Item - 2020.EP9.11

The Board of Governors of Exhibition Place:

1.  Subject to obtaining the necessary City of Toronto authorization, approved a new lease (the Lease) for the Queen Elizabeth Theatre between the City of Toronto, as landlord (the Landlord), 16730801 Ontario Ltd., as tenant (the Tenant), and the Board, for a term of ten (10) years commencing May 1, 2020 and ending April 30, 2030, with an option to extend the Lease in favour of the Tenant for a further term of ten (10) years from May 1, 2030 to April 30, 2040, substantially on the terms and conditions set out in Appendix A to the report (January 28, 2020) from the Chief Executive Officer, Exhibition Place and such other terms and conditions deemed appropriate by the Deputy City Manager, Corporate Services (the DCM), the Chief Executive Officer, Exhibition Place (the CEO), and in a form satisfactory to the City Solicitor . 

2.  Authorized the Chief Executive Officer to request the necessary City of Toronto authorities to approve and enter into the Lease.

The Board and 16730801 Ontario Ltd. (the "Tenant") entered into a lease for the Queen Elizabeth Theatre (the "QET") dated March 6, 2008, as amended by a Lease Amending Agreement dated May 1, 2010 and a Lease Amending Agreement dated May 9, 2018 (collectively, the "Existing Lease ") which expires on April 30, 2020.

At its meeting of June 13, 2019 the Board approved, subject to City of Toronto ("City") authorization, a new lease between the City as Landlord and the Tenant for a term of ten (10) years commencing May 1, 2020 and ending April 30, 2030.

At its meeting of September 19, 2019, the Board approved a new lease between the City as Landlord and the Tenant for the Fountain Dining Room located adjacent to the QET, which is also currently leased by the Tenant. The approved term of this new lease was also for ten (10) years commencing May 1, 2020 and ending April 30, 2030.

The Tenant on January 9, 2020 wrote to the CEO of Exhibition Place requesting that it be granted a new Lease with a term of twenty (20) years expiring April 30, 2040, instead of the ten (10) years approved by the Board in June 2019.

On January 9, 2020, the Tenant also wrote to the CEO of Exhibition Place requesting a term of twenty (20) years for the Fountain Dining Room lease, which would make both leases coterminous on April 30, 2040. This request is the subject of a separate report.

Since the Tenant took possession of the QET, the Tenant has undertaken several investments / renovations in the leased premises as follows:

-  2008 to 2010 - invested approximately $550,000 for upgraded washroom facilities, bar area, and technical production equipment.

-  2010 to 2017 - invested $300,000 in further stage enhancements, dressing room renovations, and technical equipment.

-  January 2018 to present - invested $1,000,000 or 42 percent of the proposed renovation estimated at a total of $2.4 million, to increase capacity, which includes a lobby renovation, and the addition of two balconies (the "2018 Renovations").
 

The major 2018 Renovations proposed by the Tenant and previously approved by the Board will significantly improve this City asset and the commercial viability of the QET and this report is recommending that a new lease for a term of ten (10) years, with a Tenant's option to extend for a further term of ten (10) years, be entered into with the Tenant on the terms and conditions provided in this report.