InnVest Real Estate Investment Trust has entered into an agreement with the landlord of its leasehold hotel, the 328-room National Hotel and Suites located in Ottawa, for an early lease surrender effective December 31, 2013, by which time the hotel will also have ceased operations.
InnVest negotiated the early lease surrender as part of its strategic review and efforts to reposition its portfolio towards higher return properties. This leasehold hotel is estimated to generate negative cash flow of over $3 million in 2013. The lease was to expire December 31, 2016.
Part of Ottawa’s hotel scene for 37 years ago, the National has 13,000 square feet of meeting space including two boardrooms, a ballroom and several multi-use rooms.
InnVest expects to recognize a provision of approximately $6.5 million during its fourth quarter primarily representing an early termination fee payable to the landlord, as well as employee severance obligations related to the closure of the hotel.
InnVest REIT holds one of Canada’s largest hotel portfolios together with a 50% interest in Choice Hotels Canada Inc. Its portfolio currently comprises 131 hotel properties, with over 16,500 rooms, operated under internationally recognized franchise brands.