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Starwood Selling Three Westin Hotels in Potential $525 Million Deal

Hotels in Ottawa, Calgary and Edmonton on Block With Sellers Looking for $475 Million to $525 Million From Sale
February 1, 2018
Pictured: The Westin Ottawa, one of three hotels being listed by Starwood Capital Group.

Starwood Capital Group is selling its Westin-branded hotels in Ottawa, Calgary and Edmonton in a deal expected to fetch $475 million to $525 million.

Cushman & Wakefield is handling the sale of what is being branded as the Westin Hotels Portfolio Canada, but the properties may be sold individually, Curtis Gallagher, vice president of hotel investments, said in an interview.

"These are three great hotels in great cities," said Gallagher, about the properties, noting Starwood, which has partners, is the lead investor in the portfolio, which was acquired in 2005.
"We will sell them together, or we will sell them individually."

Marriott International, which now owns Starwood Hotels and Resorts, is the operator at all hotels and no changes to the names of the hotels are expected.

The Westin Ottawa is a 492-suite hotel directly connected to the newly constructed Shaw Convention Centre in the city and its largest shopping mall, CF Rideau Centre. The Westin Calgary has 522 suites while the Westin Edmonton has 416.

"It’s just a capital recycle," said Gallagher, about reasons behind the sale. "Ottawa is doing exceptionally well and has been for the last few years. Edmonton and Calgary, those markets are starting to turn the corner and still perform well now. There is upside there for the next owners or owners of these hotels."

The Calgary site has some extra density available on it, but it's a value added component and development is not the driver of the deal, said Gallagher. "You are buying into the turnaround story in Alberta, the consistency in Ottawa and some additional upside with some strategic capital investment in the properties."

In its latest report from November 2017, hospitality firm HVS reported the occupancy rate in Calgary was 73.3% in the third quarter, up from 69.5% a year earlier. Revenue per available room jumped from $113.92 to $116.39 during the period for the city.

Ottawa showed strong growth with occupancy levels reaching 85.3% in the third of 2017, up from 79.6% a year earlier. RevPar jumped from $131.76 to $155.09 in the nation's capital during the period, HVS said.

Gallagher expects buyers for the three properties could emerge domestically, but he also says American and overseas buyers could be attracted too.

"They are all in major cities, and you look at the scale of the portfolio, and it can get you critical mass,” he said. "It's early days of marketing, but we see interest from all over the place."

Garry Marr, Toronto Market Reporter  CoStar Group   
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