Toronto Exhibit Residences | 99.97m | 32s | Bazis | Rosario Varacalli

[AlvinofDiaspar]

From the Post:

City Halts Sale Of Bloor Lot
99-Year Lease; McDonald's had offered $3.4M for land it leases
Kelly Grant, National Post
Published: Tuesday, December 04, 2007

The city has halted, at least for now, a plan to sell a plot of land in Yorkville to Mc-Donald's for $3.38-million -- a price critics charged was a steal for the hamburger chain.

Concerns about the deal's price tag prompted council's government management committee yesterday to put off the item until Jan. 18, four days after city bureaucrats had hoped to close the sale of the land on Bloor West's upscale retail promenade, across the street from the ROM's new Crystal.

Now local Councillor Adam Vaughan wants the deal killed outright and the property left in city hands.

He fears McDonald's Canada and the owners of several neighbouring properties are trying to assemble a land deal that could one day see a condo tower erected on that block of Bloor Street West.

"The reality is that people are circling this property now.… The question is should the city surrender its control of the property? Should the city surrender control of the revenue generated from the redevelopment? I've said no," Mr. Vaughan said.

He urged McDonald's to "come clean" about its plans for the site.

Louis Payette, a spokesman for McDonald's Canada, refused to answer questions about the postponed sale yesterday.

"[The] decision was at the discretion of the city's government management committee. We respect this decision," he wrote in an e-mail message. "In keeping with due process, it would be inappropriate to discuss our real-estate transactions publicly."

Toronto's current, 36-year-old arrangement with the McDonald's location at 192A Bloor St. W. leaves the city limited room to manoeuvre.

The city owns the land. Mc-Donald's owns the building. The fast food chain has a 99-year land lease with the city, meaning the city cannot simply sell the plot on the open market to the highest bidder without first wriggling out of its contract with McDonald's.

Metro Toronto acquired the plot for the Bloor-Dan-forth subway line in December, 1960, back when that corner of Toronto was blighted and the neighbourhood that surrounded it undesirable.

Eleven years later, in December, 1971, the old Metro council signed off on a 33-year land lease that required the fast food chain pay the city $15,500 per year in rent.

The deal gave McDonald's the right to renew the lease for two more 33-year terms at a rent that was to be renegotiated or sent to an arbitrator.

The first lease expired at the end of 2004. The city wants the rent boosted to $195,000 per year, but Mc-Donald's has so far refused to pay that amount and has instead offered to buy the land for $3.38-million.

In the past week, speculation has swirled that the 192A Bloor West site could be worth millions -- even tens of millions -- more than the $3.38-million McDonald's is offering.

But James Ziegel, senior managing director for investment sales at Cushman & Wakefield LePage, said those guesses do not reflect the fact that the city cannot sell the land without McDonald's approval.

"For people to come out and say, 'Oh they're giving it away, land in that area is worth this or that' … I don't think you can argue that on the sale unless you really understand what the legal options of the city are," Mr. Ziegel said. "My guess is they aren't that wide-ranging because McDonald's has the site tied up for 99 years."

Paul Ainslie, a councillor who sits on the government management committee, said he would rather see the city keep taking a hit on the rent payments than sell the land and lose out if the site is redeveloped into high-end condos.

"Let's let them [McDonald's] stick to their lease and let them come back to the city and say, 'We've had a developer come in and we want to do this with the property.' Let's see if we can get a better value that way," Mr. Ainslie said.

kgrant@nationalpost.com

AoD

 

[Observer Walt]

Good to see the quote from Jamie Ziegel, who is known as one of the most knowledgeable real estate people in Toronto. He may serve to cool the jets of some people at City Hall whose knowledge of real estate seems to be a bit superficial.

As for Paul Ainslie, I'm puzzled why he apparently has narrowed the options down to two: sell the land (subject to the encumbrance of the lease, of course, which would have a bit of an effect on the sale price, to put it mildly), or continue to "take a hit" as he puts it, for years into the future, in hopes of some windfall which may come from who-knows-where. He appears not to grasp that the city has another choice: negotiate a rental rate which is fair and reasonable, using the current value of the land as the reference point, and build provisions for escalations into the lease. The latter was not done back in 1971, which is just incomprehensible.

And another thing: the lease puts certain constraints on the City, but it also puts constraints on McDonalds. There appears to be rampant speculation that McDonalds has some ulterior motive, revolving around developing the property or contributing it to a land assembly. But the lease runs only for another 64 years, and some developers at least will find this less than attractive. They would prefer to assemble unencumbered properties, for obvious reasons.

I'd like to see some paper do a better report on what the lease actually says. The terms of the lease may actually prevent the use of the property for purposes other than a restaurant, or it may require the city's consent for any change in lessee and/or a change in use. I don't know this, but I'd be interested to learn. A properly drafted lease would include at least one of these terms, but then, we have learned that this lease unfortunately was not properly drafted.

 

[yyzer]

Bazis plans "Landmark" Condo across from ROM

from today's Star...

Toronto sells McDonald's site for a bargain

TheStar.com - GTA - Toronto sells McDonald's site for a bargain

TORONTO STAR GRAPHIC
The city has decided to sell this prime piece of real estate on Bloor St. just west of Avenue Rd. to the McDonald’s restaurant chain for $3.38 million. Who wants the McDonald's site?

Concord-based Bazis International Inc., a six-year-old division of a Kazakhstan multinational company, hopes to develop a condominium tower across from the ROM, on land that includes a city-owned lot occupied by a McDonald's.

"It's going to be amazing," said president Michael Gold. "We think it's important to have a landmark development across from a great site like the ROM."

Bazis was founded in 1991 in Kazakhstan and takes its name from a "collection of family names," Gold said. It owns more than 100 companies related to design, development and construction of real estate and has projects in 12 cities in countries including Russia and Ukraine.

Gold said the local company functions independently and considers itself Canadian. "All our decisions are based here," said Gold.

The company is behind 1 Bloor, an 80-storey condo-hotel project Gold bills as the tallest residential tower in Canada. It is also building Crystal Blu, a 35-storey condo at 21 Balmuto St., and Emerald Park, a condo project Yonge St. and Sheppard Ave. Others are planned in New York and Los Angeles.

Gold promises the development planned opposite the ROM won't be higher than 100 metres.

"The land will be sold to McDonald's (first) and we hope to have a block development there in the near future after consultation with the city and with the community."
March 06, 2008
Paul Moloney
city hall bureau

The city has decided to sell a prime piece of land on the Bloor St. W. strip for a bargain price and expects the property to be flipped quickly to allow a 100-metre condo tower on the site.

After a closed-door session, city council voted 28-4 yesterday to accept the original offer of $3.38 million made by McDonald's for the site the restaurant chain occupies with a cheap 99-year lease, across from the Royal Ontario Museum.

Local councillor Adam Vaughan said he understands that McDonald's plans to resell the land to Kazakhstan-based developer Bazis International Inc., which is building an 80-storey condo building down the street at 1 Bloor and already owns the lot adjacent to McDonald's.

The chain would get a new restaurant in the building as part of the deal.

Just two weeks ago, a blue-ribbon panel that examined the city's books concluded Toronto could do a better job of managing its massive real estate portfolio, and said the city could realize an extra $150 million a year from asset sales.

Some estimates had suggested the site could be worth $7 million to $9 million, though its desirability could be limited by the long lease McDonald's holds on the land.

Councillor Cliff Jenkins, a member of the government management committee who was among those objecting to the sale, said the city could entertain a higher offer in future while continuing to lease.

"We should be prepared to renew the lease and at least keep it in our hands, and not give it away at bargain-basement prices," he said.

He conceded the long-term lease reduces the value of the property, but not by that much.

"We should not allow it to put a gun to our heads," Jenkins said. "In my opinion, we're not getting a good deal."

But Vaughan said there are advantages to the sale despite the relatively low price, such as being able to limit the height of the proposed development to 100 metres – 20 metres shorter than the 28-storey condo under construction nearby at 1 Bedford Rd.

McDonald's would be part of the street-level retail shops incorporated into the building, with condos above, he added.

"McDonald's simply flows the property through to Bazis and, in return for flowing it through to them at basically the price they paid for it, they get their building demolished and a new building put in place. Effectively they get replaced on site with a better building."

McDonald's was pleased with council's decision, said company spokesperson Louis Payette.

"It has always been our goal to reach a fair agreement with the city on this property and firmly believe this decision is in the best interests of both parties," Payette said.

The government management committee had recommended the city continue to lease the site.

The restaurant chain had been paying rent of just $15,500 a year, which the city had hoped to raise to $195,000 annually.

Councillor Cesar Palacio was another member of the committee who objected to the price, saying that, "personally, I don't think that we're getting the best value for the taxpayers' money."

Vaughan said detractors should look at the overall benefit a redevelopment would bring to the stretch of Bloor west of Avenue Rd.

"On a pure real estate transaction, yeah, the money on the table probably isn't what the land is actually worth," he said.

"The most important thing is what gets built there is a positive contribution to the development of the Annex as it faces Bloor St.," Vaughan said.

"The money has to make sense, but the most important thing is the neighbourhood to the north is protected."

 

[CityPlaceN1]

such as being able to limit the height of the proposed development to 100 metres – 20 metres shorter than the 28-storey condo under construction nearby at 1 Bedford Rd

"The money has to make sense, but the most important thing is the neighbourhood to the north is protected."

So the city is selling for 3 million instead of 7-9 million in order to keep the developer from building higher than 100 metres. This is nuts!

 

[Mongo]

Wow... these guys aren't wasting any time, are they? They obviously intend to become a major player in the Toronto real estate industry, as quickly as possible.

This is a smaller project (although 100m is quite tall in its own right -- taller than "The Met Encore") but I would not be surprised if the design of this building turns out to be something extraordinary, given its location.

 

[TrickyRicky]

In some ways I see this scenerio as evidence that the city should reduce it's property portfolio, take the proceeds and pay down debt even if the net proceeds are questionable. The alternative is to create a more professional in-house real estate department but with political inteference and historical precedent I think it's better to just divest and get out of the real estate game. I don't know the terms under which the city pays debt but at 5% interest that $3.38 million applied to debt would save $169,000 annually. Less time and effort would be wasted on such matters to free up resources for concentrating on core city service delivery.

 

[Redroom Studios]

Anybody know which lot they own adjacent to McDonald's? Is it the one with the pub below or the one with Lobby Bar?

check the diagram a few posts above...

 

[interchange42]

Anybody know which lot they own adjacent to McDonald's? Is it the one with the pub below or the one with Lobby Bar?

The properties in question are indicated in the graphic included with the Toronto Star article above. (They are the two to the west of McD's, not Lobby.)

42

 

[Filip]

Wow.. I'm excited for this.

However, after reading that McDonalds would take over the prime streetfront retail space, that dropped. I'd LOVE to live in a luxury condo above a McDs. It just screams class.

 

[grey]

What a ludicrous bargain for Bazis.

The city shouldn’t even be selling it, as far as I am concerned.


That said, Adam Vaughan has a point, get rid of it and get the area cleaned up, and let's not wait on city council to make the right decision. I think the Kazakhs pick up the kind of money that will cost from in between their sofa cushions. Which are probably made of unicorn fur or something they have so much money now.


It’s a pity it took so long to get here. If they’d made this decision sooner before they pretended to think about it, the Kazakhs could have maybe joined the parcels and built something spectacular-er


Yeah, this’ll go down as one of the worst city planning decisions evarrrrr. It’ll be interesting to see who donates to what councillor that voted in favour of it.

 

[spaced]

What a ludicrous bargain for Bazis.

I'm sure Bazis will benefit but I'm curious at how much McDonald's will get out of this deal. They very well could sell it for double and still buy a spot in the new condo for much less. I'm much more concerned at McDonald's making profit out of this then Bazis; Bazis still is proving their worth in Toronto but we all know McDonald's is just plain evil.

 

[Mustapha]

It opened in 1977. My wife worked there as a teenager.

It's definitely older than the 90s. I remember eating lunch there on an elementary school field trip to the ROM in the mid-80s, and I'm pretty sure the the building looked much as it does today. Uncultured children that we were, we all thought the McDonald's lunch was the highlight of the trip. Oh, how things change.

when it first opened. 99 year lease. Wow. I'm not a contracts expert but whata sweet deal.

 

[Glen]

"The reality is that people are circling this property now.… The question is should the city surrender its control of the property? Should the city surrender control of the revenue generated from the redevelopment? I've said no," Mr. Vaughan said.

But Vaughan said there are advantages to the sale despite the relatively low price, such as being able to limit the height of the proposed development to 100 metres – 20 metres shorter than the 28-storey condo under construction nearby at 1 Bedford Rd.

(sic)

 

[jaborandi]

The City's deal is prima facie foolish. They should have negotiated for a piece of the upside on McDonald's deal not just sale and a bullsh*t height limit that they would have extracted anyway. Or, they could have just sold the dirt to Borat (didn't they have to put it on the open market anyway?) and let him play ball with Ronald just as he's doing now.

I wonder:

1. Who McDonald's greased at the city to do this deal and for how much.

2. Who Borat greased at McDonald's to sell the land and for how much.

In neither case is the winner the people of Toronto. I predict an inquiry before all is said and done.

Why do you find it necessary to refer to all Kazakhs as Borat which has become a standard perjorative term for those with small minds. What's next, Obama as Uncle Tom? You should be ashamed of yourself.

 

[unimaginative2]

Wasn't Vaughan grandstanding against this sale a few months ago? Anyway, this is crazy. There are much better ways for the city to limit building height than reducing the purchase price. That being said, even at a hundred metres that's a ridiculously low price.