Temple Hotels Inc. Announces Acquisition of Yellowknife, NWT Property

Temple Hotels Inc. (Temple) announced that it has agreed to acquire an extended-stay property in Yellowknife, NWT, known as Nova Court, for a price of $21.68 million, subject to customary closing adjustments. The property was built in 2007 and is located at 476 Range Lake Road, adjacent to Stanton Territorial Hospital and in close proximity to the Yellowknife Airport.
Nova Court consists of a four-storey, 106-suite, extended-stay building, with 88 parking spaces on a 2.37 acre site. The Nova Court extended-stay occupancy and average daily rate for 2013 year-to-date were 69% and $160, respectively. There is also approximately 8,300 square feet of unfinished space on the first floor, which Temple intends to redevelop in 2014 into nine additional hotel rooms and a 750 square foot breakfast room. The estimated total cost of the new construction and refurbishment is $4.8 million.
Based on the 2015 forecasted net income, the total investment in the property, including new construction and refurbishment, of $26.48 million represents an estimated capitalization rate of 11.6%. The purchase price will be satisfied by Temple assuming the existing 4.8% first mortgage loan in the approximate amount of $8 million, with the balance to be paid in cash.
The 2013 devolution of the political administration of the Northwest Territories from the Government of Canada to the Northwest Territories Government has spurred economic growth in Yellowknife and expanded the demand for hotel accommodation. Nova Court will be Temple's second hotel investment in Yellowknife. Temple also owns the  80-guestroom Days Inn & Suites, centrally located on 50th Avenue in the heart of downtown Yellowknife. The addition of Nova Court is expected to provide Temple with enhanced synergies and economy of scale in the growing Yellowknife market.
The vendor of the property is Lanesborough Real Estate Investment Trust (LREIT).  Mr. Arni Thorsteinson is the Chief Executive Officer and a trustee of LREIT and the Chief Executive Officer and a director of Temple. The proposed acquisition of the property was approved by the independent directors of Temple. Mr. Thorsteinson abstained from voting on the proposed property acquisition.  An independent third party appraisal was obtained which supports the purchase price to be paid by Temple for the property.
The acquisition is scheduled to close by December 31, 2013 and is subject to final regulatory approval.

on October 28, 2013