Dream Office REIT is selling a portfolio of office properties for $1.7 billion to KingSett Capital including its 50 per cent stake in Scotia Plaza to co-owners KingSett and Alberta Investment Management Corporation.
The real estate investment trust plans to use some of the money to buy back and cancel $440 million of outstanding units.
Dream is also reinvesting in its business and revising its annual distribution from $1.50 to $1 per unit.
The Scotia Plaza transaction is expected to close in the third quarter of 2017. The building recently underwent a major revitalization, with a lobby upgrade, LEED lighting retrofit and elevator modernization.
“We feel now is the opportune time for us to sell our interest in a much improved Scotia Plaza at a profit and move on to concentrate our efforts on other assets where we can use our expertise to increase value,” said Dream Office REIT CEO Jane Gavan. “We appreciate that our partner in the asset has recognized the work done on Scotia Plaza and the value that was created.”
With the new sales, Dream Office REIT will have sold or have under contract $3.2 billion worth in assets. The value of its income properties portfolio will drop from $6.1 billion from 18 months ago to approximately $2.9 billion.
Of the $2.9 billion of income properties that Dream Office REIT will own, assuming all sales are completed, about $1.5 billion are in downtown Toronto, $200 million are in Mississauga and North York, $300 million are in Calgary, and $350 million are in Montreal and Ottawa.
Photo of Scotia Plaza lobby courtesy of Dream Office REIT