H&R REIT (TSX:HR) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.
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Summary
H&R REIT successfully transitioned property management to Greystar as of April 1st, with positive early indicators such as increased lead volume and approved leases.
Same property net operating income from residential properties in the Sunbelt increased by 2.3% year-over-year, driven by lease-ups in Dallas but offset by higher vacancies and concessions.
Development projects in Florida are progressing well, with expected construction completion by the end of June.
The company is not planning to sell its Front Street asset until further leasing progress is made, while other asset sales are expected to close soon.
Management is optimistic about capturing savings from the Greystar transition and is considering NCIB activity following asset sales.
Full Transcript
OPERATOR
Good morning and welcome to H&R REIT 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 the IFRS as indicators of HR’s performance, liquidity, cash flows and profitability. HR’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. That 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 Hofstetter, Chief Executive Officer of H&R REIT. Please go ahead. Mr. Hofstadter.
Tom Hofstetter
Good morning everyone and thanks for joining us. Larry Froome, our CFO is not available today. Cheryl Freed and Jason Birkin 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 Land Tower Division to bring us up to date.
Emily Watson (Head of Land Tower Division)
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 1st. We are encouraged by our early post transition indicators. April lease 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 WI FI projects are progressing well. Four communities have launched and are expected to drive roughly 800,000 in revenue for 2026 with another seven 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. And across our Sunbelt portfolio, same property net operating income on a cash basis from residential properties in US dollars increased by 2.3% for the three months ending March 31, 2026 compared to the respective 2025 period. This growth was primarily driven by the lease up of landtower Westlove and Landtower Midtown both in Dallas, Texas. The increase was partially offset by a decrease in rental income from H and 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 tradeouts were negative 3.5% in Q1, a 50 basis point decrease over Q4 and 114 basis point point decrease over Q1 of 2025. New lease tradeouts were negative 14.8% and renewal lease rates increased 3.8%. Importantly, our Sun Belt resident retention remained strong at 58.3% in Q1. Turning to developments, our new Redwood projects in Florida, of which H and r has a 29.1% ownership interest, continue to progress well and remain on budget. Sunrise in Orlando received their Temporary Certificate of Occupancy this week, expecting first move ins by June. We expect landtower Bayside in Tampa, Florida to receive Temporary Certificate of Occupancy next week and also expect first move ins in June. Construction completion for both assets is expected by the end of June. Land tower currently has nine 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.
Tom Hofstetter
Thanks, Emily. Operator, you can open up the call for questions.
OPERATOR
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any. One moment please for your first question. First question comes from Jimmy Shan with RBC Capital Markets. Please go ahead.
Jimmy Shan (Equity Analyst)
Hi. Thanks. So maybe just on …
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