H&R REIT Increases Distributable Income In Year 2006

H&R Real Estate Investment Trust announced today that it increased distributable income by approximately 16% in both the fourth quarter and the full year ended December 31, 2006 compared with the same periods the previous year. The increase was largely attributable to completing nearly $1 billion of accretive commercial property acquisitions, and to contractual rental escalations.

H&R increased distributable income (DI) per unit (basic) 3% and distributions per unit to unitholders 2% in the fourth quarter. Both DI and distributions per unit increased approximately 2% during the full year. During 2006, the REIT's unit price rose nearly 16% to close at $24.09.

Financial Highlights

H&R management considers distributable income to be an indicative measure in evaluating the Trust's performance. The following table, however, includes non-GAAP information that should not be construed as an alternative to net earnings or cash flows from operations and may not be comparable to similar measures presented by other issuers as there is no standardized meaning prescribed by GAAP.

H&R's rentals from income properties increased 21% from 2005 in the fourth quarter and 16% in the full year, primarily as a result of the REIT's ongoing acquisition program. Net property operating income per unit, however, remained unchanged in the fourth quarter (declined 9% in the full year) due mainly to increased amortization of deferred expenses and intangible costs.

H&R President and CEO Tom Hofstedter said, "2006 was marked by our investment of nearly $1 billion in 68 commercial properties, including quality buildings leased long-term to creditworthy tenants such as Canadian Tire and TELUS Communications. These acquisitions produced a weighted average levered return of 9.3%, and were accretive to distributable income per unit."

H&R's Consolidated Financial Statements and Management's Discussion and Analysis for the period ended December 31, 2006 will be available on the trust's website (www.hr-reit.com) and concurrently filed on SEDAR (www.sedar.com).

Operating Strategy Highlights

H&R's operating strategy is to take a disciplined approach to investing in quality commercial properties that produce sustainable and growing distributable income and attractive returns on equity for unitholders. H&R has a strong track record of leasing its properties long-term to creditworthy tenants and matching those leases with primarily long-term, fixed-rate financing. As a result, the REIT reported an exceptionally high portfolio occupancy rate at the end of the fourth quarter of 99.6%, average terms to maturity of 12.6 years for its leases and 11.1 years for its mortgages, and leases representing only 12.1% of total rentable area will expire by the end of 2011. -- www.cnxmarketlink.com