H&R Real Estate Investment Trust T.HR.UN

Special distribution in units?

[Ciseaux]

I got the cash dividend from the special distribution today (5 cents regular + 12 cents special). I don't see the Unit special distribution though ($0.60 per Unit). I have the same number of units. Anyone knows how this works? Thanks.

[TeamCommonSense]

Non cash special distributions ... always work like this ... you do not see the transaction on your brokerage activity listing ... BUT ... behind the scenes, the REIT issues you with new units which immediately disappear cuz they are absorbed into the pre-exisiting units. Net effects: #1 No increase in outstanding units for the REIT #2 You will see the non cash SD on your T3 slip in March

[Ciseaux]

Thanks. I own HR.UN in a registered account. So there is no tax implication for me. This morning, I still own the same number of units than I had in December (before ex-date). I also have same cost per unit. There is something I don't quite understand. How was I paid this special distribution? Maybe it takes more time for my broker to deal with it?

[TeamCommonSense]

You will not see any changes in your registered account at this point in time ... except for the cash component of the SD which was payable 15 Jan. As I wrote yesterday: "behind the scenes, the REIT issues you with new units which immediately disappear cuz they are absorbed into the pre-exisiting units." So you will always have the same number of units before/after the SD non cash

[Ciseaux]

Do you mean that the special distribution that is payable in Units ($0.60 per Unit) is worthless if we own HR.UN in a registered account?!

[TeamCommonSense]

From my perspective .... if you have HR.un in a registered account ... the cash component of the SD is good ... cuz ... well it is cash income to your RRSP ... AND ... the non cash component is IRRELEVANT ... cuz ... in an RRSP the ACB is meaningless and one should only look at the Total Return on the initial Purchase Cost of the investment in the RRSP. So ... u chose the word worthless ... but .

[jmkOttawa]

It is not a real distribution as you are imagining. Through accounting, it transfers a tax liability to the unit holder. In a registered account it is not harmful or helpful. In a non-registered account it is a pain in the butt because it is a tax bill on 60 cents of 'other income' which was not actually received, in return for a 60 cent increase in ACB which is like a credit against