InnVest Real Estate Investment Trust and KingSett Real Estate Growth LP No. 5 announced Tuesday a definitive agreement with Ivanhoé Cambridge to acquire an aggregate 80% interest in the Fairmont Royal York Hotel in Toronto in a joint venture in which Ivanhoé Cambridge will retain a 20% interest in the property.
The JV will acquire the 1,363-room Royal York for an aggregate price of C$186.5 million (US$166.4 million), or C$137,000 (US$123,000) per room, financing the acquisition with conventional mortgage financing. The transaction is expected to close January 30, 2015, and is subject to customary closing conditions.
KingSett, with a 60% interest in the joint venture, will become the managing partner, and InnVest will become the hotel asset manager and will oversee the property’s hospitality operations working with Fairmont Hotels and Resorts.
The JV plans to invest more than C$50 million (US$44.7 million) of additional funds for renovations over the next two years. The Fairmont Royal York, built in 1929, has been undergoing a C$100 million (US$89.5 million) renovation project. By the end of January 2015, more than 500 guestrooms are expected to be fully renovated.