(Reuters) - Dundee REIT (D_u.TO), Canada’s biggest office space supplier, is looking to sell its industrial properties in the next 18 months to focus on growing its core business, its chief executive said.
Industrial properties, on a square footage basis, contributed about 8 percent to the company’s total revenue of C$441.3 million last year.
“The strength of the economy has surprised people,” CEO Michael Cooper told Reuters in an interview. “Most of the tenants need more space.”
The company, whose tenants include the Government of Canada, Telus Corp (T.TO), Enbridge Pipelines Inc ENBEP.UL and Bell Canada (BCE.TO), aims to become an all-office real estate investment trust in 12-18 months, Cooper said on Thursday.
Dundee owns 22.5 million square feet of office space across 175 properties and 5.7 million square feet of industrial space across 74 properties.
Dundee will buy more assets than sell in the rest of the year, said Cooper, who holds a law degree from the University of Western Ontario.
The REIT last month partnered with H&R Real Estate Investment Trust HR_u.TO to buy the landmark Scotiabank Plaza in Toronto for C$1.27 billion, the highest price paid for an office building in Canada.
Dundee, which last year bought 24 office properties from Blackstone Group LP (BX.N) for about C$832 million, has already spent about C2.5 billion in acquisitions this year.
“What has been very good in this real estate cycle is that there has been very little new supply and there has been very positive momentum from absorption of office space in 2010 and 2011,” said Andrew Moffs, president and portfolio manager of SRE Securities Canada.
“So that bodes very well for (Dundee‘s) growth in the future.”
Cooper, who loves to go paddle boarding, sailing and snowboarding with his family, founded Dundee Realty Corp in 1996, which was restructured into Dundee REIT in 2003.
Units of the company, which has a market value of C$3.67 billion, have gained 18 percent in the last one year, outperforming the 10 percent rise in the broader S&P/TSX REIT INDEX .GTSX404020.
Reporting by Ankur Banerjee and Shounak Dasgupta in Bangalore; Editing by Saumyadeb Chakrabarty