Toronto REIT InnVests in Hotel Markets

InnVest Real Estate Investment Trust has agreed to acquire interests in two Canadian hotel properties.
Courtyard by Marriott Downtown Toronto

Courtyard by Marriott, Toronto

By Adriana Pop, Associate Editor

InnVest Real Estate Investment Trust has agreed to acquire interests in two Canadian hotel properties totaling 799 guest rooms.

The company is paying a combined $70 million for its new additions, consisting of a 100 percent interest in Hotel Saskatchewan in Regina, Saskatchewan and a 33 percent interest in the Courtyard by Marriott in downtown Toronto, Ontario.

InnVest is purchasing these assets at an average capitalization rate of 8.3 percent based on the estimated 2016 Net Operating Income for both hotels.
Located in downtown Regina, the 224-key Hotel Saskatchewan features a restaurant and lounge, a tea room, 14,000 square feet of meeting space, 3,600 square feet of leased commercial space, and a 92-space parking lot. The property is currently undergoing a conversion from the Radisson flag to the Marriott Autograph Collection with Marriott Hotels, which will be completed in late 2015. InnVest is buying the property from Temple Hotels Inc. for a net purchase price of $37 million and expects to close the transaction in September.

The 575-key Courtyard by Marriott in downtown Toronto comprises two towers situated on 1.5 acres of land on Yonge Street, north of College Street. Amenities include 14,000 square feet of meeting space, two restaurants, 4,600 square feet of leasable retail and a 101-space underground parking garage. For its 33 percent interest in the property, InnVest will be paying a net purchase price of $33 million, while KingSett Real Estate Growth LP No. 5 will be purchasing the remaining 67 percent. This acquisition is expected to close in August.

InnVest intends to place new mortgage financing in respect of Hotel Saskatchewan of approximately $22 million, representing about 60 percent of the purchase price, with an anticipated interest rate of 4 percent. InnVest will also draw approximately $12 million from its operating line of credit, representing 36 percent of the purchase price of its 33 percent interest in the Courtyard by Marriott, which bears interest at either the Canadian bank prime rate plus 1.75 percent or the Canadian Bankers’ Acceptance rate plus 2.75 percent.