Why Investors Can't Get Enough of Vancouver Hotels
The $140M Hyatt Regency Vancouver sale was Canada's biggest hotel deal in 2014, driving transaction volume to a near-record $1.46B. And two more high-profile local hotels already sold this year. Colliers’ Alam Pirani and Tom Andrews explain the growing appetite for hospitality assets.
Last year saw the greatest number of large single-asset hotel deals since the market’s previous peak in 2007, with 14 transactions across Canada above $25M. The bulk of the hotel-sale activity was at the mid-market level, notes Alam (seen at right with Tom atop Pinnacle Peak in Scottsdale, AZ). But Vancouver, along with Toronto, had the biggest-money deals for full-service hotels last year: the Hyatt Regency Vancouver (below) acquired by InnVest REIT; and the Park Hyatt Toronto, snapped up by Oxford Properties Group for $105M. And so far 2015 has brought the sale of the Fairmont Hotel Vancouver and Westin Grand Vancouver.
Hospitality assets are attracting a range of domestic capital, notes Alam, as traditional investors (owner-operators, hotel investment firms) are joined by private equity and institutional players in aggressively pursuing higher-yield real estate. “A lot of that’s driven by favourable debt markets,” he says, pointing to all-time-low interest rates. Case in point: KingSett Real Estate Growth, traditionally not involved in hotels, took a significant position in InnVest, which then purchased a majority stake in Toronto’s uber-iconic Royal York Hotel
Chinese investment groups, seeking stability and diversification, have also been sniffing out hotel opportunities in Vancouver. Tom notes several Chinese firms looked at buying the Hotel Vancouver, as well as The Empress Hotel in Victoria (ultimately purchased by Nat Bosa). The city’s long been a darling of Asian investors, with the first wave of Hong Kong capital hitting the West Coast a quarter-century ago. “But more recently we’ve been seeing interest from Chinese groups in larger assets, like hotels,” says Tom. “They’re becoming much more competitive.”