Jul. 20, 2011 (Canada NewsWire Group) --
TORONTO, July 20, 2011 /CNW/ - Today, the Department of Finance announced proposed amendments to the provisions of the Income Tax Act concerning the income tax treatment of specified investment flow-through entities ("SIFTs"), real estate trusts ("REITs") and publicly-traded corporations. The proposed amendments include changes which impact publicly-traded stapled securities of SIFTs, REITs and corporations. The proposals include amendments which will deny a deduction for payments made by another entity to a REIT, or to a subsidiary of a REIT.
The stapled unit structure of H&R Real Estate Investment Trust ("H&R REIT") and H&R Finance Trust (collectively, "H&R") (TSX: HR.UN; HR.DB; HR.DB.B; HR.DB.C; HR.DB.D) does not involve the kinds of payments that are targeted by the proposed amendments. In particular, H&R REIT does not receive interest or other income from H&R Finance Trust. H&R Finance Trust only receives interest income from a U.S. corporation which is a wholly-owned subsidiary of H&R REIT. Based on the information available in today's Department of Finance press release, H&R has concluded that the amendments will not affect their stapled unit structure. Detailed draft legislation was not released by the government today, but will be reviewed by H&R as soon as it is released.
About H&R REIT and H&R Finance Trust
H&R REIT is an open-ended real estate investment trust, which owns a
North American portfolio of 37 office, 121 industrial and 131 retail
properties comprising over 40 million square feet, with a net book
value of approximately $5 billion. The foundation of H&R REIT's success
since inception in 1996 has been a disciplined strategy that leads to
consistent and profitable growth. H&R REIT leases its properties long
term to creditworthy tenants and strives to match those leases with
primarily long-term, fixed-rate financing.
H&R Finance Trust is an unincorporated investment trust, which primarily invests in notes issued by a U.S. corporation which is a subsidiary of H&R REIT. The current note receivable is U.S. $130.9 million. In 2008, H&R REIT completed an internal reorganization which resulted in each issued and outstanding H&R REIT unit trading together with a unit of H&R Finance Trust as a "stapled unit" on the Toronto Stock Exchange.
Forward-looking Statements
Certain information in this news release contains forward-looking
information within the meaning of applicable securities laws (also
known as forward-looking statements) including, among others,
statements relating to the objectives of H&R REIT and H&R Finance
Trust, strategies to achieve those objectives, H&R's beliefs, plans,
estimates, and intentions, and similar statements concerning
anticipated future events, results, circumstances, performance or
expectations that are not historical facts including, in particular,
H&R REIT's expectation regarding future changes in
legislation. Forward-looking statements generally can be identified by
words such as "outlook", "objective", "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "should", "plans",
"project", "budget" or "continue" or similar expressions suggesting
future outcomes or events. Such forward-looking statements reflect
H&R's current beliefs and are based on information currently available
to management. These statements are not guarantees of future
performance and are based on H&R's estimates and assumptions that are
subject to risk and uncertainties, including those discussed in H&R's
materials filed with the Canadian securities regulatory authorities
from time to time, which could cause the actual results and performance
of H&R to differ materially from the forward-looking statements
contained in this news release. Those risks and uncertainties include,
among other things, risks related to: prices and market value of
securities of H&R; availability of cash for distributions; development
and financing relating to The Bow development; restrictions pursuant to the terms of indebtedness;
liquidity; credit risk and tenant concentration; interest rate and
other debt related risk; tax risk; ability to access capital markets;
dilution; lease rollover risk; construction risks; currency risk;
unitholder liability; co-ownership interest in properties; competition
for real property investments; environmental matters; reliance on one
corporation for management of substantially all H&R REIT's properties;
and changes in legislation and indebtedness of H&R. Material factors or
assumptions that were applied in drawing a conclusion or making an
estimate set out in the forward-looking statements include that the
general economy is stable; local real estate conditions are stable;
interest rates are relatively stable; and equity and debt markets
continue to provide access to capital. H&R cautions that this list of
factors is not exhaustive. Although the forward-looking statements
contained in this news release are based upon what H&R believes are
reasonable assumptions, there can be no assurance that actual results
will be consistent with these forward-looking statements. All
forward-looking statements in this news release are qualified by these
cautionary statements. These forward-looking statements are made as of
today, and H&R, except as required by applicable law, assumes no
obligation to update or revise them to reflect new information or the
occurrence of future events or circumstances.
Additional information regarding H&R REIT and H&R Finance Trust is available at www.hr-reit.com and on www.sedar.com.
Larry Froom, Chief Financial Officer, H&R REIT, 416-635-7520, or e-mail info@hr-reit.com