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The Spanish billionaire behind the Zara fashion retail chain is set to pay more than $1.2-billion for the Royal Bank Plaza office complex in Toronto’s financial district, according to sources familiar with the transaction, making it the largest Canadian commercial real estate deal to date of the pandemic period.

Owners Oxford Properties and the Canada Pension Plan Investment Board put the Royal Bank Plaza up for sale last fall, when demand for commercial properties had picked up after a lull in 2020.

The sale to Amancio Ortega and his family investment firm, Pontegadea Inversiones SL, is expected to close in a few weeks, according to three sources. The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the deal.

The office complex, located across the street from Toronto’s main commuter train station, is considered prime Canadian real estate and consists of a 26-storey tower and a 40-storey building.

That represents almost 1.5 million square feet of leasable space, most of it office but some retail, including Royal Bank of Canada’s flagship branch. The bank, which has used the property as its headquarters since 1977, leases 40 per cent of the buildings and has its main trading floor there.

Up until now, the largest single-asset commercial real estate deal during the pandemic was last summer’s $482-million sale of Montreal skyscraper 1000 De La Gauchetière, according to commercial real estate services firm CBRE.

The most sought-after commercial properties have been apartments, warehouses, industrial buildings and land, not office buildings or retail spaces. The office sector temporarily fell out of favour when vacancies started to rise. But that may be changing. In the fourth quarter, the office vacancy rate in downtown Toronto dropped for the first time since the start of the pandemic, with demand from tech companies and other businesses.

When the Royal Bank Plaza deal closes, it will be the second major Toronto asset for Mr. Ortega and Pontegadea, which already owns an office and retail building in the trendy retail area of Yorkville. Some of Pontegadea’s other real estate acquisitions include Seattle offices leased to Amazon and Facebook, various properties on Oxford Street in London, and the Dana Hotel and Spa in Chicago.

Mr. Ortega ranks 11th on the Forbes billionaire list, with a net worth of US$74.2-billion. The fashion pioneer founded clothing group Inditex, which includes the Zara retail chain.

He started his career in the garment business as a delivery boy for a store that sold men’s shirts and as a tailor’s assistant in northwestern Spain. He stepped down as chairman of Inditex in 2011.

Pontegadea holds a controlling stake in Inditex as well as a portfolio of property investments. As of 2020, its property holdings were worth an estimated US$17.2-billion.

Oxford has owned the Royal Bank Plaza since 1999, when it bought RBC’s portfolio of real estate. CPPIB became a co-investor in 2005.

Oxford declined to comment on the deal.

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