The approximately $65-million acquisition was made in partnership with a non-institutional Canada-based investor whom Goodman officials declined to name. Goodman managing director Arthur Edwards tells GlobeSt.com that the total development cost of the project, which includes the cost of buying and renovating the existing hotel, will be between $225 million and $250 million.
Edwards says the permitting process is expected to take 12 months and the company is looking to start the redevelopment sometime in 2007. Plans for the new tower are still in flux, but definitely will include condominiums on the upper 35 floors and retail on the ground floor. In between, there could be another hotel, serviced apartments, more condos or possibly some public-use space. "We are exploring several options for the lower floors," he says.
The hotel and tower site are located at Georgia and Howe streets, adjacent to the 2.5 million-sf Pacific Centre retail complex and the Vancouver Art Gallery. "This is ground zero in the Vancouver CBD," says Edwards.
Allied bought the Hotel Georgia eight years ago for an estimated $45 million and has spent more than $10 million refurbishing the hotel since then. Allied Hotel Properties will continue to manage the hotel on behalf of Goodman Real Estate.
Goodman Real Estate has been in the business for 20 years and has a strong track record in the Seattle area, but its foray into Canada began only last year when it formed a joint venture with the Blackstone Group of New York. Under BC Retail Partners LLC, Goodman and Blackstone Real Estate Acquisitions IV used about $41 million in equity and financing to acquire the 358,400-sf Royal City Centre Mall in New Westminster, BC and the 160,000-sf Boitanio Mall in Lake Williams, BC.
Goodman's loan originator in that transaction, Holladay Fenoglio Fowler managing director Steve Gunther, told GlobeSt.com at that time that US capital is going out of the country to look for better yields. "The oversupply of investment capital is compressing cap rates in the US, leaving less value-add opportunities nationally, so investors are looking outside the US, and Canada is a good candidate due to its relatively inefficient sales market."
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