2 Bloor Street West, Toronto

Consent to Assignment of Lease

Hammerson Canada Inc. To

2 Bloor Street Property Corporation

The Corporate Services Committee recommends the adoption of the following report (November27, 1998) from the Commissioner of Corporate Services:

Purpose:

To seek approval to an assignment of lease between a head tenant and a wholly owned subsidiary corporation.

Funding Sources, Financial Implications and Impact Statement:

There are no financial implications associated with this report.

Recommendations:

It is recommended that:

(1)authority be granted for the City of Toronto to consent to an assignment of a Lease between Hammerson Canada Inc. ("Hammerson") and 2 Bloor Street Property Corporation ("2 Bloor Street");

(2)the City Solicitor and Commissioner of Corporate Services be authorized and directed to review the consent and, provided that it is satisfactory in terms of form and content, arrange for the execution of same; and

(3)the appropriate officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference/Background/History:

By the adoption on September 22, 1970 of Clause No. 32 of Report No. 34 of the Metropolitan Executive Committee, Council authorized the leasing of certain Metropolitan owned lands situated between Bay Street and Yonge Street, south of Cumberland Street, to the Canadian Imperial Bank of Commerce. The property is municipally known as 2 Bloor Street West, Toronto. The ground lease provided for a term of 99 years on the basis of an initial term of 33years commencing on September 1, 1971, together with two successive rights of renewal, each for an equal period of 33years.

Throughout the years, several sub-lease agreements have resulted in Hammerson being in control of the leased lands on a sub-tenancy basis. In December of 1990, the Canadian Imperial Bank of Commerce transferred its interest to the Canadian Imperial Bank of Commerce Development Corporation ("CIBCDC"). Metropolitan Council, at its meeting on August 13, 1997, by the adoption of Clause No. 34 of Report No. 19 of The Corporate Administration Committee, consented to an assignment from the CIBCDC to Hammerson, as a result of Hammerson's acquisition of the development corporation's interest in the property.

Comments and/or Discussion and/or Justification:

During the 1990's, Hammerson had been pursuing a rezoning of a portion of the site to permit high density residential use. During this period, negotiations occurred between Hammerson and municipal officials with respect to Hammerson's potential acquisition of the site. It was anticipated that these discussions would be concluded in 1998 with the transaction closing and providing revenue to the City.

On November 3, 1998, a letter was received from D.S. Marcil Inc., Hammerson's representatives in the sale negotiations, indicating that Hammerson was in the process of disposing of its assets in Canada and that, as a result, Hammerson was not in a position to continue the negotiations with the City. Subsequently, the sale of the Hammerson assets to OMERS was announced in the newspaper and confirmed with Mr. Dale Richmond, President of OMERS.

On November 24, 1998, a letter was received from Mr. Steven Diamond of McCarthy, Tetrault, Solicitors for Hammerson. The letter confirms the sale of the shares of Hammerson to OMERS Realty Corporation. In order to effect this share purchase transaction, Hammerson is required to assign the lease to a wholly owned corporation known as 2 Bloor Street Property Corporation and they will then sell the shares in Hammerson to OMERS. The transaction has been scheduled to close on December 21, 1998 and, in this regard, Hammerson is required to obtain the City's consent to an assignment of the interests of Hammerson Canada Inc. to 2 Bloor Street. Hammerson will remain on the covenant.

Conclusions:

I am of the opinion that the request is reasonable and in accordance with the provisions of the August25, 1971, ground lease and, therefore, recommend that consent be granted.

Contact Name:

Doug Stewart, Director of Real Estate Services; Phone No.: (416) 392-7202; Fax No.:(416)392-1880; E-mail: dstewart@city.toronto.on.ca.