H&R REIT HR.UN Q4/09 Underlying Results As Expected; Kicking Tires Again…

admin — Fri, 26 Feb 2010 15:41:08 +0000

H&R REIT (HR.UN): $16.04 – Q4/09 Underlying Results As Expected; Kicking Tires Again…
Outperform, Average Risk, Price Target: $17.50
H&R reported Q4/09 FFO/unit of $0.34, which was 5% higher than the same period last year. Q4/09 “normalized” FFO/unit of $0.36 was -10% from Q4/08’s $0.39 and in-line with our $0.36E. H&R’s traditional hallmark of stability, Q4/09 portfolio occupancy registered 99%, unchanged from 99% at Q4/08. Management has noted that intends to pursue its acquisition strategy throughout 2010 on a “very select and disciplined basis”. Citing “few opportunities in Canada to acquire high quality properties at attractive pricing”, H&R has instead noted the slow pace of recovery and the financing challenges in the U.S. commercial real estate market “may create acquisition opportunities for the REIT”. RBC CM believes the REIT’s cost of capital has improved meaningfully over the past year and we recognize that H&R has made significant progress in alleviating funding pressures related to its commitment to develop the Bow. This being said, the focal point must remain on delivering steady operating results and flawless execution upon construction of the Bow. Success on both should be drivers of a higher unit price.

TSX Commentary » H&R REIT

H&R REIT HR.UN Q4/09 Underlying Results As Expected; Kicking Tires Again…