In 2007, Dundee REIT completed Canada’s largest ever commercial real estate portfolio sale. Now, four years later, it has secured the largest office portfolio ever acquired by a Canadian REIT, by reaching an agreement with affiliates of Blackstone Real Estate Advisors LP and Slate Properties Inc. on a portfolio of 29 office properties in Toronto, Ottawa, Edmonton and Calgary at a purchase price of $831.8 million. As part of the transaction, Dundee REIT has entered into agreements to direct five of these assets to third parties for proceeds of $142.0 million. The 24 office properties ultimately being acquired by the REIT total $689.8 million (excluding transaction costs). Closing is expected to take place on August 15, 2011.
The 24 assets total 2.7 million square feet and are generally located in close proximity to public transit and a wide range of other amenities. The current average occupancy rate is 93 per cent and the average lease term is 3.9 years. Average tenant size is about 9,500 square feet, or very similar to that in the REIT’s existing office portfolio.
“We are buying this portfolio at a 7.0 per cent cap rate and, with financing available at 4.4 per cent, this will be our second highly accretive portfolio transaction of 2011,” said Michael Cooper, CEO. “With yet another large accretive transaction, our adjusted funds from operations will grow even faster in 2012 than in 2011.” To date in 2011, Dundee REIT has acquired $826 million of properties, primarily office buildings located in downtown core markets. Most recently, the REIT acquired 700 de la Gauchetière, a 28-storey, 1.0 million square foot Class A office building located in the heart of downtown Montréal.