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OPG’s Sale of the Hearn site to Studios of America

OPG’s Sale of the Hearn site to Studios of America

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​On Nov. 22, 2018, Ontario Power Generation (OPG) announced the sale of its R.L. Hearn Generating Station site located on Unwin Avenue in the Portlands area of Toronto to Studios of America Corporation (Studios), the long-term tenant and property manager of the property.

About the R.L. Hearn Generating Station

The R.L. Hearn Generating Station was the site of Canada’s first 100 Megawatt (MW) steam turbo-generator station, eventually expanding to a capacity of 1,200 MW. The station produced electricity from 1951 to 1983 and at one time supplied 10 per cent of Ontario’s power. Many OPG operators, maintainers, technicians and professionals began their careers and were trained at the station and then went on to work at OPG’s renewable generation and nuclear stations.

  • Size of property: 31.3 acres
  • Began operations: 1951
  • Ceased operations: 1983 (after 32 years of service)

Leasing the Hearn to Studios of America Limited

In 2002, under direction from the provincial government and following a competitive process to provide space for the growing film industry, OPG entered into a long term lease with Studios, effectively transferring care and control of the Hearn Site to Studios until 2041. The lease provided Studios with the first option to purchase the Hearn Site in the event that OPG deemed the site surplus to its generation needs.

The Sale of the Hearn – Years in the Making

Studios first approached OPG in 2013 to express interest in purchasing the Hearn Site. In 2015, OPG deemed the Hearn Site surplus land and commenced a disposition process. In accordance with the Studios lease, Studios exercised its purchase option and OPG and Studios entered into an agreement of purchase and sale in October of 2016.

The final sale price of the land was $16,139,619.00, which was based on an external, independent valuation conducted by a global real estate firm, as prescribed in the lease agreement. This was completed in 2016 in connection with the execution of the agreement of purchase and sale.

Hearn FAQs

► How much did OPG sell the land to Studios of America for?

$16,139,619.00.

► How much is the land worth at market value?

OPG completed an independent external appraisal of the Hearn Site in 2016 in connection with the negotiation of the agreement of purchase and sale and it was determined that the market value for the Hearn Site was approximately $16M.

► Why is the market value so low?

The market value, determined through the external appraisal obtained by OPG in 2016, reflects an ‘as vacant’ industrial use with potential for redevelopment value, as required by Studio’s purchase option. 

The appraisal took in to consideration typical value characteristics and impacts, including location, physical/site conditions (such as environmental conditions), development status and market strength.  Specifically, as a former coal generating station, the Hearn site is an industrial brownfield property and will therefore require remediation.

The property is also not serviced and there is significant underground infrastructure associated with its former use as a generating station that would need to be removed prior to any development on the land.

The Hearn site is encumbered by necessary access and use rights supporting the Hydro One Networks Inc. (HONI) high voltage switchyard and the Portland Energy Centre (gas power plant). 

The appraisal ultimately concluded that the highest and best use of the site ‘as vacant’ was an industrial/commercial use in keeping with the City’s long-term vision, or an interim industrial use until such time that a phased mix-use re-development of the site is feasible.

► How was the purchase price determined?

Studio’s purchase option, as set out in the Studio’s lease, provides that the purchase price will be the appraised market value of the Hearn site.  The purchase price reflects the appraised value, as adjusted to reflect additional restrictions imposed on the site in connection with the sale. These restrictions prevent:

  • any transfers of the property for three years;
  • any demolition or alteration of the property’s heritage characteristics without prior approval of the City of Toronto; and
  • the use of the property for residential or other sensitive uses for 15 years.

► Why didn’t OPG sell the Hearn site to the City of Toronto?

Through the Studio’s lease, Studios held the first option to purchase the site in the event OPG deemed it surplus. Studios first approached OPG in 2013 to express its interest in purchasing the site and in 2015 OPG deemed the Hearn Site surplus and commenced a disposition process.

In accordance with the Studios lease, Studios exercised its purchase option which prohibited OPG from entertaining any other offers, and OPG and Studios entered into an agreement of purchase and sale in October of 2016. Had Studios decided to not purchase the property, the property would have been put up for sale in a competitive sale process.

► Will Studios of America be demolishing the Hearn building and stack?

We are not aware of Studio’s plans for the building and stack.  Any demolition or alteration of the property’s heritage characteristics would require the approval of the City of Toronto.