Toronto lakefront hotel could be record-setting sale in Canada

Toronto’s Westin Harbour Castle could soon be the most expensive hotel ever sold in the Canadian market.

The iconic hotel, a 3.5 acre fixture at the foot of Yonge Street on Toronto’s waterfront is expected to hit the market next week, and could go for anywhere from $350 million to $400 million say Curtis Gallagher, vice-president of hotel investments at Cushman & Wakefield, the broker for the property.

“With the Canadian dollar where it’s at, it just gives that little bit more leverage to foreign buyers,” Gallagher told the Globe and Mail.

In September, Concord Pacific Developments snapped up Westin’s antipodal hotel, the Westin Bayshore in Vancouver for another record setting $290-million.

In comments via email sent to Yahoo Canada, Russell Beaudry, a senior manager for Colliers International Hotels, says the hotel investment market has been breaking records as of late.

“Transaction volume exceeded $2.4 billion in 2015, the third highest volume on record,” he wrote. “We expect activity in the hotel real estate market to remain stable throughout the year – any decrease in transaction volume in energy dependent markets like Alberta should be mitigated by growth in increased transaction activity in central Canada.”

While there are multi-hotel portfolio deals eclipsing the Westin Harbour Castle sale – like the 2013 deal which saw PSP Investments sell Westin’s Canadian Hotel portfolio in 2014 for a whopping $765 million to U.S. investment firm Starwood Capital Group with backing from investors in the Middle East – the potential sales price for the single hotel is impressive.

In October 2014, InnVest Real Estate Investment Trust and KingSett Real Estate Growth LP No. 5 signed an agreement with Ivanhoé Cambridge to acquire an 80 per cent interest in the Fairmont Royal York Hotel – a staple of Toronto’s downtown hub since it was built in 1929 – for $186.5 million.

Toronto-based InnVest has been busy; the trust also acquired the Hyatt Regency Vancouver from Hyatt Hotels Corporation in 2014 for $140 million. The 644-room, which has had $40 million in capital upgrades since 2006, sits at the centre of Vancouver and goes for $275-a-night. At $140 million for the hotel, that works out to $217,000 a room.

Oxford Properties Group has also put their hand in the pot, paying a cool $105 million for the Park Hyatt in Toronto. The company plans to invest US$25M in renovations. The 346-room hotel is located on fringe of the city’s ritzy Yorkville neighbourhood.

But it isn’t just Toronto and Vancouver that have seen record deal-making in the hotel sphere. The Remai Group paid $66 million to purchase the Canadian Courtyard and Residence Inn by Marriott Calgary Airport from the Mitchell Group and Beaumont Partners/Campus Crest bought the Canadian Holiday Inn in Montreal’s Midtown from the Rosdev Group for $65 million.

In Colliers International Hotels’ sweeping report of the hotel industry, analysts point to Chinese capital as an expanding component of the overall buyer mix.

“The Canadian economy is perceived as a safe and stable market and there is a growing propensity of Chinese capital seeking to invest in stable markets like Canada,” write the report’s authors. “This is supported by the recent easing of Chinese restrictions on investing outside of the Mainland – an added incentive is the weaker Canadian dollar against the Chinese Yuan, which has appreciated strongly along with the U.S. dollar since late 2013.”