Artis Real Estate Investment Trust (AX-UN-T) says it has buyers for two of its Ontario office buildings as the trust continues a billion-dollar disposition of assets to recycle capital. The sales of the two properties, in Toronto and Ottawa, will net $161 million.
In Toronto, Artis will sell 415 Yonge St., a 192,036-square-foot office building for $124 million. The sale of the building, which Artis had publicly said was on the market during its Q2 financial call earlier this year, is expected to close later this month. The sale price represents a capitalization rate of 3.71 per cent.
The 19-storey class-B structure was built in 1974.
Artis also has an unconditional agreement to sell 495 Richmond Rd., a 106,195-square-foot office building in Ottawa, for $39 million. The sale of the seven-storey building just west of the city’s downtown represents a capitalization rate of 6.28 per cent. It is expected to close in November 2019.
The buyers have not been disclosed.
These two sales follow on the heels of another recent deal to divest the GSA Professional Office Building, a 210,202-square-foot, single-tenant office building near Phoenix. That building sold in July for $120.7 million, representing a capitalization rate of 5.81 per cent.
Buildings Artis has divested
In November 2018, Artis announced its intention to sell between $800 million to a billion dollars worth of non-core assets during the following three years. As part of that initiative, Artis has already sold:
* Centrepoint in Winnipeg, a 51,723-square-foot office building, for $21.25 million;
* 169 Inverness Dr., West I & II in Denver, office properties of 118,518 square feet, for $36.1 million;
* Reenders Square 1 in Winnipeg, a 65,713-square-foot retail asset, for $20.6 million;
* The Britannia Building I in Calgary, a 133,897-square-foot office property, for $10.65 million;
* A portfolio of office and retail buildings in Nanaimo, B.C., for $37 million;
* 1700 Broadway in Denver, a 394,151-square-foot office building, for $104.3 million.
The nine sales have resulted in almost $520 million in revenues for Artis. The trust said in a release Wednesday morning the net gain over the IFRS value for the properties is $20.9 million.
Artis continues stock buybacks
In addition, Artis said it has approximately $310 million of properties under conditional letters of intent or agreements to sell.
Artis has also been actively buying back shares. During August, the trust says it made the following acquisitions:
* 1,839,176 trust units at a weighted-average price of $12.22;
* 3,300 Series A preferred units at a weighted-average price of $22.13; and
* 35,700 Series E preferred units at a weighted-average price of $20.74.
Since November 2018, Artis has bought back 14,740,396 trust units at a weighted-average price of $10.70; 62,600 Series A preferred units at a weighted-average price of $21.56; 142,800 Series E preferred units at a weighted-average price of $20.64; and 61,500 Series G preferred units at a weighted-average price of $21.32.
On July 31, 2019, Artis redeemed all 3,138,500 outstanding Series G preferred units. As of that date, there are 139,321,150 trust units, 3,387,900 Series A preferred units, 3,861,400 Series E preferred units, and five million Series I preferred units outstanding.
Artis is a diversified Canadian real estate investment trust investing in office, retail and industrial properties.
Since 2004, it has built a portfolio of commercial properties in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and select markets in the United States.
As of June 30, 2019, Artis’ commercial property comprises approximately 24.9 million square feet of leasable area.
During the three months ended June 30, 2019, property NOI by asset class (at Artis’s share), was approximately 52.2 per cent office, 19.5 per cent retail and 28.3 per cent industrial.
Property NOI by geographical region, was approximately 2.9 per cent in British Columbia, 18.9 per cent in Alberta, 6.4 per cent in Saskatchewan, 12.9 per cent in Manitoba, 11.4 per cent in Ontario, 11.3 per cent in Arizona, 19.9 per cent in Minnesota, 8.8 per cent in Wisconsin and 7.5 per cent in other U.S. states.