Oxford Properties Group has confirmed it has invested $730 million to acquire the 50 per cent interest in seven Calgary and Vancouver office towers which had been held by CPP Investments.

The investment means Oxford, the global real estate arm of the Ontario-based OMERS pension fund, now owns 100 per cent of the portfolio. The transaction values the portfolio at approximately $1.5 billion.

“Oxford has been a net seller of office for over a decade to achieve portfolio diversification. We believe now is an opportune time to rotate capital back into this asset class, and this portfolio ticks all the right boxes,” Tyler Seaman, Oxford’s executive vice-president, Canada, said in the announcement Tuesday morning.

“As the asset and property manager of this portfolio, this transaction represents a compelling opportunity for us to further invest in markets that we not only understand intimately, but in buildings where our teams have built great relationships with our customers and where we consistently use this advantage to outperform the market.”

Reports of the pending transaction first surfaced in May, but this is the first confirmation of the deal.

Details about the Calgary, Vancouver portfolio

The four-million-square-foot portfolio comprises seven class-AAA and class-A downtown office properties, three in Calgary and four in Vancouver. The portfolio has benefitted from a flight to quality and outperforms both the Calgary and Vancouver downtown office markets, Oxford states in the announcement.

It is occupied by a diversified mix of tenants across industries such as financial services, technology, legal, transportation and natural resources. 

The portfolio also benefits from its newer vintage, with five of the seven assets built after 2010:

• Eau Claire Tower in Calgary, a 25-storey, LEED Gold-certified office building, built in 2016 and totalling 611,000 square feet;
• Centennial Place in Calgary, built in 2010 and totalling 1.3 million square feet;
• 400 Third in Calgary, built in 1988 and totalling 820,000 square feet;
• The Stack in Vancouver, Canada’s first zero-carbon office tower, built in 2023 and totalling 558,000 square feet;
• Guinness Tower in Vancouver, renovated in 2014 and totalling 262,000 square feet;
• Marine Building in Vancouver, also renovated in 2014 and totalling 177,000 square feet; and,
• MNP Tower in Vancouver, built in 2014 and totalling 277,000 square feet.

“This transaction reaffirms our deep conviction in the outperformance of high-quality, well-located office properties and, more broadly, our conviction to invest in Canada,” Daniel Fournier, executive chair of Oxford Properties, said in the announcement.

“We have deep admiration for our partners at CPP Investments, with whom we will continue to own a sizeable portfolio, and are proud to build on our successful, 20-year track record of doing business together, all in service of generating returns for Canadians and our respective pensioners.”

Signs of life in the office sector

The transaction stems from a longstanding relationship between Oxford and CPP Investments, which continue to co-own a “substantial” portfolio of Canadian properties.

“This transaction involving high-quality office properties highlights our strong, ongoing partnership with Oxford, which has delivered compelling returns for the CPP fund,” Sophie van Oosterom, CPP Investments’ managing director and head of real estate said in the announcement.

“The transaction is a continuation of our real estate strategy to secure strong business plan execution and redeploy capital into new opportunities, supporting the continued growth and performance optimization of our global real estate portfolio.”

Oxford notes its rationale for the acquisition stems from its belief in a bifurcation of the office sector in the wake of the COVID pandemic and work-from-home trends, which had deeply cut into confidence in the sector as occupiers tried to rationalize future space requirements.

It notes an ongoing flight to quality from many top-tier employers, with the best properties in key hubs such as Calgary, Toronto and Vancouver significantly outperforming the market with over 95 per cent committed occupancy.

Recent office market data has also showed a potential upswing in the sector in major markets, with improved leasing activity over the past couple of quarters.

About Oxford and CPP Investments

Toronto-based Oxford Properties Group is a global real estate investor, developer and manager. Established in 1960, Oxford and its portfolio companies manage approximately $80 billion of assets across four continents on behalf of their investment partners.

Oxford's owned portfolio encompasses logistics, office, retail, multifamily residential, life sciences, credit and hotels. Oxford invests in properties, portfolios, development sites, debt, securities and real estate businesses across the risk-reward spectrum. 

Oxford is one of the world's most active developers with over 70 projects underway across all major asset classes. 

Oxford is owned by OMERS, the Canadian defined benefit pension plan for Ontario's municipal employees.

Canada Pension Plan Investment Board (CPP Investments) is a professional investment management organization that manages the Canada Pension Plan Fund for over 22 million contributors and beneficiaries. It makes investments in public equities, private equities, real estate, infrastructure and fixed income. 

Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. 

At March 31, the fund totalled $714.4 billion.