Allied Properties REIT has completed the purchase of a majority interest in a Vancouver office development as part of a two-property deal.

In the other transaction, the REIT closed on the upsizing of its stake in a massive Toronto mixed-use office project. Both deals totalled $234.3 million in equity and cash.

Toronto-based Allied announced the completions in a news release. In both cases, Vancouver-based Westbank was the seller and a debtor to Allied.

The two properties have a total valuation of $920.7 million.

Allied now holds undivided 90% and 95% stakes, respectively, in 400 West Georgia Street in downtown Vancouver and 19 Duncan Street in Toronto. Through the divestments, Westbank will pay off a secured $198-million mezzanine development loan tied to the Vancouver property.

The deals could have a ripple effect in Toronto and Montreal. Allied previously announced that it plans to divest other “less strategic” properties in those markets for up to $200 million to alleviate short-term debt and cash-flow pressures resulting from the acquisitions.

Allied acquired its stake in the 24-storey Vancouver development for $130.5 million of equity. The 90% stake is based on a total property value of $395 million.

Allied expanded its interest in the 57-floor Toronto asset for $67.5 million in equity, which will cover the remainder of the $198-million mezzanine loan, and $36.3 million in cash. The 95% stake is calculated according to a total $527.5-million property valuation.

Allied and Westbank previously held equal ownership stakes in the Toronto property. The cash payment is being funded in part by the reorganization of the ownership of the iconic Telus Sky mixed-use tower in downtown Calgary.

The balance of the cash payment will be funded through Allied’s planned divestments of the less strategic Toronto and Montreal assets.

Allied and Westbank, along with Telus, currently own Telus Sky equally. The REIT and Westbank are in the process of reorganizing their stakes to become equal owners of the rental-residential component. Telus is slated to control the commercial portion.

Allied was motivated to pursue the Vancouver and Toronto acquisitions after receiving unsolicited offers on the yet-to-be-sold Ontario and Quebec properties. The offers came while Allied was completing the sale of its UDC data-centre portfolio in downtown Toronto to the Canadian subsidiary of Japan’s KDDI in 2023 for $1.35 billion.

Allied expects the Telus Sky ownership reorganization to be completed in the second quarter of 2024.

Pictured (second from left): 400 West Georgia Street in Vancouver

Image: Westbank