The Liberal government could end up about $200 million richer once the sale of Ontario Power Generation’s downtown Toronto headquarters closes, recent financial filings suggest.
OPG, the provincially owned power company, announced in January it was selling its head office and a nearby parking garage to KingSett Canadian Real Estate Income Fund LP ("<a href="http://kingsettcapital.com/whoweare" target="_blank">Canada's leading private equity real estate investment business</a>"). The transaction was at the behest of Ontaro's Liberal government, which will also pocket the profits from the deal.
While the sale price <a href="http://www.qpbriefing.com/2017/02/17/seen-opg-strikes-deal-to-sell-toronto-head-office-but-sale-price-still-under-wraps/" target="_blank">wasn’t disclosed when the deal was announced</a>, OPG reported Friday in financial statements that an “estimated after-tax gain on sale in excess of $200 million is expected to be recognized upon completion of the transaction.”
The net proceeds from the sale will go to the provincial government, OPG’s sole shareholder. However, the money will first flow through the province's “Consolidated Revenue Fund,” OPG says, which means it could help reduce the government’s deficit figure. The Liberals intend to table a balanced budget this spring.
The government's ultimate destination for the funds is supposed to be its Trillium Trust, an account dedicated to funding transportation infrastructure. The exact amount the province will receive will be finalized once the deal closes, OPG spokesperson Neal Kelly said in an email. The scheduled closing date is April 5, he added.
OPG has said the deal for 700 University Ave. (a building located across the street from Queen's Park) and 40 Murray St. (the parking garage) follows “an open and competitive procurement process” that was managed by Infrastructure Ontario. The power company intends to lease back four floors of offices from KingSett.
The Liberal government ordered OPG to sell the properties back in December 2015, as part of Premier Kathleen Wynne’s campaign to squeeze more cash out of publicly owned assets. The LCBO’s head office lands, near the Toronto waterfront, were sold last spring to real estate developers, earning the government approximately $260 million.
The Trillium Trust is also where the government is depositing its proceeds from the share sales of Hydro One. More than $4.5 billion had been invested in the trust since 2014, the government has said.
OPG is also preparing to sell the former site of a coal-fired power plant in Mississauga.
“Neither the former Lakeview GS site nor the Company’s head office premises and associated parking facility are considered core assets to OPG’s business,” said OPG in its financial statements. Kelly said the company "is currently completing necessary diligence on the [coal plant] site in order to determine the sale structure and appropriate terms and timing of sale, including price."
OPG ended 2016 with a profit of $453 million, up from $417 million in 2015, its financial statements show.
The company reported the gain even after lower nuclear generation capacity, due to the start of the estimated $12.8-billion rebuild of the Darlington nuclear power plant, which began last October and took one reactor offline. OPG’s nuclear generation actually increased from 2015 to 2016, by 1.1 terawatt hours.
The costly Darlington project is “tracking on budget,” OPG reported. The refurbishment will last until until 2026.
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Sale of OPG HQ could net province more than $200M

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