Historic Canadian Hotel Sells for $186.5 Million With $50 Million Planned in Future Renovations
The Fairmont Royal York Hotel in Toronto, formerly known simply as the Royal York Hotel, has a distinguished history: at the time of its opening in 1929, it was the tallest building in the British Commonwealth, and it quickly became known for its opulent interiors. A favored residence of the British royal family, famous visitors include Queen Elizabeth II, Ronald Reagan, and even the Dalai Lama. The hotel’s Imperial Room has also been one of the top entertainment venues in North America for decades, featuring everyone from Ella Fitzgerald to Jim Carrey. Now, the Royal York Hotel is being sold for $186.5 million and will reportedly receive two years of renovations, in addition to current repairs, to restore it to its former, travertine-clad glory.
The previous owners of the hotel, an arm of Caisse de dépôt et placement du Québec called Ivanhoé Cambridge, has reached a definitive agreement with InnVest Real Estate Investment Trust and a fund managed by KingSett Capital Inc. While Ivanhoé Cambridge will keep a 20% interest in the property, an 80% stake in the Royal York Hotel will be transferred to the two new partners. KingSett will have a 60% interest in the establishment and act as managing partner, while InnVest will have a 20% share but oversee the hotel’s hospitality operations and assets. The sale is expected to close in January.
The Royal York Hotel has long been considered the grand dame of Toronto’s hotels, making it an ideal investment for the two new partners. Built by the Canadian Pacific Railway, the hotel is located in the city’s downtown financial sector, near the Air Canada Centre, Rogers Centre, and Union Station. The 1,363-room, 28-story building was considered state-of-the-art when it was unveiled in the 1920s, and its interior design followed the style of the time period: the hotel reportedly included crystal chandeliers, hand-painted ceilings, 10 elevators, and gorgeous travertine pillars. Throughout the years, the hotel has also become known for its 50-ton Casavant pipe organ, rooftop garden, and three beehives. Currently, the Royal York Hotel is undergoing a $100 million renovation project, and the new partners plan to invest more than $50 million in additional work over the next two years.
“It’s important to properly restore travertine because over time the stone will show wear and oxidation that can only be restored through proper techniques like diamond honing and polishing – everyday cleaners will not restore it to its former look,” says David Hadidian, Owner of Bay Shore Cleaning & Restoration. “The only way to get it back to its desire look is to have it professionally serviced by a company that can properly restore travertine.”
Ivanhoé Cambridge reportedly put the Royal York and another establishment, the Hotel Vancover, up for sale in May 2014 as part of the company’s strategy to reduce commercial risk and focus more attention on the corporation’s office, commercial and residential businesses. As a result, a spokesman for the company stated that Ivanhoé has sold around 90% of their lodging assets, which is equivalent to about 70 properties in Europe, the United States, Canada, India and Barbados. However, Ivanhoé still owns the historic Château Frontenac in Quebec and two other hotels in Montreal. Additionally, Caisse de dépôt et placement du Québec has retained a small interest in the Royal York Hotel itself: the corporation has an unknown stake in the new managing partner, KingSett.
KingSett Capital is one of Canada’s major private equity firms, which focuses on real estate investment. It currently manages more than $5 billion in assets. Similarly, InnVest is an open-ended real estate trust with stakes in more than 110 hotels throughout Canada. Their continued renovations to the Royal York Hotel are only part of a major change to Toronto’s financial district, which is currently adding an integrated transport hub to Union Station and a new bus terminal.