Artis Real Estate Investment Trust (AX.UN-T) is continuing to shuffle its portfolio and reduce its position in Alberta, selling four additional Western Canadian office properties for about $157 million, the company announced Tuesday.
Three transactions arranged during the second quarter of 2018 have closed, Artis said, while the fourth is to close in Q3. Artis did not disclose the purchasers.
Two of the sales involve Calgary properties, while the others are in Burnaby, B.C., and Winnipeg.
The largest of the deals is for Production Court, a 297,727-square-foot, class-A office complex in Burnaby. Artis said the property sold for $100.5 million, or $338 per square foot and a capitalization rate of five per cent.
Production Court was sold in a portfolio, along with Eau Claire Place II in Calgary. Eau Claire Place II is a 139,730-square-foot, 17-storey office tower located in the downtown. Eau Claire sold for $20.5 million, a per-square-foot price of $147 at a capitalization rate of 3.3 per cent.
This transaction closed on June 27.
Birchcliff, Centrepoint properties
Also in Calgary, Artis divested 630 4th Avenue SW, a site formerly known as the Birchcliff Building. This 68,069-square-foot, five-storey, downtown Class B office was recently vacated by a major tenant who occupied approximately 90 per cent of the building.
It was sold for $9 million ($132 per square foot) in a deal which closed on June 1.
Finally, Artis and its investment partner Longboat Development Corp. have an unconditional agreement to sell the newly constructed downtown Centrepoint building in Winnipeg. The 103,446-square-foot office building is directly across from the MTS Centre arena and entertainment centre, and includes an adjacent, 406-stall parkade.
Artis’ 50 per cent interest of the sale price is $27.3 million – a price per square foot of $527 and a capitalization rate of six per cent.
The transaction is expected to close in the third quarter of this year.
Artis said its net gain on the properties (over IFRS value) is approximately $12.2 million.
Artis continues to divest, recycle capital
Artis CEO Armin Martens during a conference call in March (see related story on Artis) the trust expected to move about $300 million more in properties this year. At the time, he said Artis planned to divest a couple of additional Calgary properties in 2018 providing it could get the prices it wanted in the still struggling market.
After a very busy 2017, when Artis sold 23 properties – 11 in Alberta, comprising 2.6 million square feet and valued at over $533 million – Martens said Artis was “not done yet”.
When the process began, Artis derived almost 39 per cent of its net operating income from Alberta properties, but that has now been reduced to about 23 per cent.
Artis is a diversified Canadian real estate investment trust investing in office, retail and industrial properties. Since 2004, Artis has built a portfolio of commercial properties in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and select markets in the United States.
As of March 31, Artis’ commercial property comprises approximately 25.1 million square feet of leasable area. Artis’ property NOI by asset class was approximately 53.4 per cent office, 20.7 per cent retail and 25.9 per cent industrial.
Property NOI by geographical region was approximately 4.1 per cent in British Columbia, 23.1 per cent in Alberta, 6.3 per cent in Saskatchewan, 13.5 per cent in Manitoba, 11.9 per cent in Ontario, 8.4 per cent in Arizona, 18.2 per cent in Minnesota, 8.9 per cent in Wisconsin and 5.6 per cent in other U.S. markets.