Freed Corp. Buys Three Popular Ontario Resort Properties in $210M Deal
Three popular Ontario resort properties will soon be under new ownership.
Today, Skyline Investments Inc. announced that Toronto-based Freed Corp. will acquire Deerhurst Resort, Horseshoe Valley Resort, and the development lands at Blue Mountain Resort in a $210 million deal.
The transaction will see the creation of a new subsidiary by Freed Corp. called Resort Communities LP, which will also include Gravenhurst’s Muskoka Bay Resort, an asset currently owned by Freed.
Skyline will take a 29% equity stake in Resort LP.
The Transaction is expected to close on or about October 31, 2021 and represents one of the largest resort sales in Canada in the past 15 years, according to Beechwood Real Estate Advisors, who advised Skyline on the transaction.
“This is a milestone for Skyline that provides significant new liquidity to capitalize on our stated strategy to redeploy our investment and operational focus from resorts and development lands into hotels,” said Skyline CEO Blake Lyon. “This Transaction allows us to realize the full net asset value of our Canadian resorts, while still participating in the value creation that Freed’s proven development team can produce. Skyline’s investment partner in Blue Mountain, Serruya Private Equity, also expressed their satisfaction and support for this transaction.”
Upon closing, Skyline will receive a cash payment of $109 million, and after debt and bond repayments, taxes and minority interest payouts, is expected to have approximately $30-$35 million. A further $80 million in payments (including approximately $12 million in interest) is expected to follow over a two-to-four-year period, and approximately $33 million will be received in the form of a 29% equity stake in Resort LP.
Net income before tax relating to the transaction on closing is expected to be between $35-$45 CAD million. After tax, net income is expected to be between $25-$35 CAD million, and the net impact on the Company’s equity after fair value adjustments through other comprehensive income is expected to be between $15-$25 CAD million.
“The acquisition of these iconic resort properties will allow us to execute our strategy of modernizing the traditional resort community market to the highest and best use through design-driven development and benefits of world-class amenities with all season access,” said Freed’s founder and CEO, Peter Freed. “In addition, the acquisition of these resorts further stimulates the growth in the hotel and resort sectors for Freed.”
The deal includes options for Resort LP to acquire Skyline’s 29% interest by December 31 2022, along with a 12% annualized return on this amount in cash. Additionally, it features put and call options for Skyline and Freed at the end of years four and five post-transaction.
Historically known for its activity on the condo-building front, the acquisition marks a major move from Freed to get further into the resort space as the hard-hit industry continues to bounce back from relentless pandemic-related closures.