Holiday Inn UK
Coming out of the recession in 2001, Realstar identified an opportunity to acquire hotel assets at significant discounts to the replacement cost and intrinsic value. Realstar led a consortium to acquire the majority of the Holiday Inn estate in the UK from the brand owner IHG Plc. The portfolio comprised of 73 hotels (13,000 rooms) across the country for consideration of £1B, the largest hotel property transaction ever at that time. In addition to its role as an investor, Realstar was also the asset-manager of the portfolio. This role entailed oversight of strategic directors, operational oversight of the brand and all property and capital investments.
Over nearly 12 years of ownership the portfolio was repositioned from a physical perspective as well as operationally restructured in order to maintain acceptable cash flow levels during the financial crisis. The portfolio was disposed of in three tranches over 2014 and 2015, resulting in a highly successful outcome for all investors and stakeholders.
In the light of Realstar’s success in Canada, the firm was approached by the owner of Days Inn (Hospitality Franchise Systems Inc., now Wyndham Worldwide) to become the master licensor of the brand in Canada. At the time there were 8 Days Inn hotels in Canada and the nature of the US product was vastly different and more varied than in Canada.
Realstar focused on creating a next generation new build hotel prototype which would be cost effective to build and efficient to operate. The prototype was a huge success and combined with the firm's focus on owner returns, led to Days Inn growing to in excess of 120 properties today.
Realstar acquired Delta Hotels in 1987 from a consortium of banks and the company’s founder. At the time, Delta was Canada’s largest privately owned hotel company, but had fallen on difficult times, due to a combination of over-expansion and a weak balance sheet.
Realstar re-capitalised the business and stabilised its operational performance. Once on a firm footing, the company was well positioned to re-position itself from the 3-star market of Holiday Inn and Howard Johnson to 4-star competitors such as Marriott and Hilton.
Following the successful re-positioning the company grew outside Canada into the U.S, Asia and the Caribbean, including becoming one of the largest hotel operators in Cuba.
In 1998 having successfully turned the business around and faced with increased competition from large US hotel companies, we successfully sold the brand and management to Fairmont Hotels and the assets to a variety of REITS and institutional owners.
In 1987, Realstar partnered with Gordon Capital Corp (now HSBC), CIBC and Merrill Lynch to privatise Pagecorp, a publicly listed company, for approximately $600 million.
The portfolio included over 4,500 multi-unit rental units across Toronto and the Ontario region, land, condo properties and a hotel in Vancouver.
The company disposed of the non-core assets, invested in and re-positioned the core multi-rental properties and held them in partnership with a sister company of Brookfield Properties, which had acquired the Gordon Capital share.
Some additonal properties were ultimately sold to Oxford Properties (owned by OMERS) and Realstar continues to hold several other assets for the long-term.
Project Harmony & QuadReal JV
Having identified the student and rental residential sectors as key opportunities in the UK, the partnerships strategy was to buy or build high-quality assets with a primary focus in London.
In 2020, RECAP II and RECAP III reached the end of their initial fund lives. A focused marketing campaign was initiated during the summer of 2020 (note in the middle of COVID lock-down) and after a competitive sales process QuadReal (the property arm of the government of British Columbia pension funds) emerged as the successful bidder.
QuadReal was a unique partner for Realstar as we already had a significant existing joint venture in the UK building new-build rental housing in London.
As part of the Project Harmony transaction, QuadReal acquired a significant minority interest in Realstar’s UK property management platform and the UNCLE brand. The stated goal of the larger joint venture is to at least double the size of the UK portfolio over the next 3-5 years.