JV’s $300M Development of 23 Canadian Travel Centers Underway

Bethesda, Md.-headquartered HMSHost Corp., alongside joint venture partner Toronto, Ont.-based Kilmer Van Nostrand Co. Ltd., is developing 23 travel and service centers along two busy Canadian highways for the Province of Ontario.

April 13, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user msvg

Bethesda, Md.-headquartered HMSHost Corp., alongside joint venture partner Toronto, Ont.-based Kilmer Van Nostrand Co. Ltd., is developing 23 travel and service centers along two busy Canadian highways for the Province of Ontario. The joint venture, Host Kilmer Service Centers (HKSC), will deliver the roadside properties at a cost of more than $300 million for the initial 20 of the 23 centers.

The service center locations are along Highways 400 and 401, which, with traffic totaling 500,000 people daily, are two of North America’s busiest thoroughfares.

“There is significant demand for these centers because the population and growth along those corridors have increased tremendously over the last 20 years,” Michael Jones, HMSHost Vice President of Business Development, told CPE.

The project is a complete teardown endeavor; all of the existing centers, many of which are 50 years old, will be demolished and replaced with the new facilities. Designed to accommodate travelers’ various needs, the state-of-art roadside facilities will feature leading Canadian eateries, as well as U.S. food chains including Burger King, Cold Stone Creamery, Quiznos and Starbucks Coffee. HMSHost’s proprietary convenience store, The Market, will also be among the offerings. Additionally, each center will feature a Canadian Tire-operated full-service gas station with convenience store.

Toronto-based Qudrangle Architects Ltd. is among those behind the design of the service properties, which will qualify for LEED Silver certification. Mississauga, Ont.’s EllisDon Corp. is serving as general contractor. The first 20 of the 23 centers will be built in phases, with the last of the group reaching completion in 2013. “This is a very aggressive development plan,” Jones said. Construction of the remaining three centers will commence after 2018.

The joint venture and the Province of Ontario are sharing the financing responsibilities for the development project. HKSC is contributing about one-third of the funds, which the partnership worked diligently to secure. “It was a challenge; we had to work through these incredibly difficult financial times,” Jones noted. “Over the past year, we were working with the Bank of Nova Scotia and they brought in TD Bank at the end.”

HKSC will operate the network of centers under a 50-year agreement with the Province of Ontario. The contract is expected to yield approximately $100 million in annual sales revenue for the joint venture. As for the Province of Ontario, Jones said, “We’ll pay them through concession revenue over the 50-year lease term, so they will recoup their investment.”

HKSC’s first group of centers, Phase One’s seven properties, is on track to open in September of this year; although the gas station and Canadian Tire convenience store segments of the centers will debut in July in time in time to accommodate this year’s summer travelers.