TORONTO—InnVest Real Estate Investment Trust and KingSett Real Estate Growth LP No. 5 have agreed to buy a combined 80-per-cent interest in the Fairmont Royal York Hotel in Toronto from Ivanhoé Cambridge for $186.5 million, or $137,000 per room.
Under the agreement, Ivanhoé Cambridge — the Caisse de depot et placement du Quebec’s real estate arm — will retain a 20-per-cent interest in the 1,363-room property, which was built in 1929. InnVest’s 20-per-cent share was purchased for just over $37 million.
KingSett, with its 60-per-cent interest, will become the managing partner of the joint venture. InnVest will become the hotel asset manager and will oversee the property’s hospitality operations together with Fairmont Hotels and Resorts.
Plans call for the joint-venture parties to invest over $50 million for renovations during the two years following the acquisition, which is expected to close on Jan. 30, 2015.
This deal is part of Ivanhoe’s strategy to sell most of its hotel assets and focus on its core businesses, office, commercial and residential. To date, Ivanhoe has sold about 90 per cent of its lodging business, according to media reports. Among those assets sold are the Fairmont Chateau Laurier n Ottawa and the Fairmont Empress in Victoria, B.C.