Toronto, ON – Ontario’s provincial government has entered into a conditional agreement to acquire an interest in the MaRS Phase 2 building in Toronto from its developer, Alexandria Real Estate (ARE). The government says the agreement, with a total value of $308.1 million, will allow greater flexibility on lease rates and the terms and types of tenants for the building. This, in turn, will help to increase occupancy rates and create long-term financial stability for the hub.
The Toronto Star today reported that only 31% of the building is currently occupied.
The government has also engaged an expert panel to review the conditional agreement and make recommendations. The panel consists of Michael Nobrega, former CEO of OMERS and the chair of the Ontario Centre of Excellence; and Carol Stephenson, retired dean of the Ivey School of Business.
The government says the $308.81 million represents fair market value. It includes a $224 million loan for Phase 2 dating from 2011 and a debt service payment that has so far cost $3.61 million; $16.2 million that MaRS used initially to purchase the land; and ARE’s $65 million interest in the property.
MaRS is located at the heart of Toronto’s Discovery District, a two square kilometre area of the city that includes Canada’s largest research university and nine affiliated, world-renowned hospitals ranked second in the world for research output. The Phase 2 facility was completed earlier this year, and increased MaRS’ footprint to 1.5 million square feet, making it one of the largest urban innovation hubs in the world.
“Our government wants to unlock the potential of the Phase 2 building and ensure that the maximum return on our investment is realized,” said Brad Duguid, Ontario’s minister of economic development, employment and infrastructure. “Based on the advice of the expert panel, we believe it is in the best interest of Ontario to increase flexibility for building tenancy and revenues through the acquisition of this interest.”