30% IRR, On Trophy Oceanfront Resort/Spa Acquisition Seeking Equity Partner

May 11, 2017

The Carlton Group has been exclusively engaged by a highly experienced, decorated hotelier to arrange for an equity partner to participate in the acquisition, branding, and repositioning of the best hotel located on the waterfront in Victoria, BC.  This historic hotel was fully re-built in 2012 with exquisite quality, and to restore the charm and detail of the prior hotel (the owner spent over $1 million / key). The hotel currently consists of 100 hotel keys with 20 residences, and our client intends to convert some of the redundant office space and existing residences to create 50 additional hotel rooms.

As such, the existing hotel key count will increase to 150 keys and our client has made a deal with one of the top hotel companies in the world to brand and manage the property. In fact, the flag is so confident in its ability to operate the property at the highest possible level that it is providing a NOI guarantee for the first three years of operation.  The hotel’s club-like atmosphere features high-end appointments and amenities not found at other hotels in Victoria and FF&E that compliments its irreplaceable waterfront setting.

With respect to the capitalization, we are interested in a partner investing approximately $23 million and the sponsor will invest $7 million.  The structure can either be preferred or pari passu and as indicated the above the returns here are excellent.

Investment Highlights:

  • One of the most famous, oceanfront hotels located in Victoria, British Columbia, whose profile will be super-charged by a well-known brand.
  • Huge value-add opportunities via raising ADR, increased operational efficiencies, and bolstering F&B + spa spend / guest via leveraging brand manager’s capabilities
  • Favorable purchase price of CAD $566,000 per hotel key (following renovation to increase key count) relative to cost previous owner spent to build the hotel.
  • Brand’s profit guaranty during repositioning (first 3 years).
  • The hotel will be fully operational during its renovation / conversion to brand standard.
  • The deal level IRR is 30% for 5 years exit
  • The average cash on cash at 12%

Cher Chang | 张育瑞

Head of Asia Division|亚太区负责人
The Carlton Group|顿集团|全球房地产私募股权投资银行
560 Lexington Avenue – 10th Floor

New York, NY 10022
917.332.2059 Direct| 电话
604.729.3586 Cell | 手机
212.504.8342 Fax | 传真

www.carltongroup.com

cchang@carltongroup.com

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30% IRR, On Trophy Oceanfront Resort/Spa Acquisition Seeking Equity Partner