Hong Kong Venture Buys Vancouver’s Hotel Georgia For CA$145 Million

Vancouver’s Rosewood Hotel Georgia will soon have a new owner. The 155 room luxury hotel at 801 West Georgia Street in Downtown Vancouver was recently sold to a Hong Kong-based joint venture. The details were announced through a regulatory filing with the Stock Exchange of Hong Kong (SEHK). The historic hotel will still be managed by the Hong Kong-based Rosewood Hotels & Resorts, so not much will change in terms of operation. I know, that’s boring. The interesting part is the financial details, and the pricing of prime commercial real estate in Vancouver.

Who’s Buying It?

The buyers are a newly created joint venture between two large Hong Kong-based real estate companies. The new venture will be 50% owned by Babenna, a wholly owned subsidiary of Magnificent Hotels. The other 50% will be owned by Able Shine. This joint venture will create a BC-based company, that will own this historic Canadian landmark built in 1927. The parent companies will go halves on the CA$145 million price tag. Oh yeah, and the parent companies are owned by other companies too. I know it’s a bit confusing, and they think so too. That’s why they made this nifty little structure chart to help people follow.

Rosewood Hotel Georgia Ownership Structure

The Acquisition Details

The purchase price of CA$145 million sounds like a lot, but it actually might be a deal for what they’re getting. In 2016, the hotel generated $31,479,000 – an 18% increase from the year before. Net operating profits were just a little over CA$6 million. According to the filing, the company is paying CA$750 (HK$4,355) per square foot, and produces a 4% yield by their estimate.

To put that in contrast, they’re paying 20% less per square foot than the average price of a condo in False Creek last month. The company notes they’re getting the property at a “near construction price.”

The eye popping price tag at first glance seems like a lot, but at second glance it was actually kind of low. Is the buyer just a great deal finder, or is commercial real estate in the city chasing more conservative valuations? Tweet us your thoughts.

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Photo: Alain Limoges

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