H&R REIT (HR.UN-T) has an agreement to sell one of its marquee Toronto office properties, the CORUS Quay building along the Lake Ontario waterfront, to George Brown College and Halmont Properties Corp., for $232.5 million.
The eight-storey building is located at 25 Dockside Dr., and comprises 479,437 square feet of space. Corus Entertainment leases the majority of space in the property.
“Given the considerable headwinds in the public and private real estate markets, we are very pleased to have executed this transaction,” Tom Hofstedter, H&R’s executive chairman and CEO, said in the announcement Wednesday morning. “This office sale furthers our strategic repositioning plan and moves H&R REIT closer to achieving our portfolio simplification strategy goals.
“We continue to execute our plan with discipline by transacting when we can surface fair value for our unitholders.”
The sale is expected to close in April 2024 and remains subject to customary closing conditions.
Halmont Properties Corp. is a Toronto-based private company which invests directly in real assets including commercial, forest, and residential properties.
George Brown College operates three Toronto campuses around the city’s downtown. It has an enrolment of over 30,000 full- and part-time students and a continuing education program with over 50,000 participants.
Details of the Halmont-George Brown partnership have not been released.
H&R also announced Wednesday a special distribution of $0.62 per unit, to be paid via a combination of units ($0.52 per unit) and cash ($0.10 per unit) to Unitholders of record as at Dec. 29.
H&R continues to divest non-core properties
The transaction is the latest in H&R’s previously announced strategy to simplify its portfolio, focusing on residential and industrial properties and divesting or repositioning other assets.
So far in 2023, H&R has sold 12 non-core properties totalling $432.9 million. Including 25 Dockside Drive, H&R’s 2023 properties sold, or under contract to be sold, total $665.4 million, exceeding the REIT’s original disposition target of $600 million.
H&R valued the 25 Dockside property at $225 million in its most recent financial update on Sept. 30. The property is encumbered by a $60 million mortgage with an interest rate of 4.9 per cent.
Net proceeds of approximately $168 million from the sale are expected to be used to repay debt and fund the REIT’s current developments.
The sale price represents a 5.7 per cent cap rate, H&R reports.
Of the REIT’s 20 remaining office properties, eight are being rezoned for residential or industrial developments, with expected increased density of approximately 2.7 million square feet at H&R’s ownership interest.
H&R has owned Corus Quay since 2012, when it acquired the asset for $186 million.
Completed in 2009, the property at the time was one of the most technologically advanced facilities of its kind. The development helped anchor a revitalization of Toronto’s East Bayfront area, a process that continues today with several major ongoing developments in the district.
It is located across the street from George Brown College’s downtown campus.
About H&R REIT
H&R is one of Canada’s largest REITs with total assets of approximately $11.1 billion as at Sept. 30, 2023. H&R has ownership interests in a North American portfolio comprised of residential, industrial, office and retail properties comprising over 27.1 million square feet.
H&R is continuing to execute its strategy to sell its office and retail properties as market conditions permit. The aim is to become a leading owner, operator and developer of residential and industrial properties, creating value through redevelopment and greenfield development in prime locations within Toronto, Montreal, Vancouver, and high growth U.S. sunbelt and gateway cities.
