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HomeCanadaDowntown Vancouver office towers sell in $300 million deal

Downtown Vancouver office towers sell in $300 million deal

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A pair of Canadian pension funds have reached a deal to sell two downtown Vancouver office buildings with tenants, including Inc., for about C$300 million.

Germany’s Deka Group has agreed to buy the towers at 402 Dunsmuir St. and 401 West Georgia St., according to two people familiar with the deal who asked not to be identified because the details are private.

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The Canada Pension Plan Investment Board and Oxford Properties Group Inc., the real estate arm of the pension fund for Ontario municipal workers, had put the buildings up for sale about six months ago. Spokespeople for Oxford Properties, CPPIB and Deka Group declined to comment on the sale, which has not yet closed.

The funds initially aimed to raise about $350 million for the properties, sources familiar with the sale process told Bloomberg News in June. But recently, it has been difficult to accurately price office buildings because few major properties have been traded globally, one of the reasons the sale of the Vancouver towers was so closely watched in both Canada and the United States. abroad.

High interest rates and the shift to remote work have created prolonged uncertainty about the value of those assets. Office owners have faced a rise in borrowing costs that has pressured valuations, along with a drop in demand as more employers have work-from-home policies.

While these concerns have been weighing on the outlook for office properties for some time, the severity of the office crisis was highlighted last week when banks in the United States and Japan were forced to increase their reserves against possible losses on office properties.

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Allied Properties Real Estate Investment Trust, a major owner of office buildings in cities including Toronto and Vancouver, also announced a $500 million writedown last week.

Now that the central banks of Canada and the United States are signaling that they are unlikely to raise interest rates anymore, the Vancouver deal may be the latest sign that clearer financial conditions are helping buyers and sellers agree on the price. Another Canadian owner, Dream Office Real Estate Investment Trust, announced the sale of a building in Toronto for C$135 million last month and began marketing another shortly after.

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