Item - 2020.GL15.16

The General Government and Licensing Committee recommends that:

1. City Council authorize the City of Toronto (the "City"), as landlord, to enter into a lease amending and extension agreement (the "Agreement") with BSREP II Hospitality Toronto GP Inc., in its capacity as general partner of BSREP II Hospitality Toronto L.P, as tenant, for the lands located at 123 Queen Street West, substantially on the terms and conditions outlined in Appendix B and as further set out in the attached Confidential Attachment 1 to the report (August 31, 2020) from the Executive Director, Corporate Real Estate Management, and on such other or amended terms and conditions acceptable to the Deputy City Manager, Corporate Services and in a form acceptable to the City Solicitor.

2. City Council direct that the confidential information contained in Confidential Attachment 1 remain confidential in its entirety, until the Agreement or notice of the Agreement is registered on title.

BSREP II Hospitality Toronto GP Inc., in its capacity as general partner of BSREP II Hospitality Toronto L.P (the "Tenant"), managed by Brookfield Asset Management, operates the Sheraton Center at 123 Queen Street West (the "Premises") and is planning to invest a minimum of $40 million in renovations and capital improvements to the Premises within the next three (3) years, and has agreed to invest a minimum of $5 million in additional renovations when the market and hospitality industry have recovered from COVID-19 impacts. In respect of the latter investment, the Tenant has agreed to update the City of its investment plans within the next three (3) years.

The Tenant has requested that the underlying ground lease with the City of Toronto be amended as set out in this report and extended for 40 years beyond the current expiry of the ground lease on May 31, 2068 (with an extension term commencing June 1, 2068 and ending May 31, 2108) in order to assist in securing capital required to fund such investments. This report requests authority for a lease amending and extension agreement, which will incorporate the major terms and conditions as described in Appendix B and Confidential Attachment 1.