The sale by H&R also includes the Bell Office campus in Ontario and a leasing deal with Deutsche Bank
One of the tallest buildings in Western Canada has been sold to a Chicago-based private equity firm as part of a $1.67 billion transaction.
The 238 metre Bow Tower in Calgary is part of an agreement announced by H&R REIT which also includes the Bell office campus in Mississauga, ON.
The buyer is Oak Street Real Estate Capital, and the deal reduces H&R’s exposure to the office market while retaining income from a share of the lease agreement for Bow’s major tenant, the energy firm Ovintiv.
H&R will effectively retain 15% of net rent from the Ovintiv Lease, ownership of the adjacent lands and will retain the management contracts on the Bow and Bell Campus, together valued at approximately $203 million.
The transaction reduces H&R’s Calgary office exposure from 9% to 3% on a fair value basis.
“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”, said Thomas Hofstedter, President & CEO of H&R. “We appreciate the patience and support of our unitholders as we continue to pursue opportunities to further enhance the value of our units.”
H&R retains an option to repurchase 100% ownership interest in the land and building of the Bow for $368 per sq. ft., being 60% of the total Bow transaction value.
