Bank of Montreal has entered into an agreement to sell its share of the land under First Canadian Place at King and Bay in Toronto to Manulife Financial.

Under the sale agreement, Bank of Montreal will sell its 25% share of the land ownership to Manulife Financial for approximately $120 million. The bank says this represents approximately a $90 million gain after tax that will be recorded as a non-recurring item at closing. The deal is expected to close in October.

Under the current ownership structure, Bank of Montreal owns a 25% undivided interest in the lands at First Canadian Place, Manulife Financial owns 25%, and O&Y FPT Inc. owns the remaining 50%. Following completion of the transaction, Manulife Financial and O&Y FPT Inc. will each own 50% of the land.

First Canadian Place tower is the tallest office building in Canada with 72 floors of commercial space. BMO currently occupies more than one million square feet (102,000 square meters) of space in the complex.

The bank’s long-term lease agreements in the 26 year-old building will remain in effect following the sale. The bank will continue to be the principal tenant in the building. O&Y FCP Inc. owns 100% of the 2.7 million square foot office complex under a lease agreement with the land ownership group until the year 2023.

In announcing the sale of the land at First Canadian Place, the bank said its strategy is to focus its capital on financial services businesses. Previous real estate sales or agreements to sell have included office buildings in Halifax, Winnipeg, and the former main branch in Vancouver.

Manulife Financial said its real estate interests are an integral part of its diversified investment portfolio and are an appropriate match to the company’s long-term financial products.