Policy 2.11.4: Lease of Space Where CBC/Radio-Canada is the Landlord

Effective: November 09, 2004
Responsibility: Vice-President Real Estate, Legal Services, and General Counsel

STATEMENT OF POLICY

It is the responsibility of the Real Estate Services to ensure that all activities pertaining to the lease of space, where CBC/Radio-Canada is the landlord, are managed in an efficient and cost effective manner and that program, production operations and all other Corporate services are housed in a way that enables them to meet their objectives in the most efficient manner, consistent with their mandate and Corporate guidelines. In particular, Real Estate Services is responsible for the following:

  • To maximize cash flow and effectiveness from leasing activities by meeting established real estate standards described in Appendix E. There are financial, physical, legal, environmental, competitive use and compatibility standards from a landlord perspective.
  • To standardize leasing activities and to streamline the leasing process, ensuring that transactions are in line with market value or better for short, medium and long-term commitments and that Corporate space is leased only when the transaction meets all of the real estate standards and is clearly to the benefit of the Corporation.
  • To ensure that all leases are executed in accordance with corporate policies and guidelines, especially those indicated in the Reference section of this policy.
  • To establish standards and procedures pertaining to leasing of space to a third party.
  • To ensure that all components and user groups comprehend and follow this Leasing Policy.

In order to ensure operational efficiency, user groups and their managers must, as a minimum, use the services of Real Estate Services in all situations outlined in Appendix A, to review, validate, authorize and sign off on leasing transactions.

HISTORY

This is a new policy.

REFERENCES

Corporate Policies:

  • Canadian Institute of Chartered Accountants’ Handbook Sections 3065 - Leases & Section 3830 - Non-Monetary Transactions
  • The Financial Administration Act
  • The Broadcasting Act


PERSON RESPONSIBLE FOR INTERPRETATION AND APPLICATION

All questions pertaining to the interpretation or application of this policy should be referred to the Vice-President Real Estate, Legal Services, and General Counsel.

DEPARTMENT RESPONSIBLE TO UPDATE THIS WEB PAGE:

The Corporate Secretariat


PROCEDURES & GUIDELINES - APPENDIX A

LEASING OF SPACE EXCLUDING TECHNICAL SPACES FOR SPECIFIC PRODUCTION PURPOSES, SPECIAL EVENTS AND TRANSMISSION

At least four situations arise where the services of Real Estate Services are mandatory to ensure that space is put to its best use and that transactions compare to market standards from a landlord perspective. The four situations are as follows:

  1. A user group receives an RFP (Request for Proposal) on a specific space belonging to the Corporation.
  2. A user group seeks to market (i.e. lease) space belonging to the Corporation.
  3. Real Estate Services or a user group identifies surplus spaces that have revenue generating potential.
  4. The lease of space for an existing tenant is up for renewal and/or approaching its expiry date.

In situation 1 & 2 above, the user group should forward details of the exact address, location and suite number of the spaces that are potentially available for leasing or subleasing (and the RFP in item 1 above) to the Director, Strategic Development and Leasing, Real Estate Services and also to SNC-Lavalin O&M who would be involved in the marketing of spaces, with a copy to their respective Vice President or his / her delegate. Real Estate Services will evaluate these spaces in regards to the established real estate standards (i.e. financial, physical, legal, environmental, competitive use and compatibility) as well as to the overall space planning strategy of the Corporation. As an information measure, Real Estate Services shall provide its documented findings to the user group’s designated individual. Real Estate Service's transactions require designated individuals to coordinate space planning, communications, moving etc. and issue approvals on behalf of the various user groups from the very start of a leasing initiative. In the event that the marketing of the space proves to be the preferred scenario, Real Estate Services shall manage the issuance of proposals, the hiring of an expert broker, the prospect/broker negotiations as well as Letter of Intent, Offer to Lease or Renewal documents and the actual signing of a valid Lease that meets the standards as described in Appendix E. The documents shall be prepared or reviewed by the Corporation’s law department. The Letter of Intent, Offer to Lease, Renewal documents and Lease documents must be approved by the Corporation in accordance with Corporate policy 2.9.3 – Delegation of Signing Authority. which requires full adherence to the two signatures . The following approvals are required:

  • Aggregate value of less than $1M, approval by the Executive Director, Real Estate Services.
  • Aggregate value of less than $4M, approval by the Vice-President Real Estate, Legal Services, and General Counsel.
  • Aggregate value equal to or exceeding $4M, the written approval of the Board of Directors and the Governor in Council.
  • All leases, except automatic renewals at STC (same terms and conditions) or fixed rent adjusted to CPI, must be reviewed in accordance with Corporate Policy 2.9.3 - Delegation of Signing Authority and Treasury Board regulations.

All leasing transactions must be recorded in one Real Estate Services database for the effective management of the leases and to ensure that lease obligations are fully met. From a strategic perspective, and in order to provide a global vision to ensure the effective administration of the lease portfolio, it is imperative that all real estate transactions and information be centralized within Real Estate Services.

A copy of the original lease is also forwarded to Corporate Finance and Administration by Real Estate Services to enable additional centralization of record keeping.

The recording of the revenue will be in accordance with guidelines established by and/or approved by Corporate Finance and Administration.

Credit history verification of new tenants will be done by Corporate Finance and Administration and provided to Real Estate Services.


APPENDIX B
LEASING OF TECHNICAL SPACES FOR SPECIFIC PRODUCTION PURPOSES

Any agreement relating to the leasing of technical spaces to third parties, for specific production purposes will be processed and managed directly by Radio and/or TV. However, Real Estate Services will be available to assist user groups as required.



APPENDIX C
SPECIAL EVENTS

The user groups may research and execute a contract for Special Events with third parties within CBC’s real estate portfolio. The user group conducting the special event has the responsibility of informing other groups to ensure that the special event does not overlap with other planned activities for these same spaces.

If the special event is the first of its kind for a specific space, the user group must provide Real Estate Services with information regarding the space layout, the equipment and furniture to be installed and the occupancy numbers. Real Estate Services must ensure compliance with safety regulations and building codes.

User groups leasing space to third parties for a Special Event, must ensure that the transaction is documented through a proper lease, contract or agreement and the legal documents contain insurance, non-liability, indemnity, termination (cause, default) clauses, extended hour fees, repair of damages fees and the restoration procedure.


APPENDIX D
SPACES FOR TRANSMISSION PURPOSES

Any agreement relating to the leasing of space to a third party for Transmission purposes will be initiated, processed and managed directly by the CTO group, provided the space is in a stand alone transmission building and does not impact bureaus or production activities.

When leasing space to third parties that wish to install transmission equipment on CBC/Radio-Canada properties managed by Real Estate Services, Real Estate Services shall consult with the CTO group to ensure that the proposed installations are proper, efficient and that they do not impede CBC/Radio-Canada functionality.


APPENDIX E
GENERAL GUIDELINES AND PROCEDURES

Approvals

All leasing of space, excluding technical space for specific production purposes, Special Events and Transmission purposes (as detailed above), must be approved and signed off by Real Estate Services as per this policy.

All leasing transactions, including technical space for specific production purposes, Special Events and Transmission purposes, must respect all relevant Corporate Policies including Corporate Policy 2.9.3 – Delegation of Signing Authority. A copy of the original lease or rental agreement must also be sent to Corporate Finance and Administration.

Financing

Revenues generated from leasing of space to third parties other than technical spaces for specific production purposes, Special Events and Transmission purposes are collected by Real Estate Services as part of the lease management process. These revenues will be credited to the Corporate reserve. Revenues generated from the leasing or contracting of technical spaces, Special Events and spaces for Transmission purposes will be collected by Radio, TV and other user groups that effect these transactions. All revenues collected by Real Estate Services and/or Radio and TV will be forwarded to Finance and Administration immediately for deposit. These user groups are responsible for all incremental expenses related to these transactions (added security, added energy costs, auxiliary construction, etc.) and will either adsorb such costs or transfer sufficient budgets to Real Estate Services to cover such costs.

User groups must finance the costs of studies they have requested even if the project is not approved and/or does not go ahead. In the case where outside consultants are required to conduct studies and/or analyses, Real Estate Services shall be responsible for negotiating the contract with the external consultant and shall advise the user group of the cost, in advance and obtain the user group’s approval before actually incurring an expense.

REAL ESTATE STANDARDS FROM A LANDLORD PERSPECTIVE

Financial:

The true value of Real Estate Services is based on the market’s perception of its most proper, probable and profitable use. The highest and best use of space is what produces the greatest return. Greatest return may be measured by Internal Rate of Return, Net Present Value, Net Effective Rental Rate and how the transaction matches up with Market for comparable spaces. Tenant solvency is also given serious consideration.

Physical:

The highest and best use estimate must be physically probable. Adequate information must be gathered concerning physical restrictions and conditions to determine the physical appropriateness of a use in any analysis.

Legal:

There may be legal restrictions on a property, inhibiting space improvements required to meet the needs of a new tenant. Such restrictions may include zoning and building codes. Transaction assessment must also consider legal issues such as, but not limited to, existing rights of first refusal and options on the spaces, tenant relocation clauses that the Corporation may require for its expansion needs. The Corporation must protect its interest by reviewing termination provisions (sale of building provisions, non-compensation or set off provisions, etc.) and the tenant’s right to sublease amongst others and generally, any favourable clauses contained in any landlord standard leases.

Environmental:

Environmental acceptance is the newest consideration affecting highest and best use decisions. Examples include noise ordinances, strict enforcement of pollution regulations and hazardous material management.

Compatibility:

A project must properly fit into its environment and neighbourhood. Other tenants may have non-competition clauses, which may restrict the activities and the choice of a new tenant. The tenant’s business activities should be compatible with CBC’s operational mission, vision and public image. All transactions must be to the obvious benefit of the Corporation and must be coordinated with Media and other user groups that could be affected.

Competitive use:

The project must be competitive. If a project cannot compete in its marketplace, the proposed use is not the highest and best use of the site or space. A new tenant must also be qualified by CBC in order to ensure its long-term feasibility and capability of paying rent.

Definitions

Technical Spaces for Specific Production Purposes:

Refers to the leasing or contracting of specialized spaces for Radio and TV production activities (i.e. Olympics). Technical Spaces must be fully functional to be considered as such. Non-functional Technical Spaces are considered as office or common area space and require the involvement of Real Estate Services for third party leasing. Make up rooms, rehearsal rooms and production meeting rooms that are adjoining to Technical Spaces and leased along with Technical Spaces do not require the involvement of Real Estate Services.

Special Events:

Refers to space, equipment and services required for events such as receptions, gala events, media events or any other short-term activity where a gathering of people, which may include CBC and/or non-CBC staff, take place for an activity outside the usual scope of business. Such Special Events usually require space for less than one week.

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