Ontario pension to buy Toronto convention complex

The real estate arm of one of Canada’s largest pension funds will purchase a full city block, comprising a convention centre, office tower and hotel, in downtown Toronto from the Canadian government.

Oxford Properties Group, the real estate arm of the C$53 billion Ontario Municipal Employees Retirement System (OMERS), is finalizing its acquisition of the Metro Toronto Convention Centre complex from Canada Lands, an arm’s-length federal agency. Terms of the transaction, which is slated to close in mid-September, were not disclosed, but a source familiar with the deal said the property would trade for close to C$240 million ($243 million; €169 million).

Covering an entire city block, the 7.6-acre mixed-use development includes the 260,000-square-foot convention centre, a 265,000-square-foot Class B office tower located at 277 Front Street that is 99 percent leased, a 538-room InterContinental Hotel and a 1,200-space parking facility.

“The complex represents a terrific long-term investment for OMERS that is in line with Oxford's domestic investment strategy and is a great addition to our portfolio,” said Blake Hutcheson, president and chief executive of Oxford Properties, in a statement. “The complex is a sizable, well-located mixed-use asset with attractive risk-adjusted income returns.”

The acquisition, which will be made as a direct investment by OMERS, is strategic because of the complex’s proximity to two other office buildings owned by Oxford—315 Front Street and 325 Front Street, Michael Kitt, Oxford’s executive vice president for Canada, told PERE.  With the purchase of the complex, OMERS effectively will control an 11-acre site in Canada’s largest city, and “that allows for a number of future potential opportunities,” including development, renovations or tenant relocations, he said.

Canada Lands put the property on the market in April, on the basis of current valuations. “Canada Lands’ sale of the complex is in line with our company's ongoing objective of optimising the value of selected assets originally belonging to the Government of Canada,” said Mark Laroche, the company’s president and CEO.

Oxford, one of Toronto’s largest landlords, owns 10 million square feet in the city’s downtown area, including 123 Front Street, 1 University Avenue, MetroCentre, Royal Bank Plaza and TD Canada Trust Tower.