InnVest Real Estate Investment Trust, a Canadian hotel franchisor with more than 100 properties in its portfolio, has entered into a definitive agreement with Oxford Properties Group to acquire the leasehold interest in the Fairmont Vancouver Airport Hotel located within Vancouver's International Airport.
The purchase price of $90 million ($233,000 per room) will be funded by first mortgage financing of 45-percent to 50-percent, cash on hand, proceeds from planned asset sales, and availability under the REIT's existing liquidity facilities. Final terms of the mortgage financing for the Fairmont Vancouver Airport Hotel acquisition are under negotiation. The anticipated forward 12-month cap rate is 7.1 percent with solid growth potential.
The transaction is subject to customary closing conditions and is expected to be completed in the third quarter of 2016. The transaction is not dependent on, and does not affect the timing of, the previously announced offer by Bluesky Hotels & Resorts to acquire InnVest. The acquisition of the Fairmont Vancouver Airport has the support of, and has been consented to, by Bluesky. The hotel has a long-term lease on the Vancouver Airport Lands.
"The addition of the Fairmont Vancouver Airport enhances our geographical diversification in the strong Vancouver market and expands our relationship with Fairmont," said InnVest President and Chief Executive Officer, Drew Coles.
InnVest REIT acquired an 80-percent majority stake of Toronto’s 1,363-room Fairmont Royal York Hotel for $186.5 million in October 2014. The deal also included a $50-million renovation. Two months later, InnVest bought Vancouver’s 644-room Hyatt Regency Hotel for $140 million, or $217,000 per room.