InnVest Real Estate Investment Trust

InnVest Real Estate Investment Trust

November 06, 2014 16:32 ET

InnVest Real Estate Investment Trust Announces Agreement to Acquire the Hyatt Regency Vancouver, Private Placement and a $63 Million Equity Offering

TORONTO, ONTARIO--(Marketwired - Nov. 6, 2014) -


InnVest Real Estate Investment Trust ("InnVest") (TSX:INN.UN) announced today that it has entered into a definitive agreement to acquire the 644-room Hyatt Regency Vancouver (the "Hyatt") from an affiliate of Hyatt Hotels Corporation for $140 million, or $217,000 per key. Following completion of the acquisition, a Hyatt Hotels Corporation affiliate will continue to provide management services to the hotel under a new long-term management contract.

Subject to customary lending conditions, InnVest expects to finance the Hyatt purchase with a $70 million, 3.8% floating rate mortgage (three-year term plus two one-year options), with the balance to be paid in cash using the proceeds of the bought deal equity offering and concurrent private placement described below. The acquisition of the Hyatt is expected to be completed in December 2014, and is subject to customary closing conditions.

Management believes the Hyatt purchase offers numerous benefits to InnVest unitholders, including:

  • accretive to adjusted funds from operations ("AFFO") per unit based on equity needed for the Hyatt acquisition;
  • reduces InnVest's pro forma leverage by approximately 110 basis points based on equity needed for the Hyatt acquisition, and results in an overall leverage reduction of approximately 260 basis points based on total incremental equity raised;
  • adds an outstanding, full-service hotel in one of Canada's most attractive hotel markets to InnVest's portfolio; and
  • diversifies InnVest's portfolio both geographically and across hotel property managers.

"We are excited to announce the acquisition of this prestigious asset in the heart of one of Canada's primary city-centre markets. The addition of the Hyatt Regency Vancouver will expand our brand and management relationships and enhances our geographical diversification in the strong western region," said InnVest President and Chief Executive Officer, Anthony Messina. "The Hyatt is well positioned within its market having benefited from substantial investments since 2006. The Hyatt currently delivers strong cash flows and we believe the Hyatt's market penetration, and cash flows will improve over time."

Added Edward Pitoniak, InnVest's Managing Director, "This acquisition fits our strategy to increase our portfolio quality and scale while also improving our balance sheet through a conservative financing structure. Today's announcement demonstrates our commitment to grow our portfolio, while reducing leverage, and builds on our objective to become the leading growth platform in the Canadian lodging industry."

Built in 1973, the Hyatt is centrally located at Burrard St and West Georgia St in downtown Vancouver. The Hyatt provides some of the largest standard guestrooms in Vancouver and features 45 Regency Club rooms and 20 suites. The Hyatt also offers 40,000 square feet of meeting space and three food and beverage outlets.

Bought Deal Equity Offering and Concurrent Private Placement

In connection with the acquisition, InnVest also announced today that it has reached an agreement with a syndicate of underwriters co-led by RBC Capital Markets, BMO Capital Markets and CIBC World Markets, with RBC Capital Markets and BMO Capital Markets acting as bookrunners, to sell on a bought deal basis, 12,050,000 units at a price of $5.25 per unit for aggregate gross proceeds of $63,262,500 (the "Public Offering"). InnVest has granted the underwriters an over-allotment option to purchase up to an additional 1,807,500 units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Public Offering.

Highlighting their support and commitment to the long-term growth of InnVest, funds managed by KingSett Capital and Orange Capital, LLC, and Westmont Hospitality Group, three of InnVest's largest unitholders, together with certain trustees and officers of InnVest have agreed to purchase an aggregate of approximately $47 million in units by way of concurrent private placement at the same price per unit as those sold under the Public Offering (the "Concurrent Private Placement"). While the Public Offering and Concurrent Private Placement are not conditional on the closing of the Hyatt acquisition, the closing of the Public Offering is conditional upon the closing of the Concurrent Private Placement.

The Public Offering and Concurrent Private Placement are expected to close on or about November 26, 2014 and are subject to customary conditions, including regulatory approval. InnVest intends to use the net proceeds from the Public Offering and Concurrent Private Placement to fund the Hyatt acquisition, for capital expenditures, debt repayment and potential future acquisitions, including the previously announced participation in the acquisition of the Fairmont Royal York Hotel in downtown Toronto.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold in the United States absent registration or pursuant to applicable exemption from registration.


"AFFO" (Adjusted Funds from Operations) is a non-IFRS financial measure and does not have any standardized meaning prescribed by IFRS. Non-IFRS financial measures are unlikely to be comparable to similar financial measures used by other organizations.

Statements contained in this press release that are not historical facts are forward-looking statements. These forward-looking statements include statements with respect to assumptions and forecasts of future results, the Hyatt acquisition, the Public Offering and the Concurrent Private Placement. These forward-looking statements are based on current expectations of management and involve risks and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are InnVest's capital requirements and available sources of funds, changes to InnVest's business strategy (including InnVest's ability to divest of assets, its intent to internalize asset management and return expectations on capital investments completed); real estate investment risks, hotel industry risks, competition and the status of InnVest as a REIT for Canadian federal income tax purposes in any year. These and other factors are discussed in InnVest's annual information form for the year ended December 31, 2013, which is available at In making such forward-looking statements, management has relied upon a number of material factors and assumptions, including with respect to: the Hyatt's expected future financial performance; general economic and financial conditions; the terms and conditions on which the Hyatt acquisition will be completed, including mortgage financing, the Public Offering and Concurrent Private Placement; the use of proceeds of the Public Offering and Concurrent Private Placement; and the expected financial impact of the Hyatt acquisition on InnVest. Although management of InnVest believes that the expectations with respect to such forward-looking statements are reasonable, such forward-looking statements are subject to known and unknown risks and uncertainties and, accordingly, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the foregoing list is not exhaustive. The forward-looking statements included herein are made as of the date hereof and InnVest disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable securities law.


InnVest Real Estate Investment Trust is an unincorporated open-ended real estate investment trust which owns a portfolio of over 110 hotels across Canada representing approximately 14,000 guest rooms operated under internationally recognized brands. InnVest also holds a 50% interest in Choice Hotels Canada Inc., one of the largest franchisors of hotels in Canada.

InnVest's units and convertible debentures trade on the Toronto Stock Exchange (the "TSX") under the symbols INN.UN, INN.DB.D, INN.DB.E, INN.DB.F and INN.DB.G.

Contact Information

  • InnVest Real Estate Investment Trust
    Chantal Nappert
    Vice President, Finance and Investor Relations
    (905) 624-7806
    (905) 206-7114 (FAX)