H&R REIT sells Bow, Bell campus buildings, reducing exposure to Calgary market
Vacancy rates in Calgary are soaring and oil and gas producers are continuing to sell off assets.
H&R Real Estate Investment Trust says it is selling two of its properties, including the Bow tower in Calgary as it tries to limit its office exposure in the city.
The REIT says it is selling the Bow building and land, partial future rent from a lease with Ovintiv Inc., and a Bell office campus in Mississauga, Ont. to Oak Street Real Estate Capital for combined gross proceeds of about $1.05 billion
It says it is also selling an effective 45 per cent stake in future rent from gas producer Ovintiv Inc. to Deutsche Bank Credit Solutions and Direct Lending for gross proceeds of $418 million.
The REIT says the deal will reduce its Calgary office exposure from nine per cent to three per cent and reduce Ovintiv Inc.’s representation in its rental portfolio from 12 per cent to two per cent.
The REIT says it will retain 15 per cent of net rent from a lease held by Ovintiv, previously known as Encana Corp., and will hold onto the Bow and Bell campus’ management contracts, which it valued at roughly $203 million.
The deal is not expected to close until the third or fourth quarter of this year and comes as vacancy rates in Calgary are soaring and oil and gas producers are continuing to sell off assets.
H&R’s president and chief executive Thomas Hofstedter says in a release, “Today’s announcement is evidence of our commitment to our strategic repositioning and is a critical step forward on our path to achieving a more simplified structure.”