Scotiabank considers selling Toronto tower

[Tony]

Scotiabank considers selling Toronto tower
Could be Canada's biggest commercial real estate deal
The Canadian Press
Posted: Jan 19, 2012 9:31 AM ET
Last Updated: Jan 19, 2012 9:29 AM ET

Scotiabank is in the early stages of hunting for buyers interested in Scotia Plaza, its skyscraper headquarters in downtown Toronto that could be worth as much as $1 billion.

The bank said Thursday that a sale of the second-tallest tower in the country is being explored as part of Scotiabank's regular review of its operations.

http://www.cbc.ca/news/canada/toronto/story/2012/01/19/toronto-scotiabank-tower.html

[Highinthesky]

I think it might be more than just regular reviews. Interesting coincidence that they are looking at selling a 1 billions dollar real estate asset at the same time they buy a 50% stake in another bank for approximately 1 billion dollars.

[DrNest]

Interesting proposal.

Should they sell, would ScotiaBank remain in the tower as rental tennants, or would they complete relocate their head office? Would they construct a new tower, or move into several smaller offices dotted about the city?

[LeftCoaster]

I have always been a bit surprised they still owned their building, none of the other major banks do. Its not their core competency and it is really incongruent with their business model.

I would imagine if they sold it they would stay on as tenants as it is an iconic building associated with their brand. No real reason to move, especially since it is the newest of the bank towers and in the best shape.

[go_leafs_go02]

If they sell, they could move to Halifax......

Just kidding...

[Rico Rommheim]

What's the point of even building office towers if banks seek to sell them off 20 years later? How would that be beneficial?

[LeftCoaster]

Well that's why they don't do it anymore

[urbandreamer]

I take it as a sign that SB believes the real estate market has peaked this cycle.

[LeftCoaster]

There is a certain amount of truth to that.

[Ramako]

You also have to consider that Scotia needs to raise some cash at the moment to pay for recent acquisitions. Apparently they closed a deal on a Colombian bank this week.

[Highinthesky]

BNS did not own Scotia Plaza when it was constructed. However the original owners went bankrupt and that is probably how BNS ended up owning the tower.

BNS would almost certainly stay in Scotia Plaza if they were to sell the tower and reading into this sale as anything more BNS selling an asset that is outside of their core business so as to meet Basel III capital requirement given their recent acquisition would not be good.

[Andrewjm3D]

You also have to consider that Scotia needs to raise some cash at the moment to pay for recent acquisitions. Apparently they closed a deal on a Colombian bank this week.

This is exactly why. I wonder if Brookfield will want to ad it to their portfolio?

[LeftCoaster]

I'm sure Brookfield, CF, BCIMC and Oxford are all licking their chops at this one.

It's a prize asset for sure, but these companies are all very well run and will likely show some restraint in running up the price.

The firms that have the capital to afford this asset make up somewhat of an oligopoly so I don't expect thing's to get too out of hand.

[Highinthesky]

Scotiabank announced today that they will be raising around 1.5 billion dollars through the sale of stock. I bet this ends the interest in a potential Scotia Plaza sale on the part of Scotiabank.

[Richlord11]

Agreed. This will vastly boost their Tier 1 capital ratio and there will be no need to continue offering Scotia Plaza to potential buyers.

[caltrane74]

Shit! I was just gonna buy some Scotiabank stock for my RRSP ....

now what do I do........ geez?

[WhipperSnapper]

Agreed. This will vastly boost their Tier 1 capital ratio and there will be no need to continue offering Scotia Plaza to potential buyers.

Why should they hold on to a non-core asset like Scotia Plaza?

[urbandreamer]

Knowing the egos of CEOs and top management, the folks are probably sick of staring at Trump Tower. They want better views.

[osmo]

The Bank wants to sell its home... I agree this points more to a ceiling in the property market. They are selling high, I am sure they wanted to dump the Plaza for a while but this was the right time to try and do it.

[Highinthesky]

Shit! I was just gonna buy some Scotiabank stock for my RRSP ....

now what do I do........ geez?

Wait for the sale of the new stock and buy on any dip while enjoying the temporary increase in yield.

[Richlord11]

Why should they hold on to a non-core asset like Scotia Plaza?

Because they will have enough liquidity through stock sales so there will be no need to get rid of it? At least now, when the RE market is quite steady. (but only my guess, please prove me wrong!)

[telyou]

That's the whole point. They will sell it now that the market has hit the ceiling and is still steady for the time being. Scotia knows what's coming. They're not going to look at selling when the market starts crashing. It's either this year or not for another decade.

[WhipperSnapper]

Because they will have enough liquidity through stock sales so there will be no need to get rid of it? At least now, when the RE market is quite steady. (but only my guess, please prove me wrong!)

You won't find a better time to sell. Also, a billion dollars holed up in a non core asset like real estate is still a billion dollars holed up in a non core asset regardless of how much cash they have to spend. Divesting of non core assets has only positive affects on stocks and bonds which means more money to throw around.

[Waterlooson]

The Bank of NS has agreed to sell its head office building in Toronto for $1.266 billion to two REITS.