it, and I'll hand it over to Larry.

Thank you, Tom, and good morning, everyone. Overall, given the headwinds we faced with multifamily supply concerns, a weak office market, the tariff war creating general market uncertainty and a weaker Canadian economy, we are very pleased with our results and in particular, the 1.6% growth in same-property net operating income on a cash basis for the year ended December 31, 2025, compared to the same period last year.

FFO for the year ended December 31, 2025, was $1.21 per unit a 1.4% increase over the $1.20 for the year ended December 31, 2024, a great result considering the headwinds I just mentioned, and the fact that we have property sales of approximately $527 million over the 2-year period from January 1, 2024, to December 31, 2025.

Breaking down our same-property net operating income on a cash basis between the segments: Residential segment was up 1.1% for Q4 2025 compared to Q4 2024 and was up 1.2% for the 2025 year over the 2024 full year. Emily will provide more details on Lantower's results shortly.

Our Office segment, same property net operating income on a cash basis increased 1.5% for both Q4 2025 compared to Q4 2024, and for the year 2025 over the 2024 year. Our office occupancy at December 31, 2025, was 96% with an average remaining lease term of 5.2 years. We expect vacancy to increase in 2026 with RBC's lease of approximately 189,000 square feet at 330 Front Street, maturing on December 31, 2025. We are in negotiations with several prospective tenants for part of the space.

Our office portfolio at December 31, 2025, consisted of 15 properties. Four of these properties were classified as held for sale at December 31, 2025. Two of which were sold in January 2026. Hess Tower is expected to be sold at the end of this month and 25 Shepherd is expected to be sold in the second half of 2026.

After the sale of these 4 properties, the pro forma office segment will comprise 12% of our total real estate assets. Retail segment same-property net operating income on a cash basis increased 4.4% for Q4 2025 compared to Q4 2024 and was up 7% for the 2025 year compared to 2024 due to occupancy gains at River Landing and ForEx.

Our net investment in ECHO and 23 Canadian retail properties were sold in January 2026, and we are expecting to sell the remaining 3 Canadian retail properties in March of this year. The only remaining retail assets will be the commercial component of River Landing and is expected to comprise 4% of our total real estate assets.

Industrial segment same-property net operating income decreased 9% for Q4 2025 compared to Q4 2024 and decreased 3.7% for the 2025 year over the 2024 year. Industrial occupancy decreased from 98.9% at December 31, 2024, to 90.7% at December 31, 2025.

Our 3 industrial developments totaling approximately 360,000 square feet at H&R's ownership share have all been leased. Two of the leases totaling approximately 204,000 square feet will commence in Q1 2026 and the third will commence in Q4 of 2026.

Our FFO and AFFO payout ratios were a healthy 50% and 60%, respectively, for the year ended December 31, 2025. The proceeds received from the sales announced to date have been used to repay debt. Our pro forma debt to total assets at the REIT proportionate share are expected to be 41.8%, and the pro forma debt to EBITDA is expected to be 8.7x coverage.

With that, I will turn the call over to Emily for an update on the Lantower Residential segment. Emily?

Thank you, Larry, and thanks to all of you for joining us. I'll begin with an overview of our fourth quarter performance in the operating environment across our multifamily platform before turning to market trends, development progress and operational strategy.

However, I want to start by stepping back for a moment because the fourth quarter marked an important inflection point not just for Lantower, but for the multifamily sector more broadly. 2025 did not unfold like a typical year due to elevated supply causing slower momentum and softer job growth further depressing pricing power across many Sunbelt markets. That context matters because it frames how we think about our -- both our fourth quarter results and the setup for the years ahead. Against that backdrop, our portfolio performed as expected and in several respects, better than we anticipated.

Collections remained strong and resident retention remained high, while new lease pricing remained pressured in certain markets, renewal performance continued to provide stability supported by a resident base that remains employed and financially healthy.

Wage growth continues to track over 3% and our average rent-to-income ratios remain near 20%, reinforcing affordability and supporting consistent renewal behavior. Importantly, fewer than 10% of our move-outs during the year were tied to home purchases, the lowest level we've seen historically, underscoring the structural affordability advantage of renting in our market.

What materially changed as we exited the year was not demand. It was supply. After several years of outsized deliveries, new competitive supply is now declining meaningfully, with forecast indicating a reduction of 36% in 2026 compared with 2025. With that shift, while that shift did not immediately translate into pricing power in the fourth quarter, it did begin to stabilize fundamentals beneath the surface.

Same-property NOI from residential properties in U.S. dollars increased 1.1% on a cash basis for the 3 months ending December 31, 2025, primarily due to lower property operating costs, including repairs and maintenance, insurance and bad debt expense. This was partially offset by a decrease in rental income at H&R Sunbelt properties, primarily due to a decrease in occupancy.

Same asset occupancy ended the quarter at 92.8%, a decrease of 2.2% from the prior year and down 1.8% from Q3. Sunbelt blended lease trade-outs were negative 3.2% in Q4, an improvement of 30 basis points over Q3 and a 280 basis point improvement over Q4 2024.

New lease trade-outs in Q4 were negative 12.4% and renewal lease rates increased 4%. January blended trade-outs for the Sunbelt were negative 3.6%, a 70 basis point improvement over January of 2025. Our Sunbelt portfolio fair market value is supported by a third-party appraisal and recent market transactions, thereby maintaining a weighted capitalization rate of 4.9%. This level remains consistent with Q3 and reflects ongoing institutional confidence in the sector due to compelling long-term fundamentals, including robust population and employment growth, business-friendly environments, and durable migration patterns that underpin lasting value creation.

Turning to development. Our new Dallas assets continue to progress well. Lantower West Love is 90% occupied and Lantower Midtown is 84% occupied on track to stabilize in early Q2. Both communities are outperforming competitive market absorption averaging 21 leases per month versus industry standards of roughly 12 per month since initial move-in.

Each was completed on time and on budget, underscoring the discipline of our development execution. Our REDT Projects remain on budget. We are on schedule to receive first move-ins at Lantower Bayside in Tampa in March of 2026 and first move-ins at Lantower Sunrise in Orlando in April with completion expected mid-2026 for both assets. In addition, Lantower currently has 9 Sunbelt developments in the pipeline totaling approximately 2,900 suites at H&R's ownership interest. Multiple sites are fully permitted and ready for construction, and we are advancing design, drawing and permitting on the remainder. These projects reflect our conviction in the long-term growth of our Sunbelt markets and our ability to capitalize on favorable land positions as construction costs stabilize.

As we look ahead, we took an important step to position the portfolio for its next phase of growth. Beginning April 1, 2026, we will transition to a third-party property management model through partnering with Greystar. This evolution reflects our focus on improving operating leverage, reducing fixed overhead and increasing strategic flexibility across the residential platform. By externalizing day-to-day property management, we retain continuity at the property level with the majority of our on-site associates expected to transition while enabling the platform to scale more efficiently.

This structure allows us to pursue additional multifamily investments in additional high-growth Sunbelt markets without incurring the cost and complexity of expanding a property management organization. We will retain a focused internal team dedicated to asset management, development and strategic oversight, ensuring continuity of leadership, investment discipline and long-term value creation.

In closing, our fourth quarter results reflect a portfolio that remains fundamentally found in an environment that has been anything but typical. While near-term pricing pressure persist in certain markets, the structural setup for multifamily housing is improving. Supply is moderating, affordability remains compelling and resident behavior continues to support stable occupancy and cash flow. Combined with a more scalable operating model and disciplined capital allocation, we believe Lantower is well positioned to navigate the next phase of the cycle and deliver durable value creation over time.

Finally, I want to thank our Lantower team for their focus, adaptability and commitment through a challenging year and their continued commitment to the Lantower portfolio success.

And with that, I'll turn the call back to Tom.

Thanks, Emily. Operator, you can open up the call for questions, please.

[Operator Instructions] The first question comes from Sam Damiani at TD Cowen.

Good morning, everyone. Tom, there hasn't been any new disposition signings or announcements since last November. Just wondering if you could comment on the efforts, the initiatives and why it's been quiet on that front now for 3 months?

No special reasons, just seasonality. End of the year, we did a lot. Christmas time comes, the market slow in December, January, as you know, it's currently February. So I know it's your favorite question. We're not jumping on to do sales just for the sake of doing sales. We will expect to -- we have on the market some assets that are there now that are going on now.

We expect to realize some sales out of Caledon. The government has to take the land for the 413 Highway expansion. We expect to hear some news on 26 Wellington that was going in the market, 25 Sheppard, we expect to hear some news. The deals just take time, nothing unusual. We're still proceeding with selling our -- the properties that we circled, and we are totally optimistic that we'll get to the finish line.

Okay. And then just on the 310 to 330 Front, I think that asset was in discussions for sale last November, the tenant in one building is obviously vacated. Is that no longer under active discussion for disposition?

It's no longer under active discussion. We decided to go ahead and the office market has gotten better. We have a large chunk of contiguous space of basically full building that very few or nobody in the market downtown has. So we're optimistic on our ability to lease that out sometime this year. And at that point in time, after we successfully stabilize the property, we'll probably be looking to sell it.

Our game plan hasn't changed at all. Maybe we circled have moved around by a few months. But at the end of the day, in a year from now, we totally expect to have our industrial division, our Lantower division probably our Calgary, [ Bow and DC ] assets. And for the most part, we sold most of those remaining assets probably by the end of the year.

Okay. Last one for me. Just on the fair value reductions in Long Island City. Like have you seen market transactions that have prompted you to go through the process to test those values and record those big fair value losses in Q4?

Well, It's -- when you have an asset like that where the -- which...

Jackson Park and mostly...

So the Jackson Park, we had an appraisal -- third-party appraisal, which I was very, very verbal on and vocal on that I didn't agree with. We had reluctance from -- previously from the auditors to write down something where we had a third-party appraisal. Subsequent to that, we've now achieved our own third-party appraisal, even though we have an appraisal at a higher amount from our partner, Tishman, and we elected to bring it down to where we feel the value always was. It was more or less an accounting issue where the auditors didn't allow us to bring it down to where we thought the value was, not that the value has changed.

[Operator Instructions] And the next question comes from Jimmy Shan at RBC Capital Markets.

So maybe just to start off on Lantower for Q4. I did notice there was a -- the NOI increased a decent amount from Q3. I was kind of wondering what was behind that quarter-over-quarter growth?

Mostly seasonality had a lot to do with the Q4. We had some true-ups in our real estate taxes that gave us some lift in the Sunbelt and an extra payroll in Q3 that we don't have in Q4, just kind of the timing of those things. And then Jackson Park has some seasonality as well from their leasing velocity that they typically have in the August -- June to August in Q3.

So really not anything different. It's just mainly driven by the seasonality and some real estate trips. And partly, we won several appeals that also had some -- we budget for what the consultants tell us kind of what the -- where they think and they just came in a little bit better than what we had anticipated. So some true-ups in Q4.

I'll just add to what -- sorry, Jimmy, just to what Emily is saying. I think in U.S. dollars, the same-store assets increased by $3.2 million Q4 over Q3. So as Emily is saying about half of that is due to the Sunbelt and about half of it is due to Jackson Park. What Emily was referring to the realty taxes and some amendments. The reason it's not in our MD&A is because we had the same kind of value in Q4 of 2024.

So -- but Q4 over Q3, you see that pick up. And then of course, there's ForEx that's just adding to that difference of the $3.2 million. Plus overall, just something that's not same asset in the whole residential is Midtown and West Love of ramping up occupancy are now starting to contribute to NOI. And so that is also leading to an increase in overall NOI from Lantower.

Okay. That all makes sense. And then in terms of the decision to outsource the property management to Greystar, I guess, is the plan going forward to continue to scale the portfolio? Because intuitively, I would have thought that outsourcing it means or not remaining internal mean you can't really see a path to scale in that portfolio. Maybe what's the thinking around the decision there?

Yes. I would disagree with that actually. In a previous company, I had 30,000 units and outsourced to Greystar along with some others. And it really requires you to be able -- well, it allows you to be far more nimble where you want to invest. You're not tied to I have to have critical mass if you can chase returns a little bit easier to maximize. But what it really allows you to do is leverage their buying power.

And that goes from everywhere -- anywhere from their pay-per-click on marketing to paint costs across the across the portfolio. So even if we got to a 30,000, 50,000 unit property -- portfolio, we're still not going to have the buying power of a company that has 1 million units.

So we saw a lift when we outsourced River Landing a few years ago, and we anticipate that we'll see similar cost savings as well. And just one nugget to -- our discount on paint, for instance, is only 40% with Sherwin-Williams, whereas theirs is 85%. To really just extrapolate kind of every turn, there's buying power that will hit, but I expect every line item on our financial statement. And it will allow us to be able to be laser focused on asset management and driving results and not as people-intensive to be able to really move a little bit faster on scaling the portfolio.

Okay. Is the plan to scale the portfolio though, going forward?

The word scale is interesting. We do plan for selling some of our assets more for regional reasons from an asset management perspective, not to scale down an asset to sell assets, out more just for operation.

Sorry, say it again, are you going to -- you're planning to sell a few assets?

We are planning on selling some of the portfolio where we don't like -- where Emily and the company don't like the geography or where we don't feel comfortable with the growth. And so we will, over time, be selling some assets, trading some assets in and out. We will maybe be developing some assets.

The external on property management is different in Canada than the United States. United States -- it's a very mature business. It's not extremely profitable at the management fee level versus Canada, which is much more expensive. So it's very common in the United States to farm out management fees for the reasons Emily mentioned, but also because it's relatively cheap.

So we're not -- going internal doesn't save you a whole pile of money on management fees as it does in Canada, and it gives you the flexibility to sell assets without having to worry about human resources. But when I say sell assets, it's really an asset management function. It's really rotating out of cities or markets or regions that we don't see the growth in and rotating back into stronger markets.

And just to be clear, given our cost of capital, we're not planning on acquiring any new assets. The only assets we may acquire would be if we did a 1031 exchange replacing assets we sold. .

Okay. And then lastly, just on the asset sale. Tom, you had mentioned before through the $2.6 billion that you think you could potentially sell. So you've -- you're close to doing $1.5 billion. I guess there's $1.5 billion left. Is that still a good number to think about? I know there are a lot of moving parts and markets unknown, but is that still the target for 2026?

No. We'll see where we are by the end of the year. The target for '26 is what I mentioned beforehand. It's more -- and I can't say they're all going to get done because some of them are beyond our control such as Caledon, but we do expect Caledon [ Guyanese ] we do expect; 26 Wellington, we do expect; 25 Sheppard, we do expect Phase 1 of the Cove.

I can't say which of those will actually get to the finish line or not get to the finish line, but the magnitude of those assets as you can -- and I can't tell you if Caledon is going to be buying all the lands, which could be $300 million, $350 million of value or $150 million of value. So I don't really have a handle on it because it's out of our control, but the magnitude of the land based on the assets that I just mentioned that are up for potential disposition are substantial.

What would be the range of value?

You know what? It could be as low as $500 million and easily in excess of $1 billion.

We have no other questions. I will turn the call back over to Tom Hofstedter for closing comments.

Thank you, everybody. Have a wonderful long weekend.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning, and welcome to H&R Real Estate Investment Trust 2025 Third Quarter Earnings Conference Call. Before beginning the call, H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts or projections and the remarks that follow may contain forward-looking information, which reflect the current expectations of management regarding future events and performance and speak only as of today's date.

Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in the forward-looking information. In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures, which do not have a meaning recognized or standardized under IFRS or Canadian generally accepted accounting principles and are therefore unlikely to be comparable to similar measures presented by other reporting issuers.

Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same.

Additional information about the material factors, assumptions, risks and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements together with details on H&R's use of non-GAAP financial measures are described in more detail in H&R's public filings, which can be found on H&R's website and www.sedarplus.com. I would now like to introduce Mr. Tom Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter.

Thank you, and good morning, everyone. With me today are Larry Froom, our CFO; Emily Watson, President of Lantower Residential. We get a lot to talk about today. So I think I'll just jump in and hand it over to Larry, followed by Emily and then Q&A. Larry?

Thank you, Tom, and good morning, everyone. As at September 30, 2025, the value of our real estate assets broken down between our segments are as follows: Residential is our largest segment at 50%; industrial 19%; office, 16%; and retail 15%. By geography, 71% of our real estate assets by value are now located in the United States.

Overall, given the headwinds we faced with multifamily supply concerns, a weak office market, the tariff war creating general market uncertainty and a weaker Canadian economy, we are very pleased with our results and in particular, the 2.1% growth in same-property net operating income on a cash basis for the 9 months ended September 30, 2025, compared to the same period last year.

For the 9 months ended September 30, 2025, FFO was $0.90, same as the 9-month period ending September 30, 2024. An amazing result considering net property sales of approximately $500 million over the 21-month period from January 1, 2024 to September 30, 2025.

Breaking down our same-property net operating income on a cash basis between the segments, Residential was down 3.4% for Q3 2025 versus Q3 last year and was up 1.2% for the 9 months 2025 versus the same period last year. Emily will provide more details on Lantower's results shortly.

Our Office segment same-property net operating income on a cash basis increased 0.5% for Q3 versus Q3 last year and was up 1.5% for the 9 months 2025 versus the same period last year, primarily due to the strengthening of the U.S. dollar. Our office occupancy at September 30, 2025, was 96.9% with an average remaining lease term of 5.3 years.

Our Office portfolio now consists of 15 properties and comprised 16% of our total portfolio. Retail segment same-property net operating income cash basis increased 5.3% for Q3 2025 versus Q3 last year and was up 7.3% for the 9 months 2025 versus same period last year due to occupancy gains at River Landing and [ ForEx ]. Industrial segment same-property net operating income decreased 7.5% for Q3 2025 versus Q3 last year and was down 1.9% for the 9 months 2025 versus the same period last year.

Industrial occupancy decreased from 98.9% at December 31, 2024, to 89.9% at September 30, 2025. During the quarter, we leased our newly constructed 122,000 square foot industrial property at 6900 Maritz Road. This lease will commence in December 2025.

In addition, a further 108,000 square feet of vacant industrial space was leased with these leases commencing in Q4 this year and Q1 next year. Our FFO payout ratio was a healthy 50% for the 9 months ended September 30, 2025, and our AFFO payout ratio was also healthy at 61.3%.

Our balance sheet remains strong. Debt to total assets at the REIT's proportionate share at September 30, 2025, was 47.3% and debt-to-EBITDA was 9.3x. Our unencumbered property pool totaled approximately $4.1 billion. With that, I'll turn the call over to Emily for an update on the Lantower Residential segment. Emily, please go ahead.

Good morning, everyone, and thank you for joining us. I'll begin with an overview of our third quarter performance and the operating environment across our multifamily platform before turning to market trends and development progress. While the broader economy continues to navigate a mixed landscape, including slower job growth, rising tariffs and fiscal uncertainty, our portfolio once again demonstrated its resilience.

Occupancy, collections and resident retention remained solid through the quarter, and we saw steady leasing momentum even as pricing power moderated across many sunbelt markets. The quarter underscored the strength of our operating fundamentals.

Our residents remain gainfully employed, wage growth has held firm around 4% and affordability remains a competitive advantage. With average rent-to-income ratios around 20%, that positioning gives us access to a wider and financially stable space, supporting consistent collections and healthy renewal trends.

We are seeing early signs that the most supply-heavy markets are beginning to rebalance. Deliveries of new competitive units are declining each quarter and forward-looking forecasts show an expected reduction of roughly 54% or about 79,000 units in 2026 compared with 2025 levels. As the pace of completion eases and job growth normalizes, we anticipate regaining pricing traction and achieving more balanced fundamentals across our footprint.

Our diversified presence across high-growth markets, combined with a deliberate focus on expense discipline and technology adoption continues to support performance through the cycle. Even in areas where lease-up activity remains elevated, we've taken proactive steps to preserve occupancy and mitigate revenue drag through targeted concessions and digital leasing efficiency.

From a long-term perspective, we remain confident in the structural underpinning of our business. Housing affordability challenges continue to steer demand toward quality rental housing and with less than 10% of move-outs tied to home purchases, retention remains high.

Taken together, we believe the ingredients are in place for a gradual reacceleration in revenue growth through 2026 and beyond. Our operating results reflect both resilience and realism. Some same-property NOI from residential properties in U.S. dollars decreased 4.6% on a cash basis for the 3 months ending September 30, 2025, primarily due to the decrease in rental income in H&R's sunbelt properties, including higher concessions being offered to tenants and higher operating expenses, including repairs and maintenance, leasing and marketing and utility expenses, which were partially offset by lower property taxes and insurance expenses.

Same asset occupancy ended the quarter at 94.6%, an improvement of 50 basis points from prior year and 90 basis points from Q2. Same-asset sunbelt occupancy closed at 93.8%, up 40 basis points quarter-over-quarter, supported by steady renewal demand and moderating new deliveries.

Same-store blended lease trade-outs were negative 1.6% in Q3 with new lease trade-outs negative 8.9% and renewal lease spread at 4.4%. October trends improved further to a blend of negative 1.2% with new lease negative 9.6% and renewal at 4.7%. While industry broadly continues to experience slower rent growth, our fundamentals remain intact.

Demand is underpinned by population inflows, resilient employment and the enduring affordability gap between renting and owning, which today sits near all-time highs in favor of renting. These conditions reinforce our conviction the durability of multifamily performance even amid softer near-term pricing. Innovation continues to be a differentiator for us.

Our AI-driven leasing platform ensures 100% coverage of calls, e-mails and text as nearly 1/3 of all inquiries are initiated outside of traditional office hours. Our centralized platform has allowed the days between application to lease sign dates to be cut in half and the time from lease approval to lease execution has decreased to 3%.

At the same time, rigorous identity and income verification protocols have reduced bad debt in half post centralization. These tools allow our teams to focus on higher impact relationships and revenue-generating activities, effectively amplifying our workforce productivity. We also continue to make headway on portfolio-wide WiFi initiatives, which improve both resident satisfaction and margin potential.

We have one community scheduled to go live with property-wide WiFi by year-end with an additional 6 installations planned through 2026 that are projected to deliver an estimated 86% return on investment. Our sunbelt portfolio fair market value is supported by a third-party appraisal and recent market transactions, thereby maintaining a weighted capitalization rate of approximately 4.97%.

This level remains consistent with Q2 and reflects our ongoing institutional confidence in the sector. High-quality multifamily assets across the sunbelt continue to trade at cap rates, driven by the region's compelling long-term fundamentals, including robust population, employment growth, business-friendly environments and durable migration patterns that underpin lasting value creation.

Turning to development. Our new Dallas assets continue to progress well. Lantower West Love is 83% leased and is expected to stabilize by April 2026 as supply pressures ease in the market. Lantower Midtown is 82% leased on track to stabilize in early Q1 of 2026.

Both communities are outperforming competitive market absorption, averaging 21 leases per month versus industry averages of roughly 14 per month since initial move-ins. Each was completed on time and on budget, underscoring the discipline of our development execution.

Our REDT projects remain on budget. We are on schedule to receive first move-ins at Lantower Bayside in Tampa in March of 2026 and first move-ins at Lantower Sunrise in Orlando in April, with completion expected in mid-2026 for both assets. In addition, Lantower currently has 9 sunbelt developments in the pipeline totaling approximately 2,900 suites at H&R's ownership interest.

Multiple sites are fully permitted and ready for construction, and we are advancing design, drawing and permitting on the remainder. These projects reflect our conviction in the long-term growth of sunbelt markets and our ability to capitalize on favorable land positions as construction costs stabilize. In summary, our third quarter results highlight a portfolio that remains fundamentally sound, operationally agile.

We've maintained stable occupancy and record high collections and continue to invest in technology and innovation that expands margins and strengthens resident loyalty. While near-term market conditions remain mixed, the long-term setup for multifamily housing is compelling, moderating new supply, favorable demographics and strong affordability advantages relative to homeownership.

We expect these factors, coupled with disciplined execution and our culture of innovation to drive sustained growth in NOI and value creation as we move into 2026. Finally, I want to recognize our exceptional Lantower team. Their focus, adaptability and commitment to excellence continue to be the foundation of our success and our ability to navigate evolving market conditions with confidence. And with that, I'll turn the conversation back to Tom.

Thank you, Emily. Operator, please open the call for questions..

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. And the first question comes from Sam Damiani at TD Cowen.

Obviously, a disappointing outcome. I wonder if you could talk about the stages of the various sale transactions that aggregate $2.6 billion, the difference between the assets that are held for sale and the assets that are not.

So I guess it's a precursor to everybody will be asking the same question. We're not going to get into details of what we're selling. We're not because we're currently in negotiations to try to conclude them. We have confidence that they will get done. Some have been approved by the Board, some haven't. So that's where we have a list of assets held for sale and the others that are not in there because we just haven't had approval from the Board yet. So stick with us, what we're really saying is that we hope this is all finished by the end of the year, which is short enough, hopefully sooner than that, because we are confident that will get done, but we're in the final throes of it. So I really can't get involved into any details on this. It's sensitive to the negotiations that we're having with the post-buyers.

Okay. And what about the use of proceeds, Tom? I mean, it would be obviously selling over.

Yes, good questions. The use of proceeds, what's the quantum of the use of proceeds? So I can't -- obviously, we pay down debt, we have a debenture that's coming due. So that's priority #1 would be pay down debt. If you do $2.6 billion, you have excess funds, and we really haven't addressed that nor at the stage to identify what the -- how we'll use the proceeds because we don't know what the proceeds are. So again, same answer. You have to stick with us for a couple of weeks, hopefully, no longer.

Yes, it's a theoretical question. Obviously, you've stated the plan. And so I was just wondering what the priorities are if you $2.6 billion.

Yes, pay down that, number one, get our balance sheet in order. And then if there's any excess funds depending on the quantum, obviously, an NCIB would be high -- maybe giving back unitholders and an NCIB would be high. Okay. Larry, do you want to jump in too or...

I think Tom said it, I mean, there's quite a bit of proceeds that will come in and it would hopefully come in, in stages. So the first sales for sure will be going to pay back down debt. And then as we get further down and we're comfortable with our balance sheets and everything, then we'll look and it will be a Board decision then what to do with the excess cash? Do we buy back units or do we distribute to our unitholders.

Okay. Last one for me. Some of the dispositions are clearly some higher cap rate assets and even deleveraging is often dilutive. Just wondering on your thoughts about the sustainability of the current distribution.

So you are correct, Sam, that it would be dilutive to FFO as the sales because some of them are higher cap rate sales, and we've taken the write-downs before that. So -- but our FFO payout ratio is only 50%. So we have a lot of room to work with. And I think the distributions are quite safe right now.

And any scenario, I can envision the distributions being challenged. I don't think that's the issue. I think we have plenty of cash. It's just a question to distribute and pay out. Debt is obviously number one. But after we do that, as I said beforehand, it's NCIB or distribute. Under no scenario, do we see any challenge to cutting distributions.

The next question comes from Fred Blondeau at Green Street. .

Just one quick for me. The fair value adjustment is quite sizable. I was wondering if you could give us a bit more color on what would be the breakdown of the adjustment between that $2.6 billion that's for sale and the core portfolio?

I mean if you look -- you're quite right, we've taken sizable write-downs -- not only this quarter, but in the 9 months, $830 million. To help you give you a sense of size, I will just comment on the assets that we have marked as held for sale, that is $865 million there. We probably comprised almost the majority of that -- of the write-down this quarter. So we had $482 million, and most of it was in office through Hess, Front St. and [ Shepherd ]. So most of that write-down from the office came from there. It wasn't solely there. There were other office properties that were written down. But I'd say just over 50% was from that.

The next question comes from Mario Saric of Scotiabank.

Just a couple of questions on the process. Firstly, is there any -- are you willing to provide any color on the pricing level of the nonbinding bids that were received during the process?

Again, the answer is going to be no. We were subject to confidentiality, and we really don't want to get into there because it's complicated. It depends on the mix of the scenarios, the players who were involved in and why -- and it never got to the final stage anyhow which was accept the special committee. So I'd rather decline from answering that question.

Okay. And then I guess, somewhat related, did the Board ever consider kind of putting the bids received to unitholder vote? And if so, I guess, what are some of the drivers behind not doing so?

The committee did not get to the stage where they had -- the answer is no. They not up to the stage where they had an acceptable offer to present at a price that they were would suggest going forward with.

Okay. Maybe switching to the asset sales. On the $2.6 billion that are expected, do you have a sense of the potential required kind of special distribution if they were all to be completed within a calendar year?

You're talking about taxes.

Yes, there would be substantial Canadian sales there, obviously. I mean the retail announced is part of it. The Canadian retail is definitely part of it. So there would be a special distribution that would be required to be made. But again, I would just say we will give more details as each sale becomes firm, we will put out more detail -- full details of the disclosure of the price, the NOI we expect to lose from those sales and potential tax implications.

I might add that the tax implications are not for 2025. The would be closings, although we have nonbinding agreements we expect sometime this year, closing would take place in 2026.

Okay. And then I guess you talked about the mix being up for debate. But if we step back before the strategic review was announced and the potential kind of bids coming in, the intent was really for the organization and for the REIT to become more focused on U.S. residential and industrial. When we look at the $2.6 billion that's under consideration, would it be fair to say that you would substantially make your way towards that previous objective by doing so?

Yes. I can't get involved too great details, but obviously, what will be left with either 1 of the 2 buckets you mentioned or one of the buckets, but definitely office would be brought down and retail will be brought down. In other words, this is somewhat in line with our original strategic plan, but I think the completion of this initiative, the strategic plan will be fine-tuned.

The next question comes from Jimmy Shan at RBC Capital Markets. .

So just on -- when you did the full auction process, you mentioned there were parties that was interested in some specific assets. So of the $2.6 billion essentially comprised of those assets in which you got interest in?

Yes. .

I'm sorry. Was that yes.

The answer is yes.

Okay. All right. So are there any residential or industrial in -- that's currently under negotiation to sell?

Again, as I mentioned before, we really don't want at this time to get involved in that level of detail. But again, as I said beforehand, we hope to have this all wrapped up soon enough.

I guess maybe the broader question is kind of what is the go-forward strategy? Is it to stick to the original strategy, sell what you can and just trying to step back and say, okay, what is -- what does H&R look like on a go-forward basis? .

Well, I guess the overall strategy was a declutter. We were too many divisions. We mentioned that the overall strategy was to get more focused on industrial/U.S. residential. They're healthier -- although they're not necessarily healthy, they're healthier asset classes than office. So the original strategy was declutter, and that's exactly what we will be doing. How far are we going? Will it end up being an industrial REIT or a residential REIT or both? I don't know at this stage, again, again, it's a little too early to tell. But the overall goal was to become less of a diversified REIT, and that's for sure what we will succeed to do.

Okay. And then in the past, you've talked about condo land for condo development being pretty tough. I mean you do have 145 Wellington, you do have the Front St. ones. I guess what's changed?

Well, it's interesting. What changes is 2 things. The office market got better, the residential market got worse. So our initiative to rezone our commercial properties was not for the here and now in either was to have some -- when the market does improve some optionality is whether it's office or residential. At this stage of the game, it looks like the office market is recovering faster and the winner of the races are going to be remaining is office rather than residential.

I would say that in all cases other than 55 Young, the status quo, whether it's Union St. or Front St. or 25 [ Shepherd ] -- sorry, or 145 Wellington is always going to be commercial rather than residential.

And then on the use of proceeds, I know it's hypothetical, but in the past, you've been averse to doing substantial issuer bid, but it does look like it's going to be a decent sized number. Would you contemplate doing that?

I don't think so. We haven't run the Board give, but our objection to a substantial issuer bid is you can probably achieve the same goal by doing an NCIB at probably 17% less. I was never a fan of it. I'm still not a fan of it, but we can have offline in discussion convince me otherwise.

But it's safe to say that beyond paying down the debt, there'd be a [indiscernible] to a buyback.

You can do a special distribution cash instead of an SIB and you wouldn't have to worry about excess money in your bank account.

Okay. Sorry, last question, just in terms of -- since the original solicited bid wasn't -- or didn't get to the finish line or wasn't presented to the unitholders, like what did the special committee consider to be acceptable in terms of terms and pricing?

I wasn't on the special committee. I don't know. The experience tells me there was a moving target. If you had a real offer that was really acceptable that they can bring forward, I can maybe answer more, but they never -- they didn't have that at the end of the day. But again, I wasn't -- I was not in the special committee. I don't know what the answer to that question is. I'm sure it was a range.

The next question comes from Matt Kornack at National Bank.

Just with regards to the tax implications, I understand if you sell Canadian assets, you can kind of push that through to unitholders in a special distribution. But for the U.S., if you can't take advantage of the 1031 exchange, do you think there would be a cash tax component?

There would be a minor tax cap for minimum tax, but we have tax loss carryforwards. So we'd be utilizing those. I don't see any U.S. tax leakage -- any material tax leakage.

Okay. And then just in terms of the quarter itself in terms of the sequential NOI, Larry, was there anything seasonality-wise in terms of the NOI reduction or there would have been a recovery or something to that effect? I know the portfolio has changed. So there may be a little bit more seasonality in it, but I was a little surprised with the move there.

No, there was -- I think this is a normal run rate. When I say normal run rate, I mean, we saw residential was down a little, and that's showing some weakness. But other than that, which is expected to recover, other than that, there was nothing unusual.

.

Okay. And then going back to the sale, I know you aren't talking specifics, but could you give kind of a broad sense as to what the disposition cap rate would be? And then also in terms of where your line of credit is in terms of current interest expense on that?

Well, listen, I'm not going to give specifics and without that, it's pretty hard to answer your question. If you have an office building that's leased hypothetically, obviously, and it falls off, it's not a cap rate discussion. In many cases, it's the present value of the residual cash flow plus dollar at the end, which represents by the pound.

So cap rates would kind of be a useless discussion if I can't identify and not willing to identify the specific asset that we're talking about. And you're talking about Lantower, you can talk about a 5% cap and that's easy. In the sunbelt, you use 5.25%, whatever number you want, you can't do that in office. If there's a 7-year WALT and it all comes to a balloon at the end, that's going to be substantially different than something that has a longer-term cap rate. So I can't really discuss cap rates. But we will give you all the color in a couple of weeks, hopefully.

I understand the dynamics there, but we don't have the same level of detail that you guys do. So more based on...

No, I know. Fair enough. But not giving the asset, it's very hard to give you -- have an intelligent conversation as to the impact without identifying the asset.

Okay. Fair enough. But Larry, just in terms of the variable interest rate, where would that stand today on your line of credit?

Well, we disclosed that the average weighted rate is 4%. But the variable rate today is on our credit line, just about just 3.9%, something like that.

And presumably, you have a lot available there, which is good. You have the flexibility to pay it down. What would be the next kind of pieces of debt that you would pay off with the proceeds?

Well, we've got $250 million coming up next year in a bank term loan. So that will be the next. We have another debenture later on in next year. That will be the next to be hit to be taken off the debt list. And from there, we will see.

And is it mostly unencumbered portfolio or the $2.6 billion slated for sale?

Well, I can tell you that the assets held for sale that we're showing of $860, whatever, $5 million, that's totally free of any debt. It may be pretty much totally free of debt and the 2.6...

Well, in a nutshell, our Lantower and our industrial divisions have debt on it. The rest we don't have debt on it. So Larry is trying to answer your question as best as he can. But if it's not in the Lantower and industrial buckets, it's debt free for the most part.

Sorry, Matt. And just a correction on what I said. There is one mortgage on our assets held for sale, and that is on the Front St. property. That's about [indiscernible] million.

Okay. Last one for me. And again, maybe that's too specific, but it sounds like these skewed to more Canadian asset sales. So you're becoming predominantly a U.S. REIT. Is that a fair point after this? Or how should we think about that?

Well, I'll let you answer the question. We are right now.

Next question is from Sam Damiani at TD Cowen.

Just a follow-up. I believe, Tom, in an answer a few minutes ago, you said that you don't see any material tax leakage from U.S. asset sales. Is that correct?

That's correct. .

So that would suggest that the sales that are being contemplated are not those with inherent gains. Is it fair to take that away from that comment?

Well, yes and no, you have tax loss carry forward. So I don't know. That would not be correct. I don't believe what you're saying. You can have the gains, but we wouldn't be paying the taxes on them. We have significant tax loss carry forward.

Okay. And then just the other one for me. I'm not sure this may have been asked, but the fair value marks taken in Q3, I think the language was to reflect the bids for the stuff that's held for sale, the $865 million. Does primarily, sorry, of course. So how much of that would still need to be taken based on the remaining $1.7 billion of the $2.6 billion planned?

Not, very little. If any, I don't think -- I think we've marked down -- as I said, we've taken our hits and we've taken them now and in the previous quarter. If we were to do the $2.6 billion, we would not be expecting to take anything major on that.

The next question comes from Tal Woolley at CIBC Capital Markets. .

One of the questions I've been trying to get an answer for investors about is that I think like when we're thinking about the process that there probably could be some agreement on what asset values are that there might not be that wide a bid-ask spread, but the problems sort of come up in affecting the transaction and that there are maybe transaction costs or tax implications that we can't see from the outside.

You guys have the deferred tax liability on your balance sheet, but it's just -- can you -- is there any sort of sense you can give around what beyond that might be the cost? We've seen this come up with other diversified REITs going through processes like Cominar in the past.

I don't really understand the question.

I don't think there'll be -- it depends on the price, obviously, for deferred tax, how much ends up paying. But assuming it was even at our fair market value that we're holding it at, all that will be paid is the deferred taxes on our balance sheet. So that would end up becoming payable if everything was sold at the prices we are carrying them at. Other hidden costs would probably be like change of control payments and that kind of thing, which are normally not substantial in any deal. And I don't think ours would be any different in that -- to that effect.

Next question comes from Mario Saric of Scotiabank. .

Just one quick follow-up. You mentioned that the $2.6 billion will be effectively done in stages. In terms of communication with the market going forward, coming back to Jimmy's question a little bit in terms of what is H&R going to look like over the next 2, 3, 5 years? What is the expectation for communication with the Street in terms of updated strategy, where you're going versus maybe just individually announcing the asset sales as they come up?

So the assets they come up, first of all, just for clarification, it will be lump that will be done by the end of the year rather. Closing will be probably over the first quarter, Q1 2026. So you'll have a pretty good handle on what in totality we're selling. You'll have a pretty good handle on -- we will announce at that point in time, but that was before the years out what our revised strategy is pending on the actual completion of these sales.

So it's pretty hard to answer these general questions without -- in a vacuum because $2.6 billion is lumpy enough that it will formalize our strategy going forward. So I'm sorry for being evasive all the time, but it really -- you're going to know soon enough. You don't have to wait for 2026. One way or another, we expect by the end of this year to give you the answers to those questions.

And just to clarify again, Tom, I think you mentioned that you don't see a scenario unfolding in which the existing distribution is unsustainable. Is that correct?

That is correct. That is correct. Under no scenario do I see that being the case.

Next question from Fred Blondeau at Green Street.

Just a quick follow-up. It looks like the REIT will be quite different, of course, in '26 than what it is now. I was wondering if you -- we should expect some sort of management restructuring or major management changes or any announcements in that regard that before the end of the year or in the beginning of next year?

Not the end of the beginning of next year, could well be depending on how -- in other words, hypothetically, let's assume that we become 100% Lantower and life changes. And obviously, management -- the need for management over here changes. I think we can't answer that question again until we formalize the sales, formalize the strategy and then we'll see then management will follow with the residual what's left in our company.

Next question from Sam Damiani at TD Cowen.

I really appreciate this. But just trying to get some clarity and certainty on this $2.6 billion. I mean your comments, Tom, are pretty clear. You're very confident and you're telling everybody to wait and you're going to hear all the details by the end of the year.

But what can you tell us today that gives us comfort that, that's -- that this is kind of a done deal in terms of getting across the finish line, getting these agreements signed and binding and then closing in early next year?

So just to be clear, one way or other, we're going to conclude that whatever this quarter, whether it happens or happens, I'm not develop telling you that it's going to happen or won't happen, but the special committee is done. They're closed up for shop. It now is back to the Board. We either execute on these deals or we don't. We have a pretty good understanding throughout this lengthy process of our company and where to go from there.

So I think we'll be able to give you a high degree of comfort by the end of this year, by the end of December as to what the future strategy is going to look like, what our cash position is going to be and if there will be any further sales.

I guess, but on the $2.6 billion specifically, are you saying just there that there is not -- like there's a chance that they're not -- like they don't get signed, they don't close. Is that what you're saying now?

Well, the signs get closed, there's definitely a possibility that it doesn't -- the deals don't happen. In this world today, in real estate, the deal is not done until it's done. You know that. It's a very tough environment out there.

Yes. And so this is sort of the direction...

None of the players that we're dealing with have the deals that this helps you are contingent on financing. They all have their equity, they all have -- they don't need any debt or they all have their debt done already. So none of those -- it's not confidentiality, it's just getting to the finish line.

Okay. And the path that the REIT is on now, having wound up the special committee, like this $2.6 billion of asset sales, this is not the finish line. Is that right? There's still further asset sales to achieve to get to whatever this goal is.

That I can say definitively, yes. That won't be done through the special committee, but there will definitely be a formalization of the strategy, whatever that is to conclude -- to get there will involve future sales.

Next question from Matt Kornack at National Bank. .

One quick follow-up, and I don't know if you will answer it. But are management or insiders part of the bidding for any of this $2.6 billion .

No, they are not. .

Next question from Jimmy Shan at RBC Capital Markets. .

Sorry. Two more quick questions. So just going back to the $2.6 billion, I guess what determines an asset that makes it to the assets held for sale versus not?

Jimmy, we put the assets held for sale in that category because they've already been approved by our Board. The rest of the sales have not been approved by the Board yet.

Okay. So the determination is Board approval only. And why were they not approved by the Board yet?

For IFRS, it's a bit more. It's approved by the Board and highly confident that they will conclude within a year. That's the IFRS mandate of putting them into that bucket.

Okay. And so the other assets that are not on there, what -- I guess, it's just a matter of timing being not approved by the Board?

Yes. There's still negotiations and pricing hasn't been finalized.

Okay. And then in terms of the full auction process that was done post July, can you give us a sense of kind of how many parties looked under the hood and sort of how far did the parties get far -- how far did they go?

How far did they go in what? -- due diligence?

In terms of like how many parties were left at the table if there were any when you did the full auction process or is there none at all.

This has always been -- we're a diversified company. This is diversified. As it's diversified. I don't -- I think it's fair to say that it would be very hard for one player to come up and absorb the entire company. This was always a club deal. And there were various players within the clubs in and out as the asset composition changed.

Towards the end, the player that was -- there was -- I don't know, round numbers, very generally speaking, there was 4 or 5 that looked at the entire company, but there were club deals in different partnerships. There was one that was much more -- spent more time and remain there throughout. But at the end of the day, there was no -- at the end of the day, there was nobody there left for the entire company at a price that the special committee wanted to take forward and bring forward to unitholders.

And needless to say, this whole exercise has taught us, I guess the conclusion is that the sum of the parts are greater than the whole. And in a diversified company, it's a club deal anyhow, maybe it's better off just to do it by ourselves.

That's one of the options we have. So we don't have to go to our strategy, be industrial, residential being residential being industrial. We could just continue to sell and achieve a higher price. I think that's something you can't abandon, but that's definitely the potential. We'll get clarity -- again, we'll have clarity on that before the year is out.

And to Matt's question, was management part of any of those such club deals?

Sorry, I couldn't hear what .

Was management also part of some of the club deals that may or may not have happened in the past?

Management were there, management was there to plug some holes where we didn't have a player. But at the end of the day, management was not there. Well, there was no deal at the end, but management could be there if there's -- for example, in all cases, there are certain assets that just nobody wanted or we needed in order to finish off a price for everything, management could step in or would step in. But at this stage, again, that management is not there at all. There's no necessity for management to be there. We're not giving you one price. There's no bidder for the entire company.

We have no further questions at this time. I will turn it back over to management for closing comments. .

Thanks, everybody. Stay tuned. We hope to be back with you years out. Have a good day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.