Morguard Corporation, a real estate and property management company, has announced an unconditional agreement to divest a portfolio comprising 14 hotels across Canada.
The transaction is in line with Morguard’s strategy to concentrate on office, retail, industrial, and multi-suite residential properties.
The sale is expected to generate gross proceeds of C$410m ($306.85m), with a portion of C$48.7m ($36.45m) allocated to repay the first mortgage debt for Morguard.
This is anticipated to leave the company with net proceeds of about C$361.3m.
The portfolio includes properties under the Hilton, Marriott, and IHG brands, as well as independent hotels, located in major urban centres across the country.
The hotels are situated in locations, including the Greater Toronto Area, Mississauga, Markham, Vaughan in Ottawa, Halifax, and Sudbury.
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Some of the properties include the 144-room Courtyard Marriott Markham, the 144-room Courtyard Marriott Mississauga and the 115-room Holiday Inn Express, Ottawa, among others.
Despite the sale, Morguard will maintain ownership of two properties.
The properties comprise the dual-branded Hilton Garden Inn and Homewood Suites in Ottawa, Ontario, and the Inn at the Quay in New Westminster, British Columbia.
Morguard Corporation CEO and chairman K. Rai Sahi said: “It is an opportune moment to divest these properties given the current market demand for a hotel portfolio of this size and quality, as well as their enhanced market value.
“Morguard has strategically divested our hotel portfolio to align with our objectives of strengthening the company’s balance sheet while owning a high-quality portfolio of income-producing real estate.”
Morguard Corporation chief financial officer Paul Miatello said: “The heightened level of financial flexibility provided by this transaction will empower us to strategically deleverage, which is important given the current interest rate environment.”
The completion of this transaction is subject to customary closing conditions and is anticipated to close in the first quarter of 2024.