RPT-KingSett to buy 50 pct of Scotia Plaza from Dream Office, H&R REIT -sources

Mon Jun 6, 2016 7:00am EDT
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(Repeats item from June 4 with no changes to text)

By John Tilak

TORONTO, June 4 (Reuters) - Real estate-focused private equity firm KingSett Capital is set to acquire 50 percent of Scotia Plaza, Canada's second tallest office building, from Dream Office REIT and H&R REIT, according to two sources familiar with the situation.

The potential sale comes about four years after Dream Office REIT, then called Dundee REIT, acquired two-thirds of the 2 million square-foot Scotia Plaza complex. H&R REIT bought the rest. The total sale price was about C$1.3 billion ($1.01 billion).

The sellers held discussions of interest with a range of foreign players, including Chinese firms Anbang Insurance Group Co and Fosun Group, as well as sovereign wealth fund Abu Dhabi Investment Authority, or ADIA, said the sources, who declined to be named as the matter was not public yet.

As per the deal terms, Dream Office will sell about 16.66 percent of Scotia Plaza and H&R REIT has decided to sell its entire stake, which comes to a third of the complex, the sources said. Dream Office will own the remaining half and expects to keep management control, they said.

The 68-story building in the heart of Toronto's financial district is a prominent landmark. It has been undergoing renovations in recent months and sections have been closed to facilitate the changes.

TD Bank and CBRE have been advising Dream Office on the deal.

While saying that an announcement is expected soon, the sources cautioned that a deal could still fall apart.   Continued...