H&R Real Estate Investment Trust (TSX:HR.UN) is selling the iconic Calgary office tower called "The Bow" in a $1.67-billion deal.
The Bow is a two million square foot tower that once symbolized Calgary’s clout as a global energy centre. H&R REIT says the "strategic transaction”" includes the sale of The Bow and the sale of the 1.1-million-square-foot Bell office campus located in Mississauga, Ontario.
Gross proceeds from sale of the two buildings will be approximately $1.47 billion, the real estate investment trust said in a news release.
H&R REIT said it will retain 15% of net rent from the lease of energy giant Ovintiv (TSX:OVV), formerly Encana Corp, ownership of the adjacent lands, and will retain the management contracts of The Bow and Bell Campus, at a combined value of $203 million.
The transaction reduces H&R REIT’s Calgary office exposure in its portfolio from 9% to 3%. However, H&R REIT will retain an option to repurchase The Bow and its land for $735 million once Ovintiv’s lease expires in May 2038.
The sale of the two large office spaces comes amid hybrid home and office work models.
