Ottawa Gov't Evaluating $2 Billion Sale Leaseback of Property Portfolio

Globe and Mail - September 18, 2006

Ottawa has hired a pair of investment banks to advise it on a range of options for about $5-billion worth of federal buildings, a review that could recommend spinning off some of these properties into a publicly traded real estate investment trust.

Public Works and Government Services Minister Michael Fortier said Friday that BMO Nesbitt Burns Inc. and RBC Dominion Securities Inc. have won a mandate to help the government deal with its aging property portfolio, which needs an estimated $4-billion worth of investment for renovations and maintenance.

The banks will focus on 35 of the 325 Crown-owned buildings, which account for more than half the value of its holdings. This group includes the National Library and Public Archives and the Lester B. Pearson buildings in Ottawa; the NFB Building in Montreal; the Sinclair Centre in Vancouver; and a pair of office complexes in Toronto.

A banker working on the advisory team said the process is 'wide open' in terms of options, whether that be orchestrating a sale and leaseback of some of the landmark buildings or bundling a select few into a REIT. He said the estimated value of the 35 properties under consideration is about $5-billion, and predicted the review could lead to a significant transaction, perhaps as much as $2-billion. Sphere: Related Content