Since then Squires and his team have established Holloway Lodging REIT as an up-and-coming real estate concern; they have raised $235 million in equity and convertible debenture and amassed a $360-million portfolio of 21 hotels stretching across Canada. They’re hoping to continue the growth and believe they offer something unique to real estate investors. “The biggest thing that differentiates us from competitors is the growth story we offer through our development pipeline,” says Squires. “We have partners who have been in the business a long time and have expertise in hotel development right across the country.”

 

At 55, Squires is a 30-year veteran of the hotel real estate markets; he was previously the vice-president of hospitality for St. John’s–based Fortis Properties Corp. before he struck out on his own in 1995 with the aim of amassing a portfolio of hotel properties. A year later, he and partner Edward Good took an aging, almost vacant office building in downtown Halifax and converted it into the successful Radisson Suite Hotel Halifax. Then in 1998 the pair worked on the development of the Sheraton Suites Calgary Eau Claire.

 

Pacrim now manages 47 hotels throughout Canada and the U.S., largely through the Super 8 brand. It’s essentially a joint venture between Squires and Good and the Aquilini Investment Group of Vancouver. However, in 2005 the partners realized that they were missing a few components in their business strategy. What they needed was a vehicle to allow their hotel group to raise capital from institutional and retail investors, and to streamline the ownership of the Pacrim hotel portfolio, which was fragmented because each hotel was owned by disparate partnerships. They also required a structure that would allow the company to grant options to staff and management, so they could benefit from the company’s success.

 

Along came the CPC program, which was designed to let entrepreneurs with a solid track record find a group of backers and a principal investment, and to gain a quick listing on the venture exchange. It seemed ideal for the new venture, says Holloway CFO Tracy Sherren, mainly “because it was less costly than doing an IPO.”

 

In November of 2005, the managers worked with Ron Rimer, the managing director of investment banking at Canaccord Capital Corp; signed 200 backers; and listed the company as a CPC. It issued stock in February of 2006, and four months later did its so-called qualifying transaction: the $4.6-million purchase of a 50-room Super 8 motel in Truro, N.S. That’s when things got interesting.

 

Working with Rimer and lawyers from Goodmans LLP in Toronto, Squires went on a fundraising and acquisition mission that built the company to its current stature in less than a year. To understand how he was able to grow the company so quickly, you must understand what makes Holloway unique. C

 

Certainly, the world is awash with REITs, which are similar to income trusts except that they invest strictly in real estate. What makes Holloway special is its relationship with other companies. Not only does Holloway work with Pacrim but it also gets first right of refusal for hotels developed by Winport Developments Limited Partnership, another company partially owned by Squires and Good. The relationship with Winport means that Holloway can grow through the development of new hotels, but these buildings are financed outside the REIT, and Holloway assumes no construction or operational risk during the early stages.

 

Winport has an active development pipeline, including projects in Atlantic Canada, Ontario, and Western Canada, and Quebec, where there is a lack of hotel chains outside the Montreal area. Holloway also has alliances with such hotel operators as InterContinental Hotels Group, Carlson Hotels Worldwide, Wyndham Hotels and Resorts, and Superior Lodging Corp., which allow its managers to gain market knowledge in diverse locales across the country.

 

Squires went to work one month after their qualifying deal and raised $72 million, with which they bought eight hotels. Next was a $13-million sale of stock in December of 2006, with which they bought a couple more inns. He took a break, then did his biggest deal to date in June: $150 million for the purchase of 11 properties. For this unit issue, Canaccord formed an underwriting syndicate that comprised CIBC Capital Markets, BMO Capital Markets, Scotia Capital, Blackmont Capital Inc., and TD Securities.

 

Through all of these fundraising waves, Squires has channelled money from financial institutions into this growing empire. Three institutions now hold significant stakes in the 10% range in the company, and the last round of fundraising included the participationof 23 different institutions. Company insiders now hold less than 5% of

the stock.

 

Sherren says the company’s mortgage debt now comprises about 40% of its capital structure, so Holloway Lodging has the financial capacity to grow. And Squires reports that the company is working with its network of contacts scouring for its next investment opportunity, whether it’s through acquisition or via a Winport development. “We said at the outset that our stated goal is to have 10,000 rooms within five years,’’ says Squires.