06/22/2017 13:10 EDT | Updated 06/22/2017 13:20 EDT

Dream Office REIT selling Scotia Plaza stake, other assets for $1.7 billion

TORONTO — Dream Office REIT says it has struck a deal to sell office properties for $1.7 billion, with $750 million of that coming from the sale of its 50 per cent stake in Scotia Plaza in downtown Toronto to co-owners KingSett Capital and the Alberta Investment Management Corp.

The Toronto-based real estate investment trust says it will use some of the proceeds to buy back and cancel $440 million worth of its investment units.

It says it plans to cut its annual investor distributions from $1.50 to $1 per unit to boost cash flow to reinvest in its business.

Dream Office REIT says if completed, the sales will result in a total of $3.2 billion raised since it adopted a strategic plan early last year with a target of $1.2 billion over three years.

It says the value of its income properties portfolio will fall from $6.1 billion 18 months ago to about $2.9 billion, with about half of that centred in downtown Toronto.