Sunray Group is continuing its efforts to diversify its portfolio, closing on the acquisition of two Central Ontario resort properties which it plans to convert from timeshares to condos.
Sunray acquired the 172-unit Carriage Hills Resort and the 78-unit Carriage Ridge Resort in the popular Horseshoe Valley resort area for $60 million through a receivership transaction on June 28.
The timeshare properties, with approximately 11,000 owners, had been operating at a deficit. The Ontario Superior Court of Justice appointed BDO Canada as the receiver of the properties in January. Colliers was named the marketing and sales agent, and the property was listed for six months with no fixed sale price.
There were eight bids for the two properties, which feature unit sizes of approximately 1,400 square feet. The Carriage Hills property is 19.43 acres while Carriage Ridge is 8.41 acres.
“A lot of the bidders were looking at it as either a hotel or some kind of fractional ownership,” Sunray president Kenny Gibson told RENX. “We looked at it and the first thing that occurred to us is that it’s a natural condominium play.
“There are two-bedroom units that are actually two separate units. One has a full kitchen and one has a kitchenette. Our plan is to split those and market 500 units.”
Condo conversion for new acquisitions
Since the two-bedroom units have separate locked entrances, Gibson said it will be easy to convert them to one-bedroom condos. The larger units will be approximately 800 square feet and the smaller ones will be approximately 600 square feet.
“There are two recreation centres, one at Carriage Ridge and one at Carriage Hills,” said Gibson. “The one at Carriage Hills has an indoor/outdoor pool and the one at Carriage Ridge has an indoor pool.
“They both have full exercise facilities, small gathering spots, playgrounds, barbecue areas and pavilions all around both properties that will be part of the condo association.”
Downhill and cross-country skiing, golf courses, a Finnish spa and an adventure park with a maze, zip lines, a climbing wall, mountain biking, miniature golf and bungee jumping are also close by.
Gibson said the interiors don’t require any work, but some painting, waterproofing and other improvements are required on the exteriors at Carriage Hills.
The exterior work will be done by the end of the summer and Gibson said the Oro-Medonte Township planning department is supportive of the move to residential units, so he expects to receive all necessary approvals in short order.
The goal is to put the units on the market this fall, but some will be available as short-term rentals this summer while they’re going through the conversion process.
Milborne Group has been retained to market and sell the units. Pricing hasn’t yet been determined.
The properties are located an hour’s drive north of Toronto and a 20-minute drive from Barrie.
Gibson believes the properties will appeal to both Toronto cottage buyers and first-time homebuyers who work in Barrie and are looking for a more affordable option.
Sunray’s hospitality business
The Gupta family-owned Sunray owns and operates 53 hotels with more than 7,500 rooms. About two-thirds of them are in Ontario, with the rest spread among Quebec, Saskatchewan, Newfoundland and Labrador, and Texas. Its brands include Marriott, Starwood, Hilton, Radisson, Best Western, IHG, Wyndham and Choice Hotels.
Gibson said Sunray also has a large Greater Toronto Area hotel property under contract that should close at the end of August.
CFO Capital financed Sunray’s purchase of Carriage Hills and Carriage Ridge. Gibson said the company has good relationships with lenders based on its track record and had no issues obtaining financing — even during the pandemic.
Gibson said hotels are pricing at a 10 to 15 per cent discount from 2019 levels.
“Because of the various government subsidies — the wage subsidies and rent subsidies — people have been able to hang on. We’re not seeing a lot of discounting in pricing even though income is way down.”
Gibson said Sunray’s hotels in secondary and tertiary markets have outperformed its urban assets.
Sunray also owns two resorts.
Bayview Wildwood Resort is a family resort north of Orillia that Gibson said is doing “phenomenally well.”
Sunray purchased Ontario’s 299-acre Hockley Valley Resort and Adamo Estate Winery in 2019. Gibson said that property is more of a corporate resort and hasn’t enjoyed the same pick-up as Bayview Wildwood, even though its golf course has enjoyed rejuvenated business when allowed to be open during the pandemic.
“Hockley Valley has always been known as a culinary destination, so not being able to have indoor dining, and with patios now just starting to open up, it hasn’t been as robust as some of the family resorts. But it’s certainly been doing better than some of our urban hotels.”
Gibson expects a continued rough ride for hotels until the Canada-U.S. border fully reopens. He doesn’t anticipate business returning to 2019 levels until late 2022 or early 2023.
“We see the light at the end of the tunnel, but it’s still a long tunnel,” he said.
Sunray has also been diversifying its portfolio in recent years and the Carriage Hills and Carriage Ridge acquisitions are part of that strategy.
The company acquired the Delta Toronto East Hotel and development property at Kennedy Road and Highway 401, which has been used to shelter homeless people during the pandemic, in 2018. It will be redeveloped into a mixed-use, high-density multiresidential property.
Gibson said Sunray is interested in both condos and purpose-built rentals.
“We have some other residential projects that we’re doing in and around Toronto that are in the planning stages. Some of them are fairly well along and we plan to expand our portfolio.”
Sunray also owns Lakeridge Seniors Residence in Penetanguishene, Ont. and Lake Simcoe Retirement Residence & Assisted Living in Orillia, Ont. It has plans for another residence in Orillia as well as in the small Ontario cities of Chatham and St. Thomas.
“Our facilities are more assisted living than the other types of care, so we think there’s a good space in assisted living,” said Gibson, who added there haven’t been any COVID-19 outbreaks at its retirement properties.