Canwest headquarters is shown in Winnipeg Friday, Feb. 27, 2009.John Woods/The Canadian Press
The sale of the tallest building in Winnipeg earlier this year is a feel-good story both for the city and the Asper family.
The family sold the building, located at Portage and Main, to a Regina, Sask.-based pension fund manager and the Hill family of Saskatchewan for a price that was never disclosed. Until now, that is, as a source close to the deal says it was just over $160-million, well beyond the $130-million to $135-million that the sellers went into the transaction expecting.
That pushed the valuation to a capitalization rate of about 5.5 per cent. That's believed to be the lowest capitalization rate (and the highest valuation relative to rental income) for any office tower sale in Canada, save two of Toronto's landmark towers. Only Scotia Plaza and the sale of a half interest in the Canada Trust tower have fetched higher valuations.
It's a very bullish sign for Winnipeg, which is undergoing a bit of a commercial real estate boom. There is a string of new hotels under construction on the way into the city from the airport, as well as other big developments. Data centres in particular are a focus, given Manitoba's cheap power and its position in the middle of Canada.
"There is definitely a building renaissance going on in Winnipeg," said Jeff Dean, a managing director at real estate specialist investment bank Trimaven Capital Advisors Inc. His firm advised on the pending sale of Winnipeg-focused landlord Huntingdon Capital Corp. to Slate Properties Inc.
The Portage and Main building sale is also a big win for the Asper family. They bought the 33-storey skyscraper with O&Y Properties about a decade ago, then later bought out O&Y's share. As private investors, the family did not disclose terms, but one person close to it said that much of the sale price will be profit given what the family paid.
For a family that watched its company, CanWest Global Communications Corp., fall apart, the win on the tower is a nice coda.
The deal came about after a push by Leonard Asper to sell the tower. Having seen the rush by pension funds to own property, and watching low interest rates, Mr. Asper was keen to put the building on the market.
In the end, there were seven parties that bid, and three that went to the final round, proving Mr. Asper right.