REGINA — The City of Regina has agreed to amend the Regina Exhibition Association Ltd. (REAL) current lease with YQR Distillery Ltd. and assign it to 102207241 Saskatchewan Ltd.
Originally, REAL entered into an 80-year lease with YQR Distillery Ltd. back in 2021.
However, YQR Distillery Ltd. faced financial difficulties, as REAL hadn't collected rent from either Sperling Silver Distilleries Ltd. or Z Group Holdings Ltd., stakeholders of YQR Distillery Ltd., in six months.
REAL board chair Jaime Boldt said this has amounted to roughly $500,000 in unpaid debt.
With uncertainty about the future of the building, Brandt president and sole director and officer of 102207241 Saskatchewan Ltd., Shaun Semple, approached REAL about discussing reimaging the space.
This included investing roughly $8 million into a new sports bar with 200 seats for a restaurant, roughly 500 seats for live music performances, and increased parking and more, said Boldt.
There would also be a $4 million investment in expanding the distillery operations, said Semple.
“This would be the largest private investment in the history of REAL,” said REAL interim CEO Trent Fraser. “This is truly a benefit to public spaces.”
REAL gave examples of recent private investments in Edmonton's ICE District and Saskatoon's Downtown Event & Entertainment District, showcasing the importance of public-private partnerships.
Legal implications
The move didn’t come with its share of concerns, as Z Group Holdings Ltd. said they weren’t consulted in any of the decisions by REAL.
Vice-president of Z Group Holdings Ltd., Dr. Ben Liu, said he only found out about the proposal on Monday through the news.
“There is no approval from shareholders [on this deal]. Under the YQR unanimous shareholder agreement, the assignment of the REAL lease by YQR requires the unanimous approval of the shareholders,” he added.
However, Boldt said Z Group Holdings Ltd. aren't members of REAL's board of directors and ”therefore had no interest.”
Boldt later said REAL legally cannot speak to people or groups on these matters if they’re not identified as a board member.
In consulting Legal experts, REAL said any concerns from Z Group Holdings Ltd. would be between YQR Distillery Ltd. and Semple.
Lease agreement woes
Several councillors brought up issues with the 90-year lease agreement and rent costs.
The proposed lease agreement rent for the first 10 years was $6 per square foot and would increase by $1 per square foot at the end of every 10 years until reaching the 50th year of the deal.
However, Sarah Turnbull (Ward 5) didn’t see eye-to-eye with this, proposing an amendment to increase the rent to match the market rate after 10 years while changing the term to an initial 10-year term with three 10-year extensions.
“We need to make sure this is in harmony with our goals and future,” said Turnbull, who supported a new sports bar at REAL.
Semple quickly shot down this and several other tweaks in the lease agreement. “I have no interest in it.”
He added the market rate proposed is one seen today for a Class D warehouse.
The amendments were rejected, and council ultimately voted 7-3 in favour of approving the transfer, with David Froh (Ward 3), Turnbull, and Shobna Radons (Ward 7) voting against.
Councillors who voted in favour weren't thrilled with the outcome.
“The length of the agreement is beyond us being alive,” said Victoria Flores (Ward 6).
She added, “that makes me incredibly uncomfortable having a 90-year lease that puts us at a disadvantage in many positions.”
Mayor Chad Bachynski said this deal has risks on paper, but there was also risks of the direction YQR Distillery Ltd. was heading.
“It was a day of balancing risk, and that's what we ultimately used to make our decision.”
With the approval, 102207241 Saskatchewan Ltd. is anticipated to take on the lease no later than June 30, 2025.
In the deal, 102207241 Saskatchewan Ltd. has the ability to terminate the lease on a six-month notice.
However, Semple said upgrades to the building will ensure long-term benefits even if 102207241 Saskatchewan Ltd. backs out.
