H&R acquires Corus Quay
H&R REIT purchased Corus Quay, a 485,000 square foot LEED Gold office property in downtown Toronto, on March 9 for $186 million before closing costs.
Completed in 2009, the eight-storey property is one of the most ambitious and technologically sophisticated facilities of its kind. The property is situated directly on the City’s waterfront and only minutes from the financial core. Corus Quay is the anchor project in the revitalization of downtown Toronto’s East Bayfront area. The new 3,500 student George Brown Campus is directly adjacent to the property.
Corus Quay’s principal tenant is Corus Entertainment Inc., which has a market capitalization of approximately $1.8 billion. The Corus lease has a remaining term of 20 years. The REIT has secured a $60 million, interest only, non-recourse mortgage for a term of 20 years. The interest rate will be at a spread of 2.30% over the 20-year Government of Canada bond. The REIT has also secured a $37 million non-recourse, first mortgage on this property on a pari passu basis for a term and rate to be determined. Funding of these mortgages is expected to occur before the end of the first quarter in 2012.
Tom Hofstedter, president and CEO of the REIT stated: “This acquisition presents a truly rare opportunity to acquire a recently completed, best in class, LEED Gold office property in downtown Toronto with a long-term, triple-net lease secured by an investment grade tenant at a 6.4% capitalization rate, with contracted rental escalations throughout the term.”