Another way we create value is by intensifying the use of underutilized land . The land beneath our buildings in Toronto is significantly underutilized in relation to the existing zoning potential . This is also true of some of our buildings in Kitchener, Montréal, Calgary and Vancouver . These opportunities are becoming more compelling as the urban areas of Canada’s major cities intensify . Because we’ve captured the unutilized land value at a low cost, we can achieve attractive risk-adjusted returns on intensification .
We have initiated the intensification approval process for eight rental properties in Toronto, four of which we own in their entirety and the remaining four of which we own with joint-venture partners . These properties are identified in the following table .
Union Centre Rezoning completed Office, limited retail 1,129,000
QRC West, Phase II Rezoning completed Office, retail 74,000
King & Peter Rezoning completed Office, limited retail 790,000
King & Spadina Rezoning completed Office, limited retail 300,000
College & Manning JV (1) Rezoning completed Office, limited retail, residential 62,500
King & Portland JV (2) In rezoning Office, retail, residential 200,000
Spadina JV (3) Rezoning completed Office, limited retail, residential 150,000
The Well JV (4) In rezoning Office, retail, residential 1,240,000
Total 3,945,500
(1) Equal two-way JV with RioCan, total estimated GLA is 125,000 square feet (2) Equal two-way JV with RioCan, total estimated GLA is 400,000 square feet (3) Equal two-way JV with Diamond, total estimated GLA is 300,000 square feet (4) 40/40/20 JV with RioCan and Diamond, total estimated GLA is 3.1 million square feet
ESTIMATED GLA (SQUARE FEET)13
APPROVAL
STATUS USE
Estimated GLA is the estimated total amount of gross leasable area in the intensification property based on applicable standards of area measurement and the expected or actual outcome of re-zoning .
The following table sets out the fair value and annual NOI of the rental properties identified in the preceding table, as at December 31, 2014, as well as the current funding obligations in relation to design-approval costs associated with those properties .
14 This is a forward-looking statement . The most important factors affecting the estimated cost to complete are design and municipal approval costs .
The material assumption made in formulating the statement is that design and municipal costs remain stable for the next year .
These properties are currently generating substantial annual NOI and will continue to do so until we initiate construction . All properties other than Union Centre and The Well are valued in relation to their current annual NOI or their current potential annual NOI . Union Centre is valued in relation to the approved density on the site, and The Well is valued in relation to the anticipated density on the site . With respect to the ultimate intensification of these properties, a significant amount of pre-leasing will be required before construction commences . The design-approval costs have been, and will continue to be, funded with cash-on-hand .
UNION CENTRE, 20 YORK STREET, TORONTO
As part of our acquisition of 151 Front Street West in late 2009, we acquired 2 .47 acres of surplus land running between York and Simcoe Streets immediately to the south of the main structure . This includes Skywalk, which connects with Union Station and will become the inner-city terminal for Union Pearson Express, which is scheduled to begin operations this year . Toronto City Council has approved our rezoning application to increase the GLA from 750,000 square feet to 1,129,000 square feet, enabling us to develop a 48-storey office tower on the surplus land . The municipal address will be 20 York Street, and the development will be called Union Centre . We have initiated the pre-leasing process .
QRC WEST, PHASE II, TORONTO
This project was made possible by our acquisition of 375-381 Queen Street West in late 2009 . It will be comprised of 46,000 square feet of office space over four storeys, with floor plates of around 12,000 square feet, and 28,000 square feet of retail space on two levels, with exceptional ceiling height (18 feet) at the grade level . The Ontario Municipal Board approved our rezoning application early this year . We have initiated the pre-leasing process .
Union Centre 82,000 2,406 2,500 2,475 25
QRC West, Phase II 28,130 1,293 750 750 -
King & Peter 33,320 1,390 700 700 -
King & Spadina 20,610 1,247 1,150 1,125 25
College & Manning JV 11,830 629 500 500 -
King & Portland JV 23,175 725 500 475 25
Spadina JV 6,730 616 475 475 - The Well JV 70,800 1,181 3,580 3,390 190 Total 276,595 9,487 10,155 9,890 265 FUNDED 2014 NOI FAIR VALUE ESTIMATED DESIGN APPROVAL COST14 FUNDEDTO BE
KING & PETER, TORONTO
388 King Street West and 82 Peter Street represent a large-scale intensification opportunity . Toronto City Council has approved our rezoning application for 790,000 square feet of GLA, enabling us to develop a 36-storey office tower on the site . We have initiated the pre-leasing process .
KING & SPADINA, TORONTO
489, 495 and 499 King Street West constitute the best remaining development site at King & Spadina . Toronto City Council has approved our rezoning application for 300,000 square feet of GLA, enabling us to develop a 12-storey office building on the site . We plan to reconfigure this project in light of the recent acquisition of 485 King West, which is adjacent to 489 King West .
COLLEGE & MANNING JOINT VENTURE, TORONTO
This is a 50/50 joint venture between us and RioCan . The site is comprised of 551-555 College Street, initially owned by us, and 547 and 549 College Street, initially owned by RioCan . It includes 23,028 square feet of land with 185 feet of frontage on College . The joint venture intends to intensify the site by creating a mixed-use office, retail and residential complex . Toronto City Council has approved the joint venture’s rezoning application for 125,000 square feet of GLA (our share being 62,500 square feet) . The joint venture has initiated the pre-leasing process .
KING & PORTLAND JOINT VENTURE, TORONTO
This is also a 50/50 joint venture between us and RioCan . This site is comprised of 602-606 King Street West, initially owned by us, and adjacent properties to the west extending from King through to Adelaide Street West that we acquired with RioCan . It includes 61,608 square feet of land with frontage on King, Portland and Adelaide . The joint venture intends to intensify the site by creating a mixed-use office, retail and residential complex with approximately 400,000 square feet of leasable area . The joint venture initiated the municipal approval process in 2013 .
SPADINA JOINT VENTURE, TORONTO
This is a 50/50 joint venture between us and Diamond . The site is comprised of 57 Spadina in Toronto, initially owned by us . It is comprised of 18,115 square feet of land with frontage on Spadina, just south of the intersection of King & Spadina . Toronto City Council has approved the joint venture’s rezoning application for 240,000 square feet of GLA (our share being 120,000 square feet) . The joint venture plans to sell the site to a residential developer later this year .
THE WELL JOINT VENTURE, TORONTO
This is a 40/40/20 joint venture between us, RioCan and Diamond to redevelop the largest underdeveloped site in Toronto’s Downtown West submarket . It’s immediately south of our King & Spadina portfolio, which includes nearly a million square feet of space across 15 buildings . With 7 .7 acres of land on the large city block bounded by Spadina, Front, Wellington and Draper, the site will support significant retail, office and residential space . The office space will be concentrated in a landmark building on the corner of Front & Spadina, but will also be interspersed throughout the site in an effort to replicate the character of the highly desirable, lower-rise office space at King & Spadina . The joint venture initiated the formal rezoning process in 2015 and have made considerable progress . The site will not be available for construction until commitments to existing tenants are fulfilled in late 2016 .
15 This is a forward-looking statement . The expectation is largely contingent upon completing our development projects in the manner contemplated .
The most important factor affecting completion will be successful lease-up of space in the development portfolio . The material assumption made