H&R REIT Shareholders Vote to Spin Off Malls Battered by Covid

(Bloomberg) -- Shareholders of H&R Real Estate Investment Trust voted to shed 70% of the company’s portfolio to focus exclusively on the apartment and warehouse assets that have done better than retail and office properties during the Covid-19 pandemic.

The plan approved Monday calls for H&R to spin off its entire portfolio of enclosed malls as a separate listed entity, and then sell off its remaining strip malls and office buildings to become a company that owns and develops nothing but apartment buildings and warehouses within five years. 

H&R REIT’s shares were down about 1% at 10:50 a.m. in Toronto. They’re up about 17% this year.

Lockdowns and the recurring need to maintain social distance throughout the pandemic have hastened the adoption of both e-commerce by shoppers and remote work by companies, crimping demand for malls and offices while increasing demand for logistics space and bigger homes. 

The Toronto-based commercial property owner’s restructuring plan is one of the most dramatic reactions to these changes in the commercial real estate world, and a tacit acknowledgment that the $3.5 billion company’s management expects they are here to stay.

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