- What H&R REIT is selling the offices at 69 Yonge Street
- Why Hillpark Capital has gone firm on an offer of $21.5m
- What next The deal is expected to close this month
H&R REIT is in the process of selling a downtown Toronto office building for $21.5m, Green Street News can reveal.
Hillpark Capital has gone firm to acquire the 91,000 sq ft Canadian Pacific Building, a Class B property at 69 Yonge Street. The deal is expected to close this month.
The valuation works out to $235/sq ft. At least one pro familiar with the 15-storey building pegged its value closer to $317/sq ft, or $29m, but said the REIT opted to take a haircut as it looks to raise capital.
The mid-rise building was completed in 1913 and H&R has owned it since 1988. It’s over 80% occupied by 12 tenants, with a weighted average lease term of more than 2.5 years. That suggests Hillpark could look to fill vacant space and roll over below-market rents to boost revenue, if it maintains the property as office space. Gross rent for currently available units is $35/sq ft.
Propel Holdings is a major tenant, occupying 38% of gross leaseable area for its headquarters. Shoppers Drug Mart occupies at-grade retail space, generating over 30% of the property’s net operating income.
In early 2024, Toronto City Council approved an official plan and zoning by-law amendment to convert the office property into 127 residential condominium units. The existing building would be conserved, and its height increased by six storeys.
The property is at King Street East in Toronto’s Financial District. It’s adjacent to King station, the 504 streetcar line, and One King West Hotel & Residence, which offers a PATH connection. It’s within 500m of Union Station.
Hillpark Capital owns, develops and manages residential and commercial real estate. Brandon Shiller is founding partner of the Montréal-based firm.
Toronto-based H&R had $10.5bn of assets as of the first quarter, across property types and provinces. Two weeks ago, the REIT led by chief executive and executive chair Thomas Hofstedter disclosed it was considering strategic alternatives after receiving an unsolicited expression of interest.
A special committee of independent trustees, formed by the Board of Trustees in February, is in discussions regarding “a number” of non-binding offers. Bidders include Blackstone and TPG, which have formed a consortium to buy the REIT’s industrial and residential assets. The Public Sector Pension Investment Board and Crestpoint Real Estate Investments, which already have a stake in H&R’s Canadian industrial assets and U.S. portfolio, are discussing joining a consortium as well, according to a report from The Globe and Mail.
