Calgary's iconic Bow Tower sold to Chicago firm

Calgary, Canada

CANADIAN real estate company H&R Real Investment Trust has sold Calgary's iconic Bow Tower, cutting its exposure to the office market in the capital of the country's oil industry.

The sale is part of a larger deal that includes a campus outside Toronto used by Canadian telecommunications firm BCE.

The two transactions together are worth C$1.67 billion (S$1.8 billion), the real estate firm said in a statement on Tuesday.

One of Western Canada's tallest buildings, designs for the crescent-shaped Bow were unveiled in 2006 as Calgary was enjoying an economic renaissance from the development of Alberta's oil sands deposits. By the time the tower officially opened in 2013, that boom was nearly over - crude prices crashed in 2014.

The investment has been a difficult one for H&R, which is one of Canada's worst-performing Reits over the past decade.

The vacancy rate in downtown Calgary office buildings rose to a record 32.7 per cent at the end of June, more than double the national average and more than three times the rate for downtown Toronto, according to data from commercial brokerage CBRE.

H&R will retain a 15 per cent stake in the lease of the Bow's major tenant, energy company Ovintiv, as well as management contracts for both office complexes.

The buyer is Chicago-based private equity firm Oak Street Real Estate Capital, according to the release.

"Today's announcement is evidence of our commitment to our strategic repositioning and is a critical step forward on our path to achieving a more simplified structure," said Thomas Hofstedter, H&R's chief executive officer, in the release. BLOOMBERG