TORONTO—Canadian REIT H&R Real Estate InvestmentTrust said Wednesday it had forged a strategic alliancewith the Public Sector Pension Investment Boardand Crestpoint Real Estate Investments Ltd. byselling a 50% interest to a portfolio of Canadianindustrial properties and a 49.5% stake in a USportfolio. Totaling 19.5 million square feet and 101 propertiesacross eight Canadian provinces and nine US states, the portfoliostakes will be sold for a total purchase price of about C$731million, or about US$644 million, with the US portfolio comprisingUS$150 million of that total.

In a regulatory filing, H&R says the sale encompasses theentirety of its industrial portfolio with the exception of aboutthree million square feet of Canadian industrial space across eightproperties and one 50,569-square-foot warehouse in Las Vegas, whichis currently vacant. It's expecting to realize C$390 million fromthe sale, reducing its rate of debt to total assets from 47.8% atSept. 30 to 45.7%.

The sale is expected to close in two tranches, one later thismonth and the second in February 2015. Under terms of theagreement, PSP Investments and Crestpoint will have a 90-day optionafter the second closing to purchase 50% of H&R's currentlyheld industrial land, totaling 1,465 acres. If the twoorganizations decline to buy the land, they will continue to havethe option of taking a 50% stake in any industrial buildingconstructed on the land, and will also have the right of firstrefusal for three years on future industrial parcel acquisitionsH&R intends to make.