Thursday, February 01, 2007

Ottawa Seeking $1.5 Billion Sale leaseback of Federal Buildings

The Globe and Mail - January 31, 2006

Ottawa is preparing to sell $1.5-billion worth of office properties across the country as part of the first phase of a plan that will see dozens of federal buildings go to the private sector with the government as a long-term tenant, sources say. Sources in Toronto and Ottawa said nine buildings are likely to go in the first phase of the sell-off, including properties in Vancouver, Toronto and Ottawa.

The deal could hit the market within weeks and would be among the largest offerings of Canadian office properties. Public Works Minister Michael Fortier refused to comment on the status of the plan, but made clear the government's real-estate portfolio is in for a shakeup. The government is expected to use a process known as a "sale-leaseback," by which it sells the buildings to the private sector and then rents them. The government is expected to use 25-year leases, sources said.

Mr. Fortier argued the government doesn't have the $4-billion needed to maintain adequately its portfolio of 6.8 million square metres of office space. Under the planned "partnerships," sources said, the private-sector companies would renovate the buildings at their cost and make money by renting them to the government. The government's 241,000 employees could thus work in better, more energy-efficient buildings.

"The government has not always taken care of its buildings in the same way as a traditional real-estate owner," Mr. Fortier said, pointing out that several buildings are in a "precarious" state. Sphere: Related Content

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