(Adds details on tenant movement)
By John Tilak and Allison Lampert
TORONTO/MONTREAL, Feb 26 (Reuters) - Dream Office Real
Estate Investment Trust D_u.TO is working with TD Bank TD.TO
and CBRE to sell half of its stake in Toronto's Scotia Plaza,
Canada's second tallest office building, according to two
sources familiar with the matter.
The potential sale comes about four years after Dream Office
REIT, then called Dundee REIT , acquired two-thirds of the 2
million square-foot Scotia Plaza complex. H&R REIT HR_u.TO
bought the rest of the stake at the time. The C$1.3 billion
($961.68 million) deal marked the highest price ever paid for a
Canadian office building.
Dream Office is now looking to sell half its stake, leaving
Scotia Plaza potentially in the hands of three different owners
with equal positions, according to the sources, who requested
anonymity because the matter is not yet public.
Under a possible arrangement, Dream could seek to retain
management control, one of the sources said, adding that it
would depend on the outcome of the final deal terms with the
buyer.
Strong interest is expected from foreign buyers and Canadian
pension funds, the sources said.
However, Scotia Plaza is facing the prospect of jump in its
vacancy rate, now about 2 percent, because of tenant migrations,
according to a real estate industry source, who asked not to be
identified because of the sensitivity of the issue.
Borden Ladner Gervais, one of Canada's largest law firms,
confirmed on Friday it is planning to move out of Scotia Plaza
this year.
The news comes as a significantly weaker Canadian dollar is
attracting increasing attention from global investors seeking an
alternative to tumultuous equity markets.
Scotia Plaza is in the midst of significant renovations in
recent months, though it is not clear if they are tied to the
potential sale.
As part of a recently announced strategic plan, Dream Office
said it is looking to sell non-core assets worth C$1.2 billion
over the next three years.
Dream Office Chief Executive Jane Gavan did not immediately
respond to an email requesting comment. TD declined comment, and
CBRE did not immediately respond to a request for comment.
Dream Office shares lost 31 percent of their value last
year, largely due to concerns about its large exposure to the
Alberta market, which has been hit by the oil price collapse.
This year the stock has gained nearly 14 percent, helped by
the announcement about selling assets. It was up 2.2 percent on
Friday.
($1 = 1.3518 Canadian dollars)
(Editing by Chizu Nomiyama, Bernard Orr)