Temple Hotels Inc. has made its first foray into Eastern Canada, and the United States may not be far behind.
The Winnipeg-based real estate investment firm (formerly Temple Real Estate Income Trust) announced Thursday it has acquired a 50 per cent stake in two Ontario hotel properties, and it expects to acquire the other half stake in each within the next six months, CEO Arni Thorsteinson said in an interview.
Thorsteinson said the 116-suite Residence Inn London Downtown in London and the 183-room Courtyard by Marriott hotel in downtown Ottawa are the seventh and eighth hotels Temple has acquired in the past 12 months, and the goal is to acquire 10 more before the end of 2013.
"We're looking all across Canada, coast to coast, and in the U.S.," he said, adding Temple hopes to do a deal south of the border before the end of the year.
Thorsteinson said this is a good time for Temple to be ramping up its acquisition activity.
"Interest rates are low, the economy is expanding, and with the hotels in the markets we're talking about, room rates and occupancy rates are rising. Our stock (TSX: TPH) is also trading at near all-time highs."
Temple now has 19 hotels in its property portfolio. Until these last two deals, all its acquisitions had been in Western Canada, and Thorsteinson said the fact it's now looking to the east and to the south doesn't mean it's turning its back on the West.
"We're also looking at (properties) right across the Prairies and in B.C. We've done very well in Saskatchewan and Alberta. Both of those markets are red-hot. In fact, the two strongest (hotel) markets in Canada right now are Saskatoon and Regina."
He said Temple also would like to add more Manitoba hotels to its portfolio. The only one it has at the moment is the 170-room Holiday Inn Winnipeg South.
Temple had been scouring the Ontario market for a couple of years before pulling the trigger on the Ottawa and London deals. Thorsteinson said both are strong hotel markets with good potential for further growth.
He said the Ottawa and London properties were both owned by the same two groups of investors. One group was ready to sell its half share right away, while the other needed more time to finalize a deal, but it's already agreed to sell its share for the same price as the first group, he added.
Temple said it paid $13.25 million for the half stake in the Ottawa full-service hotel and $6 million for the half share in the London extended-stay hotel.
Temple was launched in October 2006 with the acquisition of the Temple Gardens Mineral Spa in Moose Jaw, Sask. It later expanded into Alberta and is now the largest hotel operator in the booming Fort McMurray market.