New York Investor Trio Refis Toronto Hotel With $126M KTB Loan

The deal represents one of the largest loans originated by a Korean investor in the Canadian real estate market.

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Korean real estate fund manager KTB Asset Management has provided a CAD$165 million (approximately $126 million) loan to refinance Hotel X Toronto, sources told Commercial Observer. The transaction represents one of the largest loans originated by a Korean investor in the Canadian real estate market.

Hotel X Toronto is a newly-constructed, 30-story luxury property situated on the city’s iconic Exhibition Place grounds, overlooking the Lake Ontario waterfront and just west of Downtown Toronto.  The 404-room hotel is operated by the Library Hotel Collection—which owns and operates seven boutique hotels worldwide—and owned by New York-based luxury hotelier Henry Kallan, billionaire real estate investor Alex Rovt and Joshua Durst.

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KTB’s five-year fixed-rate loan is non-recourse and refinances $100 million in construction debt on the property, provided by Toronto-based Romspen Investment Corporation in June 2015.

The lender won the mandate via a competitive bidding process, with the help of Bridgerock Realty Advisors as its local advisor. KTB and Bridgerock have completed several transactions in the U.S., including whole loans on the Brooklyn Bridge Marriott and 285 Madison Avenue.

“We are delighted to have worked with the sponsors of Hotel X in completing this historic transaction for Korean investors,” said Jaesang Eum, the head of global alternative investments at KTB. “Although Korean investors have been one of the most active global real estate investors over the past five years, this is one of the first large loans originated by them in the Canadian market. This is an untapped market for Korean investors and we look forward to bringing more Korean capital to the Canadian real estate market.”

Kallan is the founder and president of the Library Hotel Collection, whose New York properties include Library Hotel, Hotel Elysee, Casablanca Hotel and Hotel Giraffe.

Of the competition for the financing, Kallan told CO that the asset attracted a number of interested parties, both domestic and foreign.

“Keep in mind that we had a soft opening at the hotel only five months ago, so there’s no real financial history,” he said. “So [KTB] made their decision based not only on the quality of the asset and its location in city of Toronto, but [knowing] that my other properties in Europe and New York are performing extremely well. That gave them the confidence to make a commitment based on the confidence in my abilities to produce.”

The property includes a 90,000-square-foot sports club featuring four indoor tennis courts, nine squash courts and dedicated studios for yoga, pilates and spinning. Surrounded by six acres of gardens, the hotel also offers guests numerous dining options and amenities that include a year-round rooftop pool and a 250-seat cinema.

 

toronto hotel 3 New York Investor Trio Refis Toronto Hotel With $126M KTB Loan
Hotel X Toronto’s interior.

Hotel X is Kallan’s first development in Canada.

“I’ve always liked Toronto, and always look for new opportunities,” he said. “New York is becoming more and more expensive so I’ve looked in the Caribbean, Europe and on the West Coast [of the U.S.], but you have to look at the type of return you hope to have on your investment. When you have a limited partnership it’s always important to justify what makes sense and what doesn’t make sense. Toronto seemed to make a lot of sense because New York is becoming so saturated with hotel inventory.”

The 197-acre Exhibition Place mixed-use district—which includes exhibit, trade and banquet centers, theater and music buildings and sports facilities—didn’t include a hotel at the site to accommodate its visitors, until now.

“We’re excited to complete the launch of Hotel X,” Kallan said. “There is nothing like it in the Toronto hotel market. As we tell our guests, ‘Expect the extraordinary.’”

Ken Picache of Chelan Advisors and Paul Faver of JB Real Estate Advisors advised the owners on the transaction.