The MaRS Discovery District has acquired private financing to repay most of a controversial loan it received from the Ontario government to fund one of its towers in Toronto.
The Liberal government gave the “innovation hub” nearly $400 million in loans as it struggled to find tenants for a nearly empty tower.
Both opposition parties had been critical of the Liberals for granting the loan without a proper business case, but the government claimed vindication Thursday.
“We are thrilled that MaRS will be repaying the majority of our government’s loan, with interest, almost three years ahead of schedule,” Economic Development Minister Brad Duguid and Research and Innovation Minister Reza Moridi said in a statement.
“Our decision to support MaRS is an example of our willingness to stand up in the face of opposition to serve the best interest of the people of Ontario.”
MaRS is now fully leased, which will allow it to generate enough revenue to be self-sustaining in the future, the government said. Tenants include JLABS, Facebook, IBM, Autodesk, Merck, PayPal, Etsy and Airbnb.
“We are grateful that the government of Ontario stepped up to help us solve an unforeseen problem,” Gord Nixon, chair of the board of directors at MaRS, said in a statement.
“The success of MaRS has facilitated a new generation of entrepreneurs and startups that showcase Ontario’s innovation, which is critical to the province’s competitive future and prosperity.”
MaRS says it will get $290 million from Manulife, Sun Life Financial and iA Financial Group through investments in 19-year bonds.
The province loaned MaRS $225 million for its second office tower, then later provided an $86-million line of credit to help attract tenants, spent $65 million buying out an American real estate company’s interest in the project, and gave a $16-million grant for the purchase of the land.
MaRS had trouble leasing up the tower, which was only about 30 per cent full when the loans were made in 2014, as high rents were demanded by the U.S. real estate company.