CALGARY -- One of Canada's largest owners of corporate real estate has significantly slashed the value of its Alberta properties because of the excess office space left by the economic downturn.
Dream Office REIT (TSX:D.UN) said in its second-quarter results that it has written down the value of its Alberta holdings by $748.4 million this year, or 45 per cent, to about $930 million.
The real estate investment trust said it did that because the economic conditions in the province remain soft and it now believes the uncertainty and weakness in the Alberta office sector could be prolonged.
"Since the beginning of the year, it's become apparent that the theme for Alberta office real estate is lower for longer," said CEO Jane Gavan in an investor call Thursday.
She said Calgary has the highest office vacancy rate in the country at 22 per cent, and with more buildings under construction, that won't go down any time soon.
"Even if the economy recovers, we expect it's going to take some time for businesses to add people and to require more space," she said.
The company said the value of its Alberta investment properties, which include the HSBC Bank Place in Edmonton and the Dominion Centre in Calgary, will remain challenged for the foreseeable future and their value could drop further.
Office vacancies have spiked in Alberta as energy-related companies cut staff and reduce operations because of the steep drop in oil and gas prices.
