For immediate release
Gatineau, March 5, 2007 The Honourable Michael M Fortier, Minister of Public Works and Government Services, today announced the Government of Canada is moving on the first part of a two-step strategy for the sale-leaseback of nine federal government office properties.
"We want to test the assumptions and findings of a study prepared by two expert firms by marketing the nine properties to see whether we get bids that make financial sense for Canadian taxpayers," Minister Fortier explained. "Before any sale-leaseback goes ahead, the government will obtain further independent advice to analyze whether it makes economic sense to proceed."
This decision follows an independent, private-sector analysis and evaluation of 40 out of the government's 370 Crown-owned office buildings which concluded it would be more efficient and effective to sell and leaseback certain of the properties than for the government to continue to own them.
Minister Fortier stressed that owning and managing real estate is not part of the federal government's core business. "The Government should do what governments do, that is concentrate on its priorities, and owning office buildings is clearly not a priority for Canadians," he said, noting that the government already leases 43% of its office space needs. The sale-leaseback approach would bring private-sector discipline and efficiencies to the provision of office space for the government. It would ensure, for example, that required capital repairs and maintenance are carried out in a timely and efficient manner.
Mr. Fortier said the approach is much more focused than the former Liberal government's failed attempt of 2005. "This carefully laid out two-stage plan will allow the government to see what opportunities are offered by the market," he explained.
The nine properties being marketed are located in six cities across Canada: Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal. Majority ownership would remain in the hands of Canadians. The Government of Canada would continue to occupy the buildings and ensure federal visibility in every region of the country. The government is also firmly committed to meeting its environmental obligations and protecting the heritage character of designated buildings, regardless of whether it leases or owns them.
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For further information, please contact:
Frédéric Baril
Press Secretary
Office of Minister Fortier
613-868-1128
Media Relations
Public Works and Government Services Canada
819-956-2315
Ce texte est également disponible en français.
More information on the Real Estate Study can be found at: http://www.pwgsc.gc.ca/text/buildings/index-e.html.
PWGSC news releases are also available on our Internet site at www.pwgsc.gc.ca/text/generic/media-e.html
Backgrounder
Marketing of Federal Office Buildings
In September 2006, Public Works and Government Services Canada (PWGSC) awarded BMO Capital Markets Real Estate Group and RBC Capital Markets Real Estate Group Inc. a contract to study 40 Crown-owned assets and a broad range of options to determine the most cost-effective and efficient ways to accommodate federal government departments while generating savings. The 40 assets were selected on the basis that they represent more than half of the estimated value of the entire inventory and recapitalization requirements, and are mostly located in areas that carry significant real estate challenges. The scope of this study focuses on office buildings and excludes national treasures such as Parliament Buildings.
Over the last several months the firms conducted a thorough analysis and evaluation of the assets, including site visits. They determined that it would be more effective and efficient to sell and leaseback nine of the assets than for PWGSC to own them. The nine assets are: Vancouver 401 Burrard and the Sinclair Centre; Calgary Harry Hays Building; Edmonton Canada Place; Toronto Joseph Shepard Building; Ottawa Thomas D'Arcy McGee Building and the Skyline Complex; Montreal 305 René Levesque West and 4225 Dorchester West.
The government agrees in principle with the firms' recommendation. However, it will not sell any properties until it is convinced that a sale and leaseback arrangement makes financial sense over the long term. It will obtain independent third party fairness opinion to analyze the cost of owning and leasing these assets before making any decision to sell. A firm will be hired, through a competitive process, to carry out this analysis.
Many corporations and governments around the world recognize that, due to the current economic environment, owning real estate is neither necessary nor desirable to carry out their core business, and have successfully turned to leasing. The operating environment within which government works makes it challenging to operate these nine buildings as effectively and efficiently as private sector could. The government also faces a $4-billion capital repair bill to upgrade and maintain its office buildings.
The buildings will be marketed by BMO Capital Markets Real Estate Group and RBC Capital Markets Real Estate Group Inc. to private-sector institutions, corporations and groups controlled (51%) by Canadian residents who have demonstrated the financial means and the management competence to take part in a transaction of this nature. The government reserves the right to reject any bids it does not feel will bring best value to the Crown. Neither BMO Capital Markets Real Estate Group nor RBC Capital Markets Real Estate Group Inc. will have the right to bid directly or indirectly for any of the buildings.
Over the coming months, the firms will finalize their analysis for the remaining 31 assets and develop further recommendations. PWGSC expects to receive the additional recommendations later in the year.
