BOSTON (AP) General Electric will downsize its world headquarters in Boston and will return $87 million that Massachusetts spent as part of an incentives package to lure the company from Connecticut three years ago.

The industrial conglomerate has been restructuring its operations amid sagging profits and other negative developments in recent years.

GE said it was formally dropping plans to build a 12-story office tower on the city's waterfront that was to be the centerpiece of its new global headquarters, and instead sell that parcel of land along with two older, state-owned buildings that were being refurbished for the company.

Following the sale, the company said it would reimburse MassDevelopment, an independent state agency, for $87 million in "out-of-pocket" expenses, including money spent to purchase the two brick buildings which once housed a candy factory, and other construction and financing costs.

GE plans to lease space in those buildings after the sale for its permanent headquarters with about 250 workers, down from its original estimate of 800 that it planned to have in the city.

"While changes in the company's portfolio and operating model will lead to a smaller corporate headquarters, we are fully committed to Boston and proud to call it home," said Ann Klee, GE's vice president of Boston development and operations, in a statement.

General Electric, no longer a component of the Dow Jones industrial average, has been shrinking itself since the recession.

In October, the company slashed its quarterly dividend and announced it was restructuring its power business after a larger-than-expected third quarter loss. Earlier that month, the company ousted its then-CEO John Flannery after only about a year on the job and replaced him with Larry Culp, who told investors it had become clear that GE needed to simplify its business structure.

The company's fourth-quarter revenue of $33.28 billion did exceed Wall Street forecasts.

Massachusetts officials have sought to put the best possible face on GE's sagging fortunes since trumpeting the January 2015 decision to relocate the company's world headquarters from Fairfield, Conn., to Boston. The incentives package included up to $120 million offered by the state through grants and other programs and as much as $25 million in property tax relief from the city.

The administration remains "proud that General Electric chose to relocate the company's world headquarters to Massachusetts and looks forward to GE's ongoing contribution to the growing innovation economy," said Elizabeth Guyton, a spokeswoman of Republican Gov. Charlie Baker.

The company has not used the property tax abatement offered by Boston and will be canceling the agreement with the city because it was contingent upon the construction of the office tower and the hiring of up to 800 jobs.

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