Toronto’s Don Valley Hotel and Suites and adjacent property, considered a prime location for additional future development, or redevelopment. (Courtesy CBRE)

Fengate Asset Management and Freed Developments Ltd. have closed on the acquisition of Toronto’s 5.42-acre Don Valley Hotel and Suites property.

Allied Hotel Properties Inc. announced in October a deal was in place to sell the transit-oriented and mixed-use site, which has development entitlements, for $102 million.

“This node has significant potential, as the (new Eglinton Crosstown) LRT comes on-line next year,” Fengate managing director and group head of real estate Jaime McKenna told RENX. “This will go from largely a car and bus neighbourhood to being a transit-oriented community.

“We are excited to invest in this node early in this transformation.”

Fengate is managing the joint acquisition.

“Fengate, working on behalf of LiUNA Pension Fund of Central and Eastern Canada, sees the partnership with Freed as strategic in our bid to continue to grow our residential development division,” McKenna said. “Both Fengate and Freed have an extensive track record developing both rental and condo residential projects across the GTA.”

Toronto Don Valley Hotel and Suites

The assets being acquired in the deal, which was brokered by CBRE, include the hotel property at 175 Wynford Dr. and adjacent lands. McKenna believes the $102-million price for the property was fair, considering its current use and future development potential.

“The location of the hotel and future development project features direct access to both the DVP and Eglinton Crosstown LRT, providing strong transit connectivity within Toronto,” she said.

“The Eglinton LRT will be just over 100 metres from this location, making it a great opportunity to develop residential while increasing accessibility to the hotel.”

The hotel, which is still in operation, comprises a six-storey, 353-room mid-rise building including the Garden Cafe and DV Bar/Bistro, meeting rooms, a two-storey convention centre, a health club with exercise equipment, a whirlpool, saunas, steam rooms and indoor and outdoor swimming pools. The site contains 420 parking spots.

Major renovations to Toronto Don Valley Hotel and Suites that included guest room, public area, mechanical, electrical and structural upgrades were completed for approximately $8.5 million in 1999. It underwent another renovation to public areas and guest rooms in 2010 and 2011.

The property received zoning approval in 2015 to permit the development of two residential towers comprised of just over 585,000 square feet.

A site plan application was submitted in 2018 which proposes 755 residential units in 32- and 39-storey towers along with parking, indoor and outdoor amenity spaces, and a restaurant.

The plan would retain the guest room wings of the existing hotel, while repurposing its lobby and convention centre.

Fengate and Freed’s plans

Jaime McKenna is the managing director and group head of real estate for Fengate Asset Management. (Courtesy Fengate)

The new ownership group hasn’t revealed its plans or if a rezoning application will be made to add increased residential density.

“Fengate and Freed will work closely together over the coming months to develop an optimal design for the project’s future,” said McKenna.

The property went on sale last June and attracted strong interest from traditional residential developers and “substantial hotel owners,” according to CBRE Hotels executive vice-president Bill Stone.

Fengate is an alternative investment manager focused on infrastructure, private equity and real estate strategies. It has more than 75 real estate properties valued at more than $4.9 billion. The company has offices in Toronto, Oakville, Vancouver, Houston and New York.

Freed has developed approximately $1 billion worth of properties. Its portfolio includes condominium towers, hospitality ventures and commercial spaces in Toronto and Muskoka Bay Resort in Gravenhurst, Ont.

LiUNA represents more than 100,000 building trades workers across Canada. LPFCEC was formed in 1972 and has an investment portfolio worth $8 billion.