Evidence of meeting #53 for Government Operations and Estimates in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was lease.
A recording is available from Parliament.
3:40 p.m.
Conservative
3:40 p.m.
Director, Real Estate, BMO Capital Markets
We equally have elements of confidentiality that we frankly cannot disclose. That relates both to our client and to us. Both of our banks have to maintain an element of confidentiality in terms of the actual contract that we have executed.
3:40 p.m.
Conservative
Garth Turner Conservative Halton, ON
Is the commission structure a flat-rate structure, based on the percentage of the proceeds that are realized by the government?
3:40 p.m.
Managing Director, Real Estate Group, RBC Capital Markets
The terms of our contract are subject to confidentiality.
3:40 p.m.
Conservative
Garth Turner Conservative Halton, ON
Surely you can tell us if it's a flat percentage on the proceeds that are raised by the government. That hardly seems to be a state secret.
3:40 p.m.
Managing Director, Real Estate Group, RBC Capital Markets
We would say that they are industry-low fees. We have never attempted to sell more real estate for lower fees. The basis of them is the subject of the contract.
3:40 p.m.
Managing Director, Real Estate Group, RBC Capital Markets
That is my answer to your question.
3:40 p.m.
Conservative
3:40 p.m.
Managing Director, Real Estate Group, RBC Capital Markets
I understand that.
3:40 p.m.
Conservative
Garth Turner Conservative Halton, ON
We are members of Parliament from whom the government is formed. So we are actually your clients here. So I think that you could at least tell us whether that's a flat rate based on the total amount. If you sell these buildings for $1 billion, do you get 5%? Is that the way it works?
3:40 p.m.
Managing Director, Real Estate Group, RBC Capital Markets
No, we do not get 5%.
3:40 p.m.
Conservative
Garth Turner Conservative Halton, ON
Is that the way it works? Is it a flat rate on the proceeds? Or is it net proceeds, or gross proceeds?
We can't tell if this is a good deal for the Government of Canada unless we dig down into some details.
3:40 p.m.
Director, Real Estate, BMO Capital Markets
If I could interject, with all due respect and in fairness to what we are here for, there are elements of confidentiality, and it is very difficult for us to figure out where we cross that line between answering a very vague question and being fairly specific, which is what you're looking for. We're not trying to avoid answering questions that are fair to what we're trying to do.
If you are the client—and I'm not suggesting you are not—we respectfully suggest that your colleagues share that information, and that it's not really for us to breach confidentiality that we have to maintain.
3:40 p.m.
Conservative
Garth Turner Conservative Halton, ON
We have lots of lawyers. Just tell us, and they can figure it out.
3:40 p.m.
Conservative
Garth Turner Conservative Halton, ON
So you're negotiating the sale of the buildings, and then you're negotiating a leaseback on behalf of the government.
3:40 p.m.
Director, Real Estate, BMO Capital Markets
We're not negotiating the leaseback. We're actually working with our client, the government, in structuring a leaseback that reflects what the client needs in terms of its business, its occupancy, and the deal structure. We're certainly not negotiating it. We're assisting and advising, along with lawyers and other advisers, how it should be formed, .
3:45 p.m.
Conservative
Garth Turner Conservative Halton, ON
What do we know about the leaseback arrangement so far? Do we know the length of it--25 years?
3:45 p.m.
Director, Real Estate, BMO Capital Markets
I can tell you that there will be structures where purchasers will have the ability to provide options for the government to review. The specific term is subject to bids and structure when we receive them.
3:45 p.m.
Conservative
3:45 p.m.
Director, Real Estate, BMO Capital Markets
Certain lease terms have been established, but there is flexibility to those terms. Again, I'm not trying to avoid the answer to the question. The lease and the bid process have been structured in such a way to provide an element of flexibility for the government, being the vendor, to determine the best terms that are provided at the bid date. Those may include a longer lease, a shorter lease, a higher price, a lower price--
3:45 p.m.
Conservative
Garth Turner Conservative Halton, ON
Do we know how many people are moving into the buildings? Is there an existing number of bodies in there? Do we know how many people we're trying to accommodate?