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Allied to buy Westbank’s stakes in Toronto, Vancouver towers

Allied Properties Real Estate Investment Trust has recently reached an agreement to acquire ownership stakes in prominent towers located in Toronto and Vancouver from the renowned Canadian property developer Westbank Corp. The move marks a strategic expansion for Allied, adding significant urban properties to its portfolio.

The transaction involves the acquisition of two key towers – Vancouver's 400 West Georgia and Toronto's 19 Duncan. According to the statement released on Monday, the deal values the Vancouver tower at $395 million and the Toronto property at $525.7 million. Notably, the Vancouver tower was both developed and owned by Westbank, while the Toronto building was a joint venture equally co-owned by developer Westbank and Allied.

This acquisition plays a pivotal role in bolstering Allied's urban portfolio. The company specializes in repurposing aging downtown industrial and warehouse spaces, catering to tenants in various industries, including the technology sector. In contrast, Westbank has gained recognition in Vancouver as one of the most prominent property developers, known for its ambitious projects that occasionally spark diverse opinions.

To facilitate the deal, Allied intends to convert $130.5 million of a $198 million secured mezzanine loan to Westbank into equity. This move will grant Allied a 90% ownership stake in the Vancouver-based 400 West Georgia tower. Additionally, Allied will acquire a 95% interest in the Toronto-based 19 Duncan by converting the remainder of the loan to equity and making a $36.3 million cash payment to Westbank.

Funding for Allied's payments will be sourced, in part, from property sales in Montreal and a previously announced restructuring of the Telus Sky Calgary tower, a property co-owned by Allied and Westbank. Allied has also revealed plans to sell properties deemed less strategically important, aiming to generate proceeds of up to $200 million over the next two years.

Westbank has described 19 Duncan, set to be completed this year, as a crucial element in the expansion of its practice in Toronto. The Vancouver tower spans approximately 345,000 square feet of office space, with 82% leased to notable companies such as Deloitte and Apple Inc., along with 5,525 square feet of retail space. In comparison, Toronto's 19 Duncan encompasses over 154,000 square feet of fully leased office space occupied by Thomson Reuters Corp., along with approximately 15,400 square feet of retail space and 464 residential units.

In essence, the Allied-Westbank deal signifies a significant move within the Canadian real estate landscape, enhancing Allied's urban presence and marking a strategic development for both companies involved.

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