KingSett Real Estate Growth LP, InnVest REIT and Ivanhoé Cambridge (realty wing of pension fund Caisse de dépôt et placement du Québec) have jointly purchased the Fairmont Royal York Hotel in a joint venture worth C$186.5m ($166.53m).
Reuters reports that though Ivanhoé is in-charge of selling the control, it will be retaining 20% stake, with the majority stake of 60% going to the managing partner KingSett.
The remaining 20% will go to InnVest, which will be supervising hospitality operations as the hotel’s asset manager, in collaboration with the operator of the Royal York, Fairmont Hotels and Resorts Inc. InnVest will be shelling out C$37.3m for its share.
InnVest managing director Ed Pitoniak said: "This transaction illustrates the value of our strategic partnership with KingSett Capital and is a key step in our becoming the leading growth platform in the Canadian lodging industry. Our relationship with KingSett provides us with optionality and scale to grow our portfolio as we continue to look at other opportunities in key markets."
The historic hotel, located in downtown Toronto, was built in 1929 by Canadian Pacific Railway and has 1,363 rooms (including 92 suites and 82 Fairmont Gold Rooms) that a C$100m facelift is already underway on.
Apart from this, an additional inflow of over C$50m by the new owners would be used for revamping in the two years after the acquisition takes place on 30 January 2015. Funds for the acquisition will be released as per conventional mortgage financing.
More than 500 guestrooms are supposed to be ready by the end of January 2015. There are also plans for developing the hotel’s retail space.
The hotel also boasts a meeting space of more than 65,000ft², a retail space of 30,000ft² alongside six F&B outlets.