Chronically empty office building at Calgary airport for sale after sublessee goes into receivership

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The more than half-empty office building outside Calgary International Airport is up for sale following financial troubles at the company that had been subleasing the building’s office space.

The Airport Corporate Centre, familiar to Calgarians as the blue and grey building visible on the drive into the airport, is now selling below replacement cost after the company subleasing the top seven floors struggled to repay $18 million in loans to Canada Western Bank (CWB).

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Commercial real-estate company Colliers International Group Inc. is overseeing the sale of the building. More than 146,000 square feet of the structure’s total 180,000 square feet of office space — more than 80 per cent of the building — are for sale.

The sale is the latest chapter in a back-and-forth between CWB and the numbered company — 2004639 Alberta Ltd. — identified in court documents as the Borrower.

In its request for the courts to appoint a receiver and manager over the company, CWB said that between two loans, it was owed more than $18.3 million from the company that was leasing floors two to eight in the building. In an affidavit filed to the Court of King’s Bench of Alberta, CWB said that despite extending the deadline for the loan repayment in June 2023, the company failed to both make timely payments and aggressively market its office space, and during that time did not meet its reporting requirements.

CWB wrote in its request for a receiver in mid-2023 that the company “had demonstrated poor operating results over an extended period of time.”

“The (company) has had sufficient time to pay back the loans but has been unable to do so,” CWB wrote.

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Company unable to secure tenancies despite talks with various parties

Court documents show the airport corporate centre has struggled for years to fill its space.

CWB’s affidavit said the building had a 65 per cent vacancy rate in May 2023, according to an independent appraisal conducted at the time. The company subleasing the building later said in January 2024 its vacancy rate was 51.6 per cent.

The building has a multi-tiered ownership structure. While the underlying land is owned by Transport Canada, it’s under lease to Calgary Airport Authority, which then leased the top seven floors to the company. The airport authority operates the first floor.

A sworn affidavit this year on April 24 by Davneet Danny Nijjar, one of the company’s shareholders, showed the company was in advanced talks with a handful of parties, including Alberta Opportunities Fund Inc. and Lux Capital Corp., but hadn’t yet secured tenancies.

A month later, on May 30, Court of King’s Bench of Alberta Justice Richard A. Neufeld appointed FTI Consulting Canada Inc. receiver of the company’s current and future assets.

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According to a post by a Colliers executive, the corporate centre is a Class A building — the highest classification rating for Canadian office buildings — and is connected with direct access to food and beverage options at Calgary airport.

Building is ‘a bit of a Rubik’s cube’: Colliers

The building is a “bit of a Rubik’s cube,” said Eric Horvath, senior vice-president and partner at Colliers International, alluding to the vast amounts of space available and unique floor plates.

“It’s no secret that the office market is somewhat challenged, that with 60 per cent vacancy, this building is in a bit of a conundrum in that how do you value the building, right?” Horvath said.

Colliers is initially taking the building to market unpriced. The number of prospective owners and investors that approach the commercial real-estate firm will ultimately determine how long it takes the building to bring in new tenants, he said.

Though Horvath is unsure how long a sale will take, he said he’s confident the building will sell.

“There’s no doubt that this building is going to sell but, at this point, we’re just not crystal clear on what the disposition process is going to entail.”

mscace@postmedia.com
X: @mattscace67

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