It hasn’t wasted much time.
Last month, it closed on a 14-property sale to Slate Office REIT (SOT.UN-T) for $430 million. The acquisition consists of 10 office buildings, one mixed-use office complex and three retail centres totaling 2.8 million square feet of GLA.
Ten of the sold buildings are in Fortis’ home province of Newfoundland and Labrador (including the newly completed Fortis Building and Fortis Place office towers in St. John’s, the Fraser Mall in Gander and the Milbrook Mall in Corner Brook).
Other properties include the Maritime Centre in Halifax, Brunswick Square in Saint John, Kings Place in Fredericton and Blue Cross Centre in Moncton.
The office properties are approximately 89 per cent occupied, meaning there is headroom to increase net operating income if more tenants can be attracted.
Financing the deal
As part of the acquisition, Slate Office entered into a strategic co-ownership agreement with a Canadian institutional real estate fund under which the REIT acquired a 10% interest in three of the properties and the co-owner acquired a 90% interest.
The REIT’s proportionate share of the portfolio purchase price is $304 million before transaction costs, funded with proceeds from an $80-million public offering of subscription receipts of the REIT, a $35 million private placement of units of the REIT to Fortis Inc., an affiliate of the vendor, and $189 million from new acquisition credit facilities.
The REIT’s proportionate interest in the portfolio comprises 2.5 million square feet of GLA.
Fortis hotels sold
This week, Fortis also agreed to sell its entire portfolio of 22 hotel properties for $365 million to an unidentified private investor group. That transaction, involving 22 hotels in seven provinces, is expected to close in the fall.
“Fortis Inc. announced in September 2014 that it was engaging in a review of strategic options for the hotel and commercial real estate assets of Fortis Properties,” Fortis Properties president and chief executive officer Nora Duke told Property Biz Canada earlier this year. “Fortis Properties represents approximately three per cent of Fortis’ overall holdings.”