COLLIERS INTERNATIONAL HOTELS

2017 Canadian Hotel Investment Report | 1

www.collierscanada.com/hotels

CANADIAN HOTEL

INVESTMENT REPORT

COLLIERS INTERNATIONAL HOTELS

2017

Accelerating success.

2 | Colliers International Hotels

2017 CANAD IAN HOTEL INVESTMENT REPORT

INVESTMENT in the Canadian hotel real estate market finished with $4.1 billion in transaction volume in 2016, the second highest on record and almost 70% higher on a year-over-year basis. The year also provided many firsts: the highest volume in the current cycle, a record for investments made by cross-border investors, and a new high for traditional price per room metrics. We expect continued robust activity that should exceed $3.0 billion in overall transaction volume in 2017, with a $1+ billion portfolio already closed in Q1.

CANADIAN HOTEL INVESTMENT TRENDSStrategic VolumeTraditional Volume

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$1B

$3B

$5B

$1B

$2B

$3B

$4B

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Institutional

Hotel Investment Company

Real Estate Company

Public Company

Private Investor

Institutional

Hotel Investment Company

Real Estate Company

Public Company

Private Investor

0 20 40 60 80 100

TTL

TOT

SK

MB

BC

AB

500

1B

1.5B

2B

2.5B

3B

3.5B

4B

4.5B

5B

$4B

$2B

Source: Colliers International Hotels

IntroductionC O L L I E R S I N T E R N AT I O N A L H O T E L S

Canada is celebrating its 150th birthday as a nation on July 1st, 2017. Major events and celebrations are planned throughout the year across the country.For more information visit: www.canada150.com

CURRENT CYCLE


2017 INDUSTRY OUTLOOK

ABOVE AVERAGE TRANSACTION ACTIVITY

Transaction volume should easily surpass the current cycle average of $1.9 billion. We estimate that in 2017 the overall transaction market should surpass $3.0 billion.

POTENTIAL FOR A NEW RECORD IN THE TRADITIONAL MARKET

Private capital should continue to drive the traditional portion of the market to new heights this year. Investors are on track to pursue opportunities across the country, supported by historically low debt costs and a moderate new supply environment.

REBOOT OF NEW DEVELOPMENT PROJECTS

Supply pressure should increase in markets where operating performance is thriving. New supply growth in Canada’s 17 major markets has averaged between 0.5% and 1.0% in each of the last five years. Colliers anticipates the new supply environment will increase to range between 1.5% to 2.0% annualized growth within the next two to three years.

STRONG DEMAND EXPECTED FOR CANADA’S 150TH ANNIVERSARY

Increasing occupancies and average rates are forecasted to continue into 2017, aided by favourable currency tailwinds. Most Canadian markets are expected to benefit as significant marketing and investments have been made to promote Canada throughout the year.

PEAK YEAR FOR INTERNATIONAL TRAVEL INTO CANADA

Increased international travel, particularly from the United States and China will be seen this year, supported by the continuing weakness of the Canadian dollar. Canada benefits from Approved Destination Status for Chinese travelers and has experienced a 276% increase in visitation since its enactment in 2009, according to Statistics Canada.

ENERGY-LINKED MARKETS TO REBOUND

Declines in top-line performance should stabilize and rebound in 2017 across hard-hit energy markets. As a result we should witness an uptick in trading activity in Alberta, Saskatchewan, and Newfoundland and Labrador. A HANDFUL OF CROSS-BORDER

PURCHASES WILL ACCOUNT FOR A SIGNIFICANT COMPONENT OF THE TRANSACTION ENVIRONMENT

Despite a recent clamp-down on capital controls in Mainland China, we view cross-border capital from China continuing to comprise a significant portion of the transaction universe over the course of the year, as well as renewed interest from state-side investors.

MAJOR MARKET FOCUS

The majority of interest will continue to target Toronto and Vancouver; however with limited opportunities in these markets investors will continue to look at other key markets including the downtown and suburban areas of Ottawa, Montreal and Calgary.

O U T LOO K

2 0 1 7

Industry


CURRENCY MARKETSA WEAKENED CANADIAN DOLLAR PROVIDES GREAT INCENTIVE TO THE GLOBAL INVESTOR

The Canadian dollar has been in a downtrend against the US dollar since a re-balancing in energy markets in 2014. As assets were made available in the 2014 to 2016 period in the hotel sector, the market morphed with domestic investors increasingly competing against a highly incentivized global investor on many of the large portfolios and trophy opportunities.

Foreign exchange characteristics should entice cross-border firms to continue their pursuit of Canadian real estate. While not all opportunities are of interest to foreign capital, the traditional tranche of the market is also benefiting from a captive Canadian investor pool that generally has less

incentive to move money into US dollar denominated currency.

THE CANADIAN HOTEL INDUSTRY is firing on all cylinders, having gained strength in each passing year of the current cycle. Several factors beyond regular buyer–seller–lender dynamics have come into play that have dramatically enhanced the appeal of the country’s lodging sector and provide promise for continued activity in the coming years. Four themes have emerged that have enhanced liquidity which include: shifts in currency markets, capital flight from primarily Mainland China, a search for risk-adjusted returns by both domestic and internationally-focused investors, and strong operating performance witnessed in most markets across the country.

CAPITAL FLIGHTCANADIAN REAL ESTATE BENEFITS FROM AN OUTFLOW OF CAPITAL

Cross-border property acquisitions by Chinese capital have been growing unabated over the past decade. Pressure to diversify investments beyond Mainland and Hong Kong has led to an outflow to global real estate that amounted to almost US$35 billion in 2016, according to Real Capital Analytics – up from a paltry US$600 million in 2009.

Canada is a natural destination for this capital given its stable political and legal environments. An investment made into a country like Canada also provides favourable currency exchange where investments can be made at a relative discount, as well as a less absolute cost to acquire leading properties in comparison to major global centres such as New York City, London and Singapore. We expect international investment into Canada will continue in the foreseeable future as opportunities arise.

This weakness provides a strong incentive for global investors to

acquire Canadian properties with greater purchasing power.

Canadian Dollar decline vs. the US Dollar since

early 2013

-25%

SPECIAL FEATURE

Source: Real Capital Analytics; Colliers International

GLOBAL CROSS BORDER REAL ESTATE ACQUISITIONS BY MAINLAND CHINESE CAPITAL (2009-2016) $USD

2016

2015

2014

2013

2012

2011

2010

2009

0 $5 $10 $15 $20 $25 $30 $35

10%

1%

3%

0%

0%

0%

2%

0%

Cana

dian

Sha

re %

of T

otal

Cap

ital

Source: Statistics Canada

Of the total global outflows from China in 2016, 10% was directed to Canadian real estate – a new record.

$ Billions

Making Waves

Canadianin the

Hotel Sector


SEARCH FOR YIELDHOSPITALITY ASSETS IN FOCUS

In an environment where long-term bonds are providing meager returns, investors are increasingly looking to real estate to provide adequate yield to their portfolio. With lodging assets generally providing superior risk-adjusted returns – averaging 210 basis points higher than a sample of competing commercial real estate classes in Canada – the hotel sector has benefited from investment from non-traditional capital sources. The search for yield is also now a global affair with international-oriented investors searching all corners of the globe and moving money to destinations that satisfy their return requirements.

Year Occupancy ADR RevPAR Supply Demand2016 64.5% $149 $96 0.9% 1.5%2015 64.3% $144 $92 1.0% 0.2%2014 64.9% $137 $89 0.5% 3.0%2013 63.3% $133 $84 0.5% 2.1%2012 62.4% $130 $81 0.5% 1.6%2011 61.9% $128 $79 1.2% 2.9%

CANADIAN TOP-LINE OPERATING METRICS

Source: Smith Travel Research

LIQUIDITY in the hotel transaction market has increased over the course of the present cycle and 2017 should be another banner year given the dynamics of the currency markets, sustained capital flight from Mainland China, and continuation of operating performance and aggressive search for yield by domestic and international investors.

FASTEST GROWING MARKETS IN CANADA BY RevPAR IN 20161. WINDSOR, ONTARIO (18.1%)

2. TORONTO DOWNTOWN, ONTARIO (16.5%)

3. VANCOUVER SOUTH/SURREY, BRITISH COLUMBIA (16.2%)

4. VANCOUVER AIRPORT, BRITISH COLUMBIA (13.1%)

5. BANFF, ALBERTA (12.9%)

Source: Smith Travel Research

+9.4%

On average hotels offer a 160-260 basis point yield premiumDowntown full service hotels vs. downtown office, retail power centre and multifamily high rise in urban markets across Canada as of Q4 2016. Source: Colliers International

STRONG OPERATING PERFORMANCEINDUSTRY FUNDAMENTALS IN A “SWEET SPOT”

Notwithstanding regional softness in Alberta, Saskatchewan and Newfoundland and Labrador, on a national level the operating environment has been performing well with RevPAR growing by 5.0% in 2016 and a compound annual growth rate of 3.5% throughout the current cycle.

Growth in demand has outpaced new supply over the past decade and as a result top-line revenues in Canada have grown by nearly 22% since 2011, according to Smith Travel Research.

70¢The Canadian dollar is forecast to remain in the mid-to-low 70 cent

range against the US dollar through the medium-term according to BMO Capital Markets Economics Research


Source: Statistics Canada

SPECIAL FEATURE

Tourism up in 2016


TRANSACTION ANALYSIS

YE 2016 Year In Review

HOTEL INVESTMENT REACHES NEW HEIGHTS

Canadian hotel investment continued to rise in 2016 with overall transaction volume surging ahead of 2015 levels by almost 70%, reaching nearly $4.1 billion with the sale of over 240 hotels. Robust trading activity was underpinned by a number of large single asset and portfolio deals as well as significant M&A activity with 2016 ranking as the second highest year on record for total volume after 2007. Total volume included $2.54 billion (100 trades) of strategic activity, representing 62% of the year’s total. This compares with $826 million (33%) of strategic volume in 2015.

Despite regional economic pressures, a variety of positive indicators supported an elevated trading environment: strong growth in operating fundamentals, a broad mix of buyers and sellers, healthy debt markets and an attractive foreign exchange rate against the Canadian dollar compared with key global currencies.

• Foreign capital was a prominent theme in 2016 with cross-border groups, primarily from Asia investing $2.75 billion (67% of total volume).

• Foreign investment surpassed the combined total dollar volume between 2010 and 2015 ($1.7 billion) by over $1 billion.

• Portfolio deals, both national and regional, were a major component of the market with 10 transactions inclusive of 128 hotels totaling $2.56 billion in volume, well above levels seen in the current cycle.

• Total price per key (inclusive of strategic activity) averaged $133,600, trending 17% above 2015 ($114,300).

• Average deal size paced slightly above 2015 at $16.9 million with an average property size of 120 keys.

• Seven hotels sold for over $50 million representing 16% of total volume, compared to eight hotels in 2015 at 41% of volume.

$4.1 BILLION VOLUME

$1.55B TRADITIONAL VOLUME

$2.54B STRATEGIC VOLUME

PROPERTY SELLER BUYER KEYS PRICE ($M)

PRICE/RM

CAP RATE

BUYER ORIGIN

TOP PORTFOLIO TRANSACTIONS 2016 (BY VOLUME)InnVest REIT (1) InnVest REIT Bluesky Hotels & Resorts 14,551 $2,100.0 n/a n/a Asian

Coast Hotels (2) Okabe Co. Ltd APA Group 919 $210.0 n/a n/a Asian

Diversified Eastern Canada Hotel Portfolio (3) InnVest REIT Easton's Group of Hotels 1,571 $90.0 $57,300 n/a Canadian

Toronto Airport Portfolio (4) Ocean Properties Morguard Corporation 417 $33.5 $80,300 n/a Canadian

Oakville Hotel Portfolio (5) InnVest REIT Vrancor Group 249 $32.5 $130,500 n/a Canadian

TOP SINGLE ASSET 2016 (BY VOLUME)Four Seasons Hotel Toronto Kingdom Holdings Shahid Khan 259 $225.0 $868,700 n/a American

Ottawa Marriott Hotel (6) Larco Hospitality Inc. InnVest REIT 489 $115.0 $235,200 6.5 Canadian

Fairmont Vancouver Airport (7) Oxford Properties InnVest REIT 386 $90.0 $233,200 7.1 Canadian

Oak Bay Beach Hotel (8) Bison Properties NOAH Holdings Ltd 120 $62.0 n/a n/a Asian

Novotel Toronto Centre (9) Olde Yorke Esplanade Hotels Ltd. Silver Hotel Group 262 $52.0 $198,500 n/a Canadian

2016 TOP TRANSACTIONS BY VOLUME

(1) Privatization of publicly traded company, encompassing 94 hotels valued at $2.1 billion.(2) $210 million entity acquisition inclusive of five owned properties (Edmonton, Chilliwack,

Vancouver, Prince George and Victoria) and the brand/franchise business.(3) 14 property non-core hotel portfolio, two of which were leasehold interest.(4) Three property portfolio(5) Two property portfolio. Includes attached 17,000 SF convention centre leased to a third party.(6) Cap rate based on forecasted 2016 net income.

(7) Leasehold interest. Cap rate based on forecasted net income.(8) Distressed sale. 20 units are condominium units rented by the hotel. Price per room not

applicable.(9) The transaction also included a significant parking and retail component not included in the sale

price.


14% FOREIGN

100% FOREIGN


VOLUME ($M)

% OF VOLUME

NUMBER OF HOTELS

PRICE PER ROOM

AVG. DEAL SIZE ($M)

AVG. NUMBER OF KEYS

AVG. CAP RATE

FULL SERVICE $679 44% 29 $124,700 $23.4 172 6.5%

FOCUSED SERVICE $475 31% 33 $96,600 $14.4 129 7.0%

LIMITED SERVICE $393 25% 80 $74,200 $4.9 61 8.2%

TOTAL $1,547 100% 142 $99,000 $10.9 123 7.3%

2016 TRADITIONAL MARKET ANALYSIS BY SEGMENT


TRADITIONAL MARKET HIGHLIGHTSExcluding strategic transactions, there was $1.55 billion of traditional volume with the sale of 142 hotels. Traditional activity has grown materially throughout the current cycle, trending above $1.5 billion over the past two years compared with an average of $860 million over the past decade. • Price per key metrics averaged $99,000, pacing

almost 20% above 2015 ($84,600) and ranking as the highest on record for traditional sales.

• Full-service trading accounted for the largest proportion of volume; however, investment in focused-service (+43%) and limited-service (+18%) properties surged year-over-year, well-above levels seen in the current cycle.

BUYERS REMAIN EAGER FOR HOTEL REAL ESTATE • Hotel investment companies (“HICs”) were the

most active buyer group by volume for traditional sales investing $600 million with an average deal size of $12.8 million. HICs were the largest acquirers of focused-service properties, primarily in submarkets of major urban centres and secondary markets.

• Private investors acquired over 80 properties comprising investment of $543 million, primarily in the limited-service segment with a smaller average deal size of $6.7 million.

• Public companies invested $277 million in traditional hotel sales, principally purchasing full-service properties in major markets with an average deal size of $69.2 million.

• Beyond large strategic deals, foreign investors were also active on smaller single asset transactions acquiring seven properties totalling $219 million (14% of traditional volume).

2016 BUYER/SELLER GROUPS (BY VOLUME)

SELLERS CONTINUE TO SHED NON-CORE ASSETS • HICs and private investors were the largest sellers,

together divesting 109 hotels representing almost 70% of sell-side volume ($1.03 billion).

• Institutional sellers were less active than in recent years; however they continued to shed non-core assets to redeploy capital (17% of volume).

PRIVATE INVESTOR

REAL ESTATE COMPANY

HOTEL INVESTMENT CO.

INSTITUTIONAL & OTHER

PUBLIC COMPANY

18%1%

39%7%

35%

32%17%34%6%

10%

SELLER

BUYER

Note: Strategic transactions are excluded from this analysis which represents $2.54 billion (62%) of annual volume.




NEW SUPPLY Colliers estimates new hotel room supply (net of closures) in Canada’s 17 major markets increased by 1.0% in 2016, edging ahead of the 0.8% seen in both 2014 and 2015. Stronger supply growth of 1.5% is expected in 2017, the largest growth rate over the past six years.

ECONOMIC ENVIRONMENT Notable strength in the tourism sector was a bright spot for Canada’s economy which saw moderate real GDP growth of 1.3% in 2016 according to the Conference Board of Canada. Regional economic dichotomies were evident with national growth impacted by a challenging energy sector as well as muted business investment.

Stronger real GDP growth of 2.0% is projected for 2017 with the Conference Board anticipating modest improvements in the energy and export sectors. Government stimulus funds are also expected to ramp up in 2017 with increased spending and infrastructure investments, contributing to a stronger employment outlook than seen in the 2014-2016 period.

CAPITALIZATION RATES Average annual capitalization (cap) rate trends have compressed by approximately 150 basis points since 2015 after relative stability during the previous five years. Further rate compression is expected in 2017, influenced by a highly competitive buyer pool and continuing influx of global capital.

Transactions reporting cap rates averaged approximately 7.3% in 2016. Full service hotels primarily traded between 5.0% - 8.0% with an average of 6.5%; however prime assets in major markets traded at sub 5.0% levels. Focused service asset trades reported cap rates of 6.5% - 9.0% with an average of 7.0%, followed by limited service properties in the 8.0% - 11.0% band with an average of 8.2%.

DEBT MARKET CONDITIONS Near record transaction activity in the lodging sector was supported by liquid debt markets. The Canadian GOC 10-year bond yield hit a record low of 0.943% in October 2016, although rebounded higher by year-end on the back of the US election results and anticipation for renewed inflation over the medium-to-long-term. Conservative loan-to-value ratios (LTVs) across the hospitality spectrum continued through 2016 in the 55% to 65% range for stabilized investments. A diverse mix of lenders were active in the hospitality space with a growing presence of international lenders on larger deals with sponsor criteria a significant factor.


Overall Cap Rate Trends

2017F

2016

2015

2014

2013

2012

2011

2010

5% 6% 7% 8% 9% 10%

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

ANNUAL AVG.

HALIFAX

MONTREAL AIRPORT

MONTREAL DT

OTTAWA

NIAGARA FALLS

TORONTO DT

TORONTO AIRPORT

TORONTO NORTH

WINNIPEG

REGINA/SASK

EDMONTON

CALGARY

RICHMOND

VANCOUVER

VICTORIA

2016 2017F


MAJOR MARKET HOTEL SUPPLY GROWTH IN CANADA


Transaction activity has historically been split fairly evenly between Eastern and Western Canada with the West generally garnering a higher average price per room. Western Canadian markets impacted by the energy sector saw transaction activity slow year-over-year, representing 30% of traditional volume compared with 70% in Eastern Canada. Ontario maintained its top spot for hotel investment accounting for almost 60% of volume followed by British Columbia (21% of volume). Despite tapered trading in Western Canada, transactions saw an average price per room premium of 15% over the East.

REGIONAL ANALYSIS

2016 TRADITIONAL TRANSACTION VOLUME BY REGION

NUMBER OF HOTELS

NUMBER OF ROOMS $ VOLUME % VOLUME $/ROOM

West 43 3,223 $461 30% $111,300

Alberta 13 1,170 $109 7% $93,700

British Columbia 26 1,775 $332 21% $133,100

Manitoba 3 98 $10 1% $76,400

Yukon 1 180 $10 1% $54,400

East 99 10,917 $1,085 70% $96,000

Ontario 75 8,391 $892 58% $104,100

Quebec 17 1,967 $164 11% $76,100

Nova Scotia 1 61 n/a 0% n/a

New Brunswick 6 498 $28 2% $55,500

TOTAL 142 14,140 $1,547 100% $99,000

2015 TRANSACTION VOLUME ($MILLIONS)Source: Colliers International Hotels


0 100 200 300 400 500 600 700

Calgary

Edmonton

London

Victoria

Greater Montreal Area

Niagara Falls

Ottawa

Greater Vancouver Area

Greater Toronto Area

-100%

-11%

116%

31%

-31%

1628%

—

-73%

-40%

2016

Note: Strategic transactions are excluded which represent $2.54 billion (62%) of the annual total.



CANADIAN HOTEL INVESTMENT TRENDS

YEAR VOLUME ($M) PERCENT CHANGE

NUMBER OF HOTELS

PERCENT CHANGE

PRICE PER ROOM ($)

PERCENT CHANGE

TOTAL TRANSACTION VOLUME2016 $4,081 65.9% 242 64.6% $133,600 16.9%

2015 2,460 69.1% 147 15.7% 114,300 22.6%

2014 1,455 -28.1% 127 10.4% 93,200 -29.9%

2013 2,023 71.7% 115 -0.9% 133,000 59.1%

2012 1,178 6.4% 116 17.2% 83,600 -22.6%

2011 1,107 54.4% 99 15.1% 108,000 30.1%

2010 717 73.2% 86 16.2% 83,000 26.7%

2009 414 -61.4% 74 -19.6% 65,500 -43.8%

2008 1,072 -76.6% 92 -45.2% 116,500 -24.4%

2007 4,580 55.3% 168 19.1% 154,200 -4.8%

2006 2,950 72.9% 141 35.6% 162,000 48.9%

2005 1,706 373.9% 104 108.0% 108,800 62.4%

2004 360 -23.2% 50 -2.0% 67,000 7.7%

2003 469 -13.1% 51 4.1% 62,200 -24.0%

TRANSACTION VOLUME EXCLUDING STRATEGIC SALES*2016 $1,547 -5.3% 142 0.0% $99,000 17.0%

2015 1,634 35.0% 142 13.6% 84,600 2.9%

2014 1,210 6.3% 125 14.7% 82,200 -6.1%

2013 1,138 -3.4% 109 -6.0% 87,500 4.7%

2012 1,178 49.9% 116 20.8% 83,600 -3.9%

2011 786 57.8% 96 17.1% 87,000 26.1%

2010 498 20.3% 82 10.8% 69,000 5.3%

*Strategic transactions typically involve at least two of the following conditions: 1) a pricing premium is paid; 2) the asset is located in a high barrier to entry market or within a geographic hub of an owner’s principal business; or 3) the opportunity allows for an extension of the company’s brand or portfolio.

Note: Trends are based on hotel transactions of at least $1 million.Source: Colliers International Hotels

COLLIERS HOTEL VALUE INDEXThe Colliers Hotel Value Index monitors the annual fluctuation in hotel values due to shifts in supply and demand, top-line operating performance and investor attitudes.

• The value of Canadian hotel real estate, derived from 17 major markets increased by an estimated 9.8% in 2016, following the 6.8% growth reported in 2015. We estimate values will continue rising in 2017 by 12.2%.

• Strong operating performance and surging underlying real estate values contributed to record annual valuation growth above 20% in both Downtown Toronto (+23.7%) and Downtown Vancouver (+23.4%).

• Rising passenger arrivals contributed to a stronger valuation growth for the airport

submarkets of Toronto, Montreal and Vancouver than seen in recent years.

• Continued declines in operational performance in energy-linked markets including Calgary, Edmonton and Regina/Saskatoon impacted hotel valuations in 2016; however, these markets are expected to stabilize in 2017.

• Performance in the Whistler and Alberta Mountain markets has been strong with demand and rate power increasing in response to the lower Canadian dollar. While there have been relatively few transactions in these markets, implied valuations are showing strong growth in the 2016-2017F periods.



COLLIERS HOTEL VALUE INDEX

10Y

VANCOUVER DOWNTOWN VANCOUVER AIRPORT

10Y

10Y

10Y

10Y

10Y

2015 6.2% 2016 7.2% 2017F 7.5% 2015 21.2% 2016 23.4% 2017F 22.1%

10Y

2015 7.8% 2016 12.2% 2017F 13.4%

10Y

WHISTLER2015 6.2% 2016 8.5% 2017F 9.3%

CALGARY2015 -6.0% 2016 -10.2% 2017F 0.9%

10Y

EDMONTON2015 -8.3% 2016 -5.3% 2017F 1.1%

10Y

ALBERTA MT. RESORTS2015 12.1% 2016 13.5% 2017F 14.1%

REGINA/SASKATOON2015 -4.4% 2016 -5.8% 2017F -3.7%

10Y

WINNIPEG2015 2.2% 2016 3.2% 2017F 4.3%

10Y

T.O. NORTH/PARKLANDS2015 6.2% 2016 10.4% 2017F 7.8%

TORONTO DOWNTOWN2015 14.2% 2016 23.7% 2017F 25.1%

10Y

TORONTO AIRPORT WEST2015 7.3% 2016 13.6% 2017F 17.3%

10Y

NIAGARA FALLS2015 9.0% 2016 7.2% 2017F 8.4%

OTTAWA2015 7.5% 2016 9.3% 2017F 12.4%

10Y

MONTREAL DOWNTOWN2015 8.8% 2016 9.2% 2017F 8.9%

10Y

MONTREAL AIRPORT2015 5.5% 2016 8.2% 2017F 9.4%

HALIFAX/DARTMOUTH2015 3.5% 2016 4.8% 2017F 6.9%

10Y

CAN. NATIONAL AVG.2015 6.8% 2016 9.8% 2017F 12.2%

10Y


COLLIERS VALUE INDEX

VICTORIA


NAME CITY PROV. ROOMS DATE PRICE ($) PRICE/ROOM ($) CAP RATE (%)

Bluebird Motel Innisfail AB 52 Jan $1,580,000 $30,400 n/a

Chinook Country Inn Sundre AB 35 Jan $1,180,000 $33,700 n/a

Nova Lodge Hinton Hinton AB 103 Mar $7,100,000 $68,900 11.2

Quality Inn & Suites Hinton Hinton AB 70 Mar $5,566,700 $79,500 n/a

Elkwater Lake Lodge & Resort (1) Elkwater AB 68 May $3,260,000 n/a n/a

Four Points by Sheraton Edmonton International Airport Nisku AB 112 Jun $17,200,000 $153,600 n/a

Sawridge Inn and Conference Centre (2) Fort McMurray AB 188 Jun $20,150,000 n/a n/a

Candlewood Suites & Holiday Inn Express West Edmonton (3) Edmonton AB 214 Sep $18,500,000 $172,900 n/a

Lakeview Inn and Suites Edson East Edson AB 45 Sep $2,900,000 $64,400 n/a

Spruce Grove Inn (4) Banff AB 120 Oct $10,560,000 $88,000 n/a

Voyager Inn (4) Banff AB 88 Oct $12,440,000 $141,400 n/a

Argyll Plaza Hotel (5) Edmonton AB 48 Nov $4,742,500 $98,800 8.2

Homestead Inn (6) Banff AB 27 Nov $3,900,000 $144,400 n/a

ALBERTA - 13 TRADES 1,170 $109,079,200

Abbott Villa on the Lake (7) Kelowna BC 52 Feb $4,400,000 $84,600 n/a

Cozy Beach Bed and Breakfast (8) White Rock BC 3 Feb $1,165,000 n/a n/a

Econo Lodge Kelowna Kelowna BC 44 Feb $3,999,000 $90,900 n/a

Best Western Inn at Penticton Penticton BC 64 Mar $5,600,000 $87,500 n/a

Four Points by Sheraton Surrey (9) Surrey BC 77 Mar $12,200,000 $158,400 n/a

Manteo Resort Waterfront Hotel (10) Kelowna BC 78 Mar n/a n/a n/a

Best Western Mountainview Inn Golden BC 72 Apr $4,535,000 $63,000 n/a

Camilla House Bed & Breakfast (8) Vancouver BC 9 Apr $3,548,000 n/a n/a

Hospitality Inn Port Alberni Port Alberni BC 50 Apr $4,200,000 $84,000 11.0

O Canada House Bed & Breakfast (8) Vancouver BC 7 Apr $3,250,000 n/a n/a

Canadian Princess Resort (11) Ucluelet BC 46 May n/a n/a n/a

Oak Bay Beach Hotel (12) Victoria BC 120 May $62,000,000 n/a n/a

Park Inn & Suites by Radisson on Broadway Vancouver (13) Vancouver BC 117 May $51,800,000 n/a n/a

Quality Hotel & Conference Centre Abbotsford Abbotsford BC 116 May $10,645,000 $91,800 n/a

Super 8 Lake Country Lake Country BC 40 May $3,450,000 $86,300 n/a

The Vedder River Inn Chilliwack BC 48 May $6,739,800 $140,400 n/a

Travelodge Chilliwack Chilliwack BC 74 May $7,050,000 $95,300 n/a

Alpine Motor Inn Abbotsford BC 44 Jun $2,810,000 $63,900 n/a

The Lodge at Twin Creeks Abbotsford BC 12 Jun $1,495,000 $124,600 n/a

Fairmont Vancouver Airport (14) Richmond BC 386 Aug $90,000,000 $233,200 7.1

Marina West Resort & Marina (15) Tofino BC 63 Aug $7,900,000 n/a n/a

Super 8 Victoria (16) Victoria BC 51 Sep $5,980,000 n/a n/a

Driftwood Inn Sechelt BC 28 Oct $3,250,000 $116,100 n/a

Deluxe Hotel Vancouver Vancouver BC 24 Nov $5,526,000 $230,300 n/a

April Point Resort & Marina (17) Quadra Island BC 56 Dec n/a n/a n/a

Painter's Lodge (17) Campbell River BC 94 Dec n/a n/a n/a

BRITISH COLUMBIA - 26 TRADES 1,775 $332,242,800

2016 CANADIAN TRADITIONAL HOTEL TRANSACTIONS

2016 TRANSACTIONS


2016 TRANSACTIONS


Howland Hotel (8) Beausejour MB 6 Jul $1,325,000 n/a n/a

St. James Hotel (8) Winnipeg MB 20 Aug $3,500,000 n/a n/a

Trails West Inn Brandon MB 72 Aug $5,500,000 $76,400 n/a

MANITOBA - 3 TRADES 98 $10,325,000

Quality Inn Grand Falls Grand Falls NB 80 Jan $5,200,000 $65,000 n/a

Quality Inn Edmundston Edmundston NB 132 Feb $2,400,000 $18,200 n/a

Comfort Inn Campbellton (18) Campbellton NB 59 Sep n/a n/a n/a

Comfort Inn Saint John (18) Saint John NB 59 Sep n/a n/a n/a

Fairfield Inn & Suites Moncton (19) Moncton NB 82 Oct $9,100,000 $111,000 n/a

Quality Inn Moncton (19) Moncton NB 86 Oct $6,700,000 $79,800 n/a

NEW BRUNSWICK - 6 TRADES 498 $27,650,000

Comfort Inn Bridgewater (18) Bridgewater NS 61 Sep n/a n/a n/a

NOVA SCOTIA - 1 TRADE 61 n/a

Courtyard by Marriott Toronto Airport (20) Toronto ON 168 Feb$21,105,000 $75,400 n/a

Hotel Carlingview Toronto Airport (20) Toronto ON 112 Feb

Residence Inn by Marriott Toronto Airport (20) Toronto ON 137 Feb $12,395,000 $90,500 n/a

Ottawa Marriott Hotel (21) Ottawa ON 489 Feb $115,000,000 $235,200 6.5

Best Western Orangeville Inn & Suites Orangeville ON 84 Mar $12,200,000 $145,200 n/a

Bonanza Motel Niagara Falls ON 50 Mar $1,400,000 $28,000 n/a

Claramount Inn (22) Picton ON 10 Mar $1,975,000 n/a n/a

Comfort Inn Toronto East (23) Toronto ON 81 Mar $7,800,000 n/a n/a

Drawbridge Inn Sarnia ON 95 Mar $2,000,000 n/a n/a

Four Points by Sheraton Toronto Airport (24) Mississauga ON 204 Mar $15,500,000 $76,000 n/a

Hilton Garden Inn Toronto/Mississauga Mississauga ON 154 Mar $23,700,000 $153,900 4.9

Knights Inn Port Colborne Port Colborne ON 26 Mar $1,050,000 $40,400 n/a

Quality Inn Sarnia/Point Edward Point Edward ON 48 Mar $2,400,000 $50,000 n/a

Quality Hotel & Suites Woodstock (11) Woodstock ON 137 Mar n/a n/a n/a

Ramada Gananoque Provincial Inn Gananoque ON 77 Mar $1,560,000 $20,300 n/a

Sportsman's Inn Resort & Marina (25) Killarney ON 27 Mar $2,395,000 n/a n/a

Best Western Plus Couchiching Inn Orillia ON 81 Apr $7,850,000 $96,900 n/a

Holiday Inn Express Toronto-North York Toronto ON 163 Apr $15,875,000 $97,400 n/a

Holiday Inn Windsor Downtown Windsor ON 145 Apr $6,500,000 $44,800 n/a

Imperial Hotel & Suites (26) Niagara Falls ON 104 Apr $12,500,000 n/a n/a

Kings Hotel Inn & Suites Kingsville ON 18 Apr $1,076,000 $59,800 n/a

The Falls A Family Lodge (27) Niagara Falls ON 36 Apr $1,600,000 n/a n/a

TownePlace Suites by Marriott London (28) London ON 126 Apr n/a n/a n/a

Best Western Fallsview (29) Niagara Falls ON 243 May $32,000,000 $131,700 n/a

Seven Oakes Motel Kingston ON 44 May $3,000,000 $68,200 n/a

Barr's Motel (7) Barrie ON 12 Jun $1,000,000 $83,300 n/a

Best Western Brantford Hotel and Conference Centre Brantford ON 158 Jun $11,300,000 $71,500 n/a

Comfort Inn Port Hope Port Hope ON 89 Jun $7,291,000 $81,900 n/a

Days Inn Ottawa Airport (6) Ottawa ON 81 Jun $10,900,000 $134,600 n/a

Hampton Inn by Hilton Brampton/Toronto Brampton ON 92 Jun $15,400,000 $167,400 5.0

London Executive Suites Hotel London ON 51 Jun $4,500,000 $88,200 n/a



Novotel Toronto Centre (30) Toronto ON 262 Jun $52,000,000 $198,500 n/a

Pari's Motel Ottawa ON 26 Jun $1,700,000 $65,400 n/a

Sleep Inn Sault Ste. Marie Sault Ste Marie ON 59 Jun $2,900,000 $49,200 n/a

Super 8 Grimsby Grimsby ON 60 Jun $3,500,000 $58,300 n/a

Waterview On The Bay (31) Wiarton ON 26 Jun $1,400,000 n/a n/a

Wyndham Garden Niagara Falls Fallsview Niagara Falls ON 152 Jun $22,116,000 $145,500 n/a

Country Inns & Suites Oakville (32) Oakville ON 71 Jul $8,300,000 $98,600 n/a

Crowne Plaza Toronto Airport Toronto ON 489 Jul $36,000,000 $73,600 n/a

Days Inn Fallsview (33) Niagara Falls ON 96 Jul $20,000,000 n/a n/a

Holiday Inn & Suites Oakville @ Bronte (34) Oakville ON 144 Jul$32,500,000 $130,500 n/a

Staybridge Suites Oakville-Burlington (34) Oakville ON 105 Jul

Holiday Inn Cambridge-Hespeler Galt (35) Cambridge ON 143 Jul$15,350,000 $46,900 n/a

Holiday Inn Kitchener-Waterloo Conference Centre (35) Kitchener ON 184 Jul

Motel 6 London London ON 99 Jul $6,000,000 $60,600 n/a

Quality Inn & Suites Kingston Kingston ON 75 Jul $8,350,000 $111,300 n/a

Super 8 Chatham Chatham ON 40 Jul $2,100,000 $52,500 n/a

Super 8 Midland Midland ON 65 Jul $3,436,000 $52,900 n/a

Toronto Plaza Airport Hotel (36) Toronto ON 197 Jul $17,500,000 $88,800 n/a

Best Western Plus Burlington Inn & Suites Burlington ON 78 Aug $10,350,000 $132,700 n/a

Days Inn Brockville Brockville ON 85 Aug $3,900,000 $45,900 n/a

Four Points by Sheraton Cambridge Kitchener Cambridge ON 124 Aug $12,500,000 $100,700 n/a

Knights Inn Oshawa Oshawa ON 25 Aug $1,575,000 $63,000 n/a

Pantages Hotel Toronto Centre (11) Toronto ON 82 Aug n/a n/a n/a

Quality Suites Oakville (37) Oakville ON 80 Aug $10,000,000 n/a n/a

Rodeway Inn King William Huntsville ON 32 Aug $1,700,000 $53,100 n/a

Travelodge Oshawa Whitby Oshawa ON 133 Aug $10,600,000 $93,800 n/a

Windermere House (38) Windermere ON 56 Aug n/a n/a n/a

Comfort Inn Kirkland Lake (18) Kirkland Lake ON 64 Sep n/a n/a n/a

Holiday Inn Hotel & Suites London (18) London ON 143 Sep n/a n/a n/a

Holiday Inn Toronto Airport East (18) Toronto ON 191 Sep n/a n/a n/a

Quality Suites Toronto Airport (18) Toronto ON 254 Sep n/a n/a n/a

Staybridge Suites Guelph (18) Guelph ON 120 Sep n/a n/a n/a

Staybridge Suites London (18) London ON 117 Sep n/a n/a n/a

Fairfield Inn & Suites Toronto Brampton Brampton ON 107 Sep $14,300,000 $133,600 8.1

Hampton Inn & Suites by Hilton Barrie Barrie ON 104 Sep $16,000,000 $153,800 n/a

Holiday Inn Express & Suites Toronto - Markham (39) Toronto ON 117 Sep $31,800,000 n/a n/a

Travelodge Barrie on Bayfield Barrie ON 130 Sep $8,700,000 $66,900 7.3

Highwayman Inn & Conference Centre Orillia ON 86 Oct $4,950,000 $57,600 n/a

Travelodge Pembroke Pembroke ON 57 Oct $3,845,000 $67,500 n/a

Courtyard Waterloo St. Jacobs (28) Waterloo ON 118 Nov n/a n/a n/a

Holiday Inn Toronto Airport East (9) Toronto ON 191 Nov $18,000,000 $94,200 n/a

Ramada Niagara Falls Niagara Falls ON 150 Nov $5,844,000 $55,700 n/a

Super 8 London London ON 85 Nov $4,100,000 $48,200 n/a

Templar Hotel Toronto ON 27 Dec $9,750,000 $361,100 n/a

ONTARIO - 75 TRADES 8,391 $892,263,000


1. Leasehold interest. Resort includes a mix of guest rooms, cabins and strata condo units. Price per room not applicable.

2. Acquired for redevelopment. Price per room not applicable.3. New build dual branded property with no operating history. 50% interest

transferred. Price per room reflects 100% interest.4. Part of two property portfolio valued at $23 million.5. Sold together with Argyll Plaza strip mall. Sale price is based on an estimated

allocation for the hotel.6. Leasehold interest.7. Distressed sale.8. Price per room not applicable.9. Share sale.10. Share sale of traditional and strata units. Pricing details confidential.11. Sale details confidential.12. Distressed sale. 20 units are condominium units rented by the hotel. Price per

room not applicable.13. Acquired for future redevelopment. Price per room not applicable.14. Leasehold interest. Cap rate based on forecasted net income.15. Sale included excess land and a marina. Price per room not applicable.16. Acquired for conversion to alternate use. Price per room not applicable.17. Part of two property portfolio. Sale details confidential.18. Part of 14 property non-core hotel portfolio valued at $90 million.19. Part of two property portfolio valued at $15.8 million.20. Part of three property portfolio acquired for $33.5 million.21. Cap rate based on forecasted 2016 net income.22. Sale included three cottages on adjacent properties. Price per room not applicable.23. Purchased by the City of Toronto for conversion to alternate use. Price per room

not applicable.24. Sale included excess land with development potential.25. Property includes full-service marina as well as cabin, motel and hotel

accommodations. Price per room not applicable.

26. Includes additional parcel. Price per room not applicable. 27. Distressed sale. Includes additional parcels. Price per room not applicable.28. Partial sale. Part of two property portfolio. Sale details confidential.29. Sale price reflects total acquisition value for hotel and a partial leasehold interest

which was acquired in a separate transaction in December 2016.30. The transaction also included a significant parking and retail component not

included in the sale price.31. Includes five cottages. Price per room not applicable.32. Sale included 1.0 acre of excess land valued at $1.3 million. Price per room based

on net value of hotel.33. Sale included a leased restaurant pad and vacant land. Price per room not

applicable.34. Part of two property portfolio acquired for $32.5 million. Includes attached 17,000

SF convention centre.35. Purchase of partnership units. Part of two property portfolio acquired for $15.35

million.36. Acquired for future conversion to alternate use.37. Includes a Tim Hortons restaurant and gas station. Price per room not applicable.38. Sale included various cottages and excess land with development potential. Sale

price is confidential.39. Sale included excess land with development potential. Price per room not

applicable.40. Includes excess land. Price per room not applicable.41. Cap rate based on forecasted net income for the first full year of operation

following acquisition.42. Privatization of publicly traded company, encompassing 94 hotels valued at $2.1

billion.43. $210 million share deal inclusive of five owned properties (Edmonton, Chilliwack,

Vancouver, Prince George and Victoria) and the franchise business.


Quality Inn & Suites Victoriaville Victoriaville QC 74 Jan $5,775,000 $78,000 n/a

Delta Sherbrooke Hotel and Conference Centre Sherbrooke QC 178 Mar $6,000,000 $33,700 n/a

Hotel Plaza Valleyfield Salaberry-de-Valleyfield QC 122 Mar $6,600,000 $54,000 n/a

Motel Royal Quebec City QC 17 Mar $1,250,000 $73,500 n/a

Auberge L’Autre Jardin Quebec City QC 28 Apr $1,400,000 $50,000 n/a

Samesun Montreal Central Montreal QC 23 Apr $3,550,000 $154,300 n/a

Comfort Inn Ste. Foy Ste Foy QC 78 May $2,850,000 $36,500 n/a

Best Western Laval-Montreal Laval QC 80 Jun $9,400,000 $117,500 n/a

Hotel Quartier Quebec City QC 140 Aug $15,100,000 $107,900 n/a

Comfort Inn Rimouski (18) Rimouski QC 79 Sep n/a n/a n/a

Comfort Inn Riviere-du-Loup (18) Riviere-du-Loup QC 67 Sep n/a n/a n/a

Comfort Inn Rouyn-Noranda (18) Rouyn-Noranda QC 77 Sep n/a n/a n/a

Quality Suites Montreal Aeroport (6)(18) Pointe-Claire QC 161 Sep n/a n/a n/a

Quality Suites Quebec City (6)(18) Quebec City QC 119 Sep n/a n/a n/a

Sheraton Montreal Airport Hotel (11) Montreal QC 465 Sep n/a n/a n/a

Hampton Inn & Suites by Hilton Montreal-Dorval Dorval QC 143 Oct $16,800,000 $117,500 7.9

Château-Vaudreuil Hôtel & Suites (40) Vaudreuil-Dorion QC 116 Nov $23,400,000 n/a n/a

QUEBEC - 17 TRADES 1,967 $164,175,000

Westmark Whitehorse Hotel & Conference Centre (41) Whitehorse YK 180 Apr $9,800,000 $54,400 15.0

YUKON - 1 TRADE 180 $9,800,000

*Strategic transactions typically involve at least two of the following conditions: 1) a pricing premium is paid; 2) the asset is located in a high barrier to entry market or within a geographic hub of an owner’s principal business; or 3) the opportunity allows for an extension of the company’s brand or portfolio.


InnVest REIT (42) - - 14,551 Aug $2,100,000,000 n/a n/a

Coast Hotels (43) - 919 Sep $210,000,000 n/a n/a

Four Seasons Hotel Toronto Toronto ON 259 Sep $225,000,000 $868,700 n/a

STRATEGIC - 100 TRADES 15,729 $2,535,000,000


2016 CANADIAN STRATEGIC HOTEL TRANSACTIONS


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