Ownership of Toronto’s historic Royal York Hotel has been reorganized just in time to take advantage of soon-to-be-completed renovations at Union Station.

The timing is “perfect,” one analyst said, as the buildings facing each other across Front St. will cease to be separated by jackhammers and shredded pavement for the first time in years, and a high-speed rail link will finally start funneling business commuters from Pearson airport into the downtown core.

In a deal announced Tuesday, a fund managed by real estate company KingSett will acquire a 60 per cent interest in the hotel worth an estimated $111.9 million, while InnVest Real Estate Investment Trust will pay $37.3 million for a 20 per cent stake. Caisse de dépôt et placement du Québec, the provincial pension fund and current owner of the Royal York, will keep a 20 per cent stake in the property through its subsidiary Ivanhoé Cambridge.

The joint-venture partners plan to spend $50 million on additional renovations of the 85-year-old property in the 24 months after the deal closes in January. The Royal York is in the midst of a $100 million renovation. More than 500 rooms are expected to be fully updated by the end of January following major infrastructure upgrades.

The joint venture said most of the additional $50 million will be earmarked for further room renovations in addition to upgrades to public spaces. The hotel has 2,700 square metres of retail space, nearly 6,000 square metres of meeting space and six bars and restaurants

The Royal York’s current operator, Fairmont, will continue to run the hotel.

With Union Station’s renovation almost complete and the downtown booming, the time seems ripe for investment in the building. “The timing is as close to perfect as you might imagine,” said Charles Suddaby, head of the hospitality and gaming group at Cushman & Wakefield Ltd.

The Royal York was built in 1929, just two years after Union Station opened, and the fortunes of the neighbouring properties have often been linked. Union’s overhaul is scheduled for completion in time for the Pan Am Games next July.

InnVest managing director Ed Pitoniak said the train hub’s revamp helped entice his firm into buying its share of the Royal York, citing the imminent Union-Pearson Express and improved PATH connection between the hotel and the station.

“It’s simply a great asset. An incomparable asset in an incomparable location,” he said.

The hotel was put on the market in May.

Ivanhoe Cambridge said earlier this year that it planned to focus on three luxury hotels in Quebec by selling most of its portfolio of 70 hotels in Europe, the United States, Canada, Barbados and India to concentrate on retail, office and residential multi-family units that generate more stable returns.

But executive vice-president Sylvain Fortier said the real estate investor had a change of heart because it likes the Toronto hotel’s location. “It allowed us to indirectly remain involved in this asset without necessarily being the lead for the renovations,” he said of the deal.

“We are also not as present in Toronto as we would have liked to be in recent years.”

Fortier said it will also possibly retain an interest in the Seattle Fairmont Olympic that is in the process of being sold.

Other remaining hotels in the portfolio will be sold entirely to new owners over the coming months. The Fairmont Washington, D.C., is expected to sell this year, while the Fairmont Vancouver and Hilton Atlanta will probably follow in early 2015.

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Among the hotels that already have been sold are Ottawa’s Chateau Laurier and The Empress Hotel in Victoria.