Oxford Properties Group has sold a downtown Calgary tower in one of the largest office deals in the city this year.
Calgary-based Aspen Properties Ltd. and Hazleview Investments Inc. of Toronto announced their acquisition of the property August 5. The deal gives Aspen’s 13 properties in the Calgary and Edmonton markets.
The purchase price and other financial terms were not disclosed, but industry sources indicate that it is the city’s largest office deal this year to date. During the first quarter of the year, Altus Group reported that Calgary saw just $62 million worth of office transactions.
“We felt we were acquiring it at an extremely attractive going-in yield and basis relative to replacement cost,” said Michael Tsourounis, managing partner and co-head of real estate with Hazelview, noting that Aspen has an established track record of revitalizing and adding value to office properties. “Given Aspen’s track record of executing on some pretty great value-add and repositioning strategies … we feel that asset will continue to be extremely competitive in the landscape downtown for Class A space.”
Aspen’s repositioning of properties includes addressing Calgary’s persistently high office vacancies. It was one of three companies that sought municipal approval to convert office towers to residential use earlier this year. Its Palliser One tower at 125 9 Avenue SE received a share of $31 million the Downtown Calgary Development Incentive Program awarded to three downtown office conversion projects in April.
Millennium Tower has thrived under Oxford’s management, offering 436,304 square feet of space on 23 floors. It has attracted a diverse portfolio of tenants from international software firm SAP to the Black Diamond Group, an Alberta-based workforce housing provider.
Tsourounis said there are no plans to convert the office tower another use. However, the new owners are looking to refresh the interior spaces and amenities in the building, which was completed in 2000.
“Oxford was a great landlord to the property, but we feel it could probably use a little modernization and upgrade to the aesthetics,” he said.
Oxford, for its part, divested itself of the tower as part of its ongoing adjustment of its portfolio.
“The sale of Millennium Tower forms part of a long-term process of achieving greater levels of diversification within our real estate portfolio,” the company told Western Investor, noting that Calgary is just one of several cities where it has recently changed up its commercial portfolio.
“Over the past three years, Oxford has strategically sold positions in high quality, well-leased commercial real estate assets including office buildings across global markets such as Toronto, Vancouver, Montreal, New York, London, Paris, Sydney and now Calgary,” it said.
Despite gathering economic concerns, Hazelview continues to scout opportunities in Western Canada.
“We continue to like the Alberta market. We feel there’s strong growth in the province as we see rebounding commodity prices,” he said.