By Ria Taitt
From TT Newsday
CLICO Investment Bank made close to TT $1 million profit on a sale to Government of a property which now houses the High Commission in Canada. The company bought the commercial property at No 200 First Avenue, Ottawa, Canada, for Can $1.3 million and sold it to government in a period of ten months for Can $1.5 million, making Can $200,000 in the process.
Furthermore, because Government was without the finances to purchase the building, it borrowed the full purchase price of $1.5 (TT $6.2 million) from CIB. The Investment bank earned interest on that sum amounting to TT $1 million over the moratorium period of one year. Therefore altogether CIB earned about TT $2 million - TT $1 million in interest and $1 million on the direct sale. An arranger's fee of .025 per cent of the purchase price (TT $38,927.81) was also to be paid, but it is not clear who got this fee - whether it was CIB or a real estate agent.
According to former government sources the High Commission's lease for its original place on the elite diplomat's row at Albert St, was coming to an end and the High Commissioner, Robert Sabga, came up with a proposal for government to buy a building and rent part of it to support the expenditure of running the High Commission. It was something, Sabga noted, which other High Commissions had done as a means of generating revenue. Sabga had looked at several buildings and eventually narrowed down the choice to the commercial property at No 200 First Avenue, Ottawa Canada. Government did not have the funds at the time and the owners of the property were not prepared to accommodate a request for a deferral of the sale. As a consequence, financing mechanisms other than a direct purchase were considered.
According to the Cabinet note, Scotiabank had originally offered 100 percent financing for the project by way of a non-revolving loan facility and Cabinet had agreed to accept this proposal on September 29, 1999. But it later, on August 9, 2000, rescinded the decision and agreed instead to accept the offer of a lease facility from CLICO Investment Bank. CIB bought the building in October, 2000.
In May 1, 2001 Government agreed to pay a total of TT $7.2 million representing:
1) The purchase price of the property of TT $6,228,450 or the equivalent of Can $1.5 million;
2) The arranger's fee of 0.25 per cent of the purchase price or TT $38,927.81;
3)Interest over the moratorium period of one year of TT $1,007,509.29.
It also agreed that CIB was to be paid "all outstanding sums due to the Bank in respect of the cost of acquisition, fees and other charges which are estimated at $6.72 million at the proposed closing date of May 30, 2001".
The Cabinet also decided that the then Attorney General and Minister of Legal Affairs was to prepare the documentation to give effect to the above.
Sources yesterday questioned the fact that the High Commission chose such an old building which was almost guaranteed to take a lot of money in terms of maintenance. The Cabinet itself noted that the Commissioner of Valuation had advised that the Report submitted by the Canadian-based Engineering firm clearly indicated that the building was not a modern one - it was 60 years old - and that maintenance could be "expensive and exacting".
The Cabinet noted however that in this connection the High Commissioner's Office had indicated that "proper arrangements" would be made for the maintenance of the property, and that the Office of the High Commission would not be occupying all the available space. The additional space would be leased to generate revenue.
According to one of the Appendices attached to the Cabinet note, the "operating expenses" for the building at 200 First Avenue amounted to $103,033.75 for the year 1998, and $127,290.86 for 1999. The increase in the second year arose from the increases in property taxes - the largest single item of expenditure - which went from $36,548.74 in 1998 to $55,903.64 in 1999.
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