H&R REIT Increases Distributable Income 18% in Third Quarter 2005

Toronto, Ontario, November 8, 2005 - H&R Real Estate Investment Trust (TSX: HR.UN) announced today that its total distributable income increased 18% in the three months ended September 30, 2005 compared to the same period last year.

Financial Highlights
The following unaudited results are reported in accordance with Canadian Generally Accepted Accounting Principles.

The information above represents non-GAAP information, which should not be construed as an alternative to net earnings and may not be comparable to similar measures presented by other issuers. These amounts exclude the impacts of changes in accounting policies recorded during 2004 and 2005 and of capital gains/losses related to the disposition of non-core properties.

The following results are reported in accordance with Canadian Generally Accep

H&R's rental revenue increased 23% from 2004 in both the third quarter and year to date, mainly as a result of the REIT's ongoing acquisition program. Net earnings, however, declined 2% in the third quarter (7% year to date) due mainly to increased amortization of deferred items arising from mandated accounting policy changes.

H&R's Consolidated Financial Statements and Management's Discussion and Analysis for the third quarter ended September 30, 2005 will be available on the trust's website (www.hr-reit.com) and concurrently filed on SEDAR (www.sedar.com).

H&R President and CEO Tom Hofstedter said, "In the third quarter, we completed the acquisition of six properties in Canada and two in the United States, increased our overall portfolio occupancy rate to 99.6%, and negotiated a $169 million acquisition in the US which closed early in the fourth quarter. We are currently evaluating other potential acquisitions with a gross value of over $130 million, but we expect to spend less buying properties in 2006 than this year due to a more limited supply of accretive acquisition opportunities in North American real estate markets.

Operating Strategy
H&R's operating strategy is to use a disciplined approach to investing in quality commercial properties and managing them in order to produce sustainable and growing distributable income that maximizes return on equity for unitholders. H&R leases its properties to creditworthy tenants through long-term leases matched with primarily long-term, fixed-rate financing. As a result, the REIT reported an industry-leading portfolio occupancy rate at the end of the third quarter 2005 of 99.6%, average terms to maturity of 12.4 years for its leases and 11.5 years for its mortgages, and only 18% of leases maturing up to the end of 2010.
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Capital Transaction Highlights
During the third quarter 2005, H&R completed the following property acquisitions:

• A 108,500 square foot (sq.ft.) retail store in Akron, Ohio for $15.6 million,
• Two office properties comprising 124,700 sq.ft. in Sydney, Nova Scotia for $24.8 million,
• Two single-tenant retail properties comprising 209,700 sq.ft. in Winnipeg, Manitoba for $32.7 million,
• A 314,000 sq.ft. retail and entertainment complex in Richmond, B.C. for approximately $83 million,
• A 25,300 sq.ft. retail property in Eganville, Ontario for $3.6 million, and
•  A 119,600 sq.ft. retail store in Cape Coral, Florida for $20.7 million.

The REIT also sold an industrial building of 184,300 sq.ft. in the Toronto area, generating a capital gain of $2.2 million.

At the end of the third quarter 2005, H&R had ratios of 63.3% for total debt to gross book value, and 52.8% for non-recourse debt to total debt.

Subsequent Events
During October 2005, H&R completed the acquisition of a 114,000 sq.ft. industrial project in Etobicoke, Ontario at a purchase price of $11.5 million.

As previously announced on October 31, 2005, H&R completed a bought-deal public offering of 7,675,000 trust units at a price of $19.55/unit, generating gross proceeds of approximately $150 million, which will be used partially to fund the acquisition described as follows.

On November 2, 2005, H&R completed the previously announced $169 million acquisition of three industrial distribution centres comprising 2.2 million sq.ft. The properties are strategically located in the suburbs of Chicago, Atlanta and Dallas, near major inter-state highways and rail lines in three of the United States' five most active distribution hubs. The properties are leased for an average term to maturity of 12 years. The investment grade tenant is Nestlé USA (a subsidiary of Nestlé S.A.). H&R will assume existing financing of $100 million, on a non-recourse basis, due in February 2012.

Monthly Distributions
H&R also announced today that its payment of distributable cash will be $0.1087 per unit (representing $1.3044 on an annualized basis) and will be made on December 30, 2005 to unitholders of record December 19, 2005.

ABOUT H&R REIT
H&R REIT is a TSX-listed, open-ended real estate investment trust, which owns a North American portfolio of 34 office, 106 industrial and 88 retail properties comprising 35 million square feet, with a net book value of $3.7 billion. The foundation of H&R's success since 1996 is a disciplined strategy that leads to consistent and profitable growth.

H&R REIT has a distribution reinvestment plan for its unitholders, which allows participants to reinvest their monthly cash distributions in additional H&R units at an effective discount of 3%. Beneficial unitholders who would like to enroll in the plan should contact the nominee (stockbroker, bank, trust company or investment banker) with whom their units are registered.

This document may contain forward-looking statements that are based on the REIT's expectations regarding its business or economic and real estate environments. These statements are not guarantees of future performance, and involve risks and uncertainties that are described in the REIT's most recent Annual Report, Annual Information Form and other publicly available documents, which are accessible at www.sedar.com. Actual outcomes and results may differ materially from those expressed in these forward-looking statements, and readers are cautioned not to place undue reliance on them. Statements speak as of the date on which they are made, and the REIT undertakes no obligation to update them publicly.

Additional corporate information regarding H&R REIT is available at www.hr-reit.com. For more information, please call Eric Cohen, Chief Financial Officer, 416-635-7520, or e-mail info@hr-reit.com.
 

SEDAR #: 00002857

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.