Morguard Corp. has an unconditional agreement to sell a portfolio of 14 hotels in eastern Canada for $410 million.
In the announcement Monday morning, Morguard states the move aligns with its “commitment to optimize its real estate portfolio, focusing on core real estate investments, including office, industrial, retail, and multi-suite residential properties.”
Morguard does not identify the buyer.
The hotels being sold are located in Halifax, Ottawa, four communities in the Greater Toronto Area and Sudbury and comprise a total of 2,248 rooms (see complete list below).
“It is an opportune moment to divest these properties given the current market demand for a hotel portfolio of this size and quality, as well as their enhanced market value,” K. Rai Sahi, Morguard’s chairman and chief executive officer, said in the release.
“Morguard has strategically divested our hotel portfolio to align with our objectives of strengthening the company’s balance sheet while owning a high-quality portfolio of income producing real estate.”
The 14-hotel portfolio being sold
The portfolio is encumbered with first-mortgage debt totalling $48.7 million, which will be repaid through proceeds of the sale, according to the release. This will result in net proceeds of $361.3 million for Morguard, before customary adjustments and closing costs.
The portfolio includes Marriott, Hilton, IHG and independently-branded hotels.
The GTA-area hotels are located in Toronto, Mississauga, Markham and Vaughan.
Following the sale, Morguard will retain ownership of two hotels: a dual-brand Hilton Garden Inn and Homewood Suites in Ottawa; and the Inn at the Quay in New Westminster, B.C..
“The heightened level of financial flexibility provided by this transaction will empower us to strategically deleverage, which is important given the current interest rate environment, Paul Miatello, Morguard’s chief financial officer, said in the announcement.
The transaction remains subject to standard closing conditions and is expected to close in Q1 of this year.
Hotels involved in the transaction are:
- Courtyard Marriott – Markham, Ont,, 144 rooms;
- Residence Inn Marriott – Markham, 100 rooms;
- Courtyard Marriott – Mississauga, 144 rooms;
- Hilton Garden Inn Toronto Airport West – Mississauga, 152 rooms;
- Cambridge Suites – Mississauga, 100 rooms;
- Holiday Inn Express – Ottawa, 115 rooms;
- Towne Place Suites by Marriott – Sudbury, 105 rooms;
- Courtyard by Marriott Toronto Airport – Toronto, 168 rooms;
- Hotel Carlingview Toronto Airport – Toronto, 112 rooms;
- Residence Inn by Marriott Toronto Airport – Toronto, 137 rooms;
- Toronto Airport Marriott – Toronto, 424 rooms;
- Courtyard Marriott Vaughan – Vaughan, 144 rooms;
- Cambridge Suites Hotel – Halifax, 200 rooms;
- The Prince George Hotel – Halifax, 203 rooms.
