Dream Office REIT began to exit the Calgary and Edmonton real estate markets Tuesday, announcing the company has agreed to sell 12 office buildings in Alberta for approximately $200-million.
Toronto-based Dream owns 45 properties in Alberta and announced plans in August to sell all or part of the portfolio as part of a larger restructuring that will see the company pay down debt and focus on owning and operating office buildings in downtown Montreal, Toronto and Vancouver. In its most recent financial statements, Dream valued its entire Alberta portfolio at $890-million.
The 12 buildings Dream agreed to sell have a total of 1.5 million square feet of leasable space. The sale is expected to close in the first quarter of this year.
Dream did not disclose the buyer of the Alberta buildings. Sources familiar with situation said Toronto-based Slate Asset Management, a private real estate company, is in talks with Dream to buy all or part of the Alberta portfolio. A spokesperson for Slate did not return a request for comment.
Dream is expected to continue selling Alberta properties. Company management has said in part due to the downturn in the oil and gas industry, the Calgary market currently has 22 per cent more office space than corporate clients require, with inventory expected to rise by another 10 per cent as construction is completed on new buildings. Dream executives also said they were pleasantly surprised by the number of potential buyers reviewing their Edmonton and Calgary buildings.
Dream wrote down the value of its real estate portfolio by $748-million in August and in a subsequent conference call with investors, chairman Michael Cooper said the write down "in a way was an advertisement to people who might be interested in acquiring assets in Alberta," adding that the company was "pleased with the level of interest" in the portfolio.