The four properties are located in Whistler, B.C. and Lake Louise, Banff and Jasper, Alberta. A source with knowledge of the plans places the potential transaction value at upwards of $1 billion, according to Bloomberg News
. The portfolio has a combined total of 2,200 units, welcoming more than a million guests a year.
Jones Lang LeSalle Inc. (JLL) has been contracted to help sell the stake, according to the source who wishes to remain anonymous. Oxford Properties confirmed it is planning to sell the stake, but declined to comment on how much the eventual sale could be worth.
“This decision is in line with our overall strategy to grow our global partner program, which now manages over $18 billion in third party capital,” said Eric Plesman, head of Oxford Properties Canada, in a statement.
Toronto-based Oxford Properties - a real estate management branch of OMERS, one of Canada's largest pension plans - will go onto manage the Fairmont and Fairmont Château-branded hotels. The group acquired the four hotels as part of a larger portfolio in 2006 that included Fairmont Vancouver Airport and two Quebec properties. The YVR hotel and Quebec properties have since been sold.
The remaining properties are located at 4599 Chateau Blvd., Whistler; 111 Lake Louise Dr., Lake Louise; 405 Spray Ave, Banff; 1 Old Lodge Rd, Jasper.
Oxford manages more than $26 billion in assets, up 35 per cent in just the last five years. The company has spent over $300 million in improving hotels since it acquired the 2006 portfolio.
Confidence in Alberta resort markets
Hotel occupancy reached a record-high of 66 per cent nationally in 2018, according to new market report from CBRE Hotels. In Banff, hotel occupancy was at 71.9 per cent for 2018, with a RevPAR of $184.99. Jasper’s occupancy hit 69.5 per cent, with a RevPAR of $169.79. Both towns eclipse the Alberta average RevPAR value of $88.05 per room, according to the latest yearly report by the Alberta Hotel and Lodging Association (AHLA). Banff and Jasper also have the highest average daily rate values in all of Alberta, at $257.28 and $244.47, respectively.
Alberta resort markets’ notably high lodging revenue make the Fairmont stake sale attractive to local and foreign investors alike.
“With RevPAR growth of 10.5 per cent to $201.31, resort properties once again significantly outperformed the rest of the province,” reads a statement from AHLA board chair Leanne Shaw and president and CEO Dave Kaiser.
While certain areas in Alberta are facing occupancy challenges as markets struggle to keep up with new supply delivered during the 2012 to 2013 building boom, the resort market in the province is thriving. Regardless of these diverging trends across the province, Alberta’s overall hotel market is expected to see demand growth of 1 per cent in 2019.
“Our hotels are full, and we are in good shape to continue to grow top and bottom lines in 2019,” said David Larone, senior managing director of CBRE Hotels.
Demand is veering strongly from primary to secondary and tertiary markets. Smaller cities and resort towns are seeing increased investment, with 72 per cent of hotel transactions in 2018 taking place in these areas, compared with just 59 per cent the year prior. Capitalization rates in these markets also remain higher than their primary market counterparts, averaging between 7 to 9 per cent nationally versus 5 to 7 per cent in major markets.
Alberta’s price per key in 2018 was $83,300, with 19 hotels changing hands to the tune of $154 million.
Banff and Jasper tourism revenue is expected to reach to $10.3 billion by 2020, according to the AHLA. Tourism at Banff National Park posted a record-setting eight months of visits between April and November 2017 and has only continued to grow steadily since.