CN and Homburg Invest Inc. have announced they have reached an agreement under which Homburg Invest will purchase the Central Station Complex (CSC) in Montreal, Canada and CN will leaseback its corporate headquarters building and Central Station railway passenger facilities.
The transaction, subject to customary closing requirements and regulatory approvals, including federal government approval of an agreement to protect the heritage features of Central Station, will generate proceeds of C$355 million for CN. The transaction is expected to close by yearend.
Claude Mongeau, CN executive vice-president and chief financial officer, said: "We are very pleased to have concluded this transaction with Homburg, which has a solid reputation for managing and developing major urban properties. With a new property manager in charge of the Central Station's extensive retail/commercial and services facilities, the CSC's role as a major downtown Montreal transportation and commercial hub can be enhanced. At the same time our agreement with Homburg allows CN to monetize a key real estate asset, generating significant value for its shareholders."
Richard Homburg, chairman and chief executive officer of Homburg Invest, said: "We are very excited about building a lasting relationship with CN as our anchor tenant. The station is a landmark in downtown Montreal and we are committed to protecting its heritage features. We also see an opportunity to turn this property into a Montreal icon with the potential development of one million square feet for the site. Homburg already has investment and development projects of almost C$1 billion in the Montreal market and this transaction reinforces our commitment to a marketplace that we consider highly attractive. For our shareholders, the growth potential and prime location of this property represent significant value."
Under the agreement with Homburg Invest, CN will lease back its 17-storey office headquarters building and Central Station railway passenger facilities on a long-term basis. Central Station includes the Grand Hall, train platforms and portions of the subtrack level.
CN and Homburg structured the sale-and-leaseback transaction to reflect the long-term presence of CN's corporate headquarters in Montreal and to ensure continued operation of Central Station for use by VIA Rail Canada Inc., and l'Agence metropolitaine de transport, and AMTRAK.
Brookfield Financial acted as the exclusive advisor to CN in the transaction.