Hudson Pacific Properties says it has purchased downtown Vancouver’s Bentall Centre office complex in a joint venture with an affiliate of Blackstone Property Partners (BX-N). China’s Anbang Insurance Group owned the four-building, 1.45-million-square-foot complex since 2016.
The deal marks L.A.-based Hudson Pacific’s (HPP-N) entrance to the Vancouver market, the company said in a release on Wednesday.
Hudson Pacific will own 20 per cent of the joint venture as the operating partner, while Blackstone will own 80 per cent and serve as the managing partner. The deal is expected to close in the second quarter of this year.
Anbang bought Bentall Centre in 2016 for a reported $1.06 billion. Its ownership of the complex has been in a dubious state since the Chinese government took over the Beijing-based company and said it would divest billions of the company’s holdings amid corruption allegations and the jailing of its former chairman, according to reporting by Postmedia and other Canadian media.
Hudson Pacific “closely tracking” Vancouver
Vancouver’s growing concentration of tech and media companies, high quality of life, and favourable immigration policies, made the city a natural market for expansion of Hudson Pacific’s portfolio, the company’s CEO and chairman Victor Coleman told RENX in an email.
“Bentall Centre is one of the city’s preeminent office and retail properties and a landmark of downtown Vancouver,” he said. “The acquisition will provide us with immediate scale in the city’s financial core, as well as the opportunity to create substantial value through Hudson Pacific’s tailored repositioning strategy, and the eventual development of additional premier office space.”
Hudson Pacific’s strategy is to focus on West Coast markets led by tech, media and entertainment industries: “We’ve been closely tracking the Vancouver market for some time, and we see numerous demand drivers similar to those in our existing core markets of L.A., the Bay Area, and Seattle,” Coleman said.
Hudson Pacific plans to be the long-term owner and operator of Bentall Centre. “We’re engaged and invested in the success of this asset, and of the city and community of Vancouver.”
For that purpose, Hudson Pacific will be opening a local office in Vancouver, he said.
Blackstone enters Vancouver office market
Nadeem Meghji, head of real estate Americas at Blackstone, said the deal also marks its entrance to the Vancouver office market.
“This transaction represents a continuation of our global strategy of acquiring high-quality, well-located office buildings in high-growth, innovation cities around the world,” he said. “(We) plan to own and invest in this property for the long term. We are also excited to again work with Hudson Pacific and its top-tier team.”
Bentall Centre includes four class-A office towers called Bentall I-IV, which total 1.3 million square feet. The complex also includes 140,000 square feet street-grade and concourse level retail space.
Office space is 97 per cent leased
The office space is 97 per cent leased, with current major tenants including Bank of Montreal, Deloitte Management Services, WeWork, CIBC World Markets, and Absolute Software.
The buyers said they have a longstanding relationship and have completed four major deals in recent years, including Hudson Pacific’s $3.5-billion purchase of the former-Equity Office Properties San Francisco Peninsula and Silicon Valley office portfolio in 2015.
The joint venture says it plans to fully renovate Bentall’s retail promenade while updating the indoor and outdoor common areas of the office towers.
“The purchase also affords the ability to build by-right another office tower, one of the few remaining large-scale office development opportunities in Vancouver’s downtown core,” Hudson Pacific said in its release.
L.A.-based Hudson Pacific Properties is a real estate investment trust which owns and operates more than 17 million square feet of office and studio properties. Its anchor tenants include Netflix, Google, Square, Uber, NFL Enterprises and others.
Jim Szabo, CBRE‘s vice-chairman of capital markets, was the broker of record on the transaction, RENX has confirmed. CBRE declined to comment on the deal.