Capitalizing on the fitness boom: A joint venture

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By Maxwell Vo

Passion. Purpose. Partnership. That’s how our synergistic collaboration began with Altea Active, a unique Canadian active lifestyle brand. Valuable foresight, teamwork, a great location and an admirable purpose, resulted in the development of Altea Active Toronto, a brand new 89,000-sq.-ft. state-of-the-art social wellness club that recently opened in the Liberty Village neighborhood. This expansive urban playground offers comprehensive and appealing amenities for the urban demographic, including adults, kids and families.

Located at Strachan Avenue and Ordnance Street in the heart of Liberty Village, Altea Active Toronto is accessible to more than 238,000 people who live within a three-km radius. The two-level facility is housed in the Novus building, a new 34-storey, multi-level residential highrise by BentallGreenOak (BGO), surrounded by a dynamic and culturally energized neighbourhood.

NYX Capital’s partnership with Altea Active’s visionary leadership, underscored by Altea’s successful track record in managing 16 large-scale, health and wellness clubs for close to 20 years is a rewarding and remunerative venture. NYX’s expertise in the private equity real estate investment arena combined with a thriving fitness industry brand serves to diversify our investment offerings and solidify synergies. Augmenting investment portfolios through a unique growth strategy like this one, which is based on a recurring revenue model inherent to health clubs, is a key driver behind generating attractive margins for investors.

Altea Active Toronto is a “one-of-a-kind urban playground, designed to foster community and encourage social interaction,” says Michael Nolan, co-founder and COO of Altea Active. “A modern space with premium amenities and services that are sure to reignite Torontonians love of fitness and living a healthy lifestyle.”

The building: State-of-the-art

The more than 89,000-sq.-ft. wellness and social club will encompass spaces for relaxation, meditation, socialization, healthy eating, fitness and programming for all ages. The design of Altea Active Toronto’s fitness and social spaces is a masterful fait accompli by the Toronto-based and internationally acclaimed, Chapi Chapo Design firm.

Altea Active Toronto: Premium Wellness & Social Amenities

  • 185-plus weekly group fitness classes
  • A 2,500-sq.-ft. hot yoga studio with three fireplaces
  • 250-plus top-of-the-line cardio and strength training machines
  • Canada’s largest cycling studio with 75 bikes and 285-in. screen
  • A 25-metre lap pool, hot tub, KLAFS Sanarium & Polaris Ice Room and hydrotherapy jet pool
  • A Himalayan salt lounge and Somadome meditation pod
  • 2 Topgolf swing suites sports simulators
  • Four Duckpin Bowling lanes, pool tables, air hockey, dome hockey and pinball machines
  • Family-friendly amenities (kid’s club, swim lessons, bowling)
  • Spacious areas for social gatherings and private events
  • Food Hall, including a full-service Starbucks, The Smoothie Bar, Ah-So Sushi Bar & Catalyst (kitchen and cocktails)
  • An elevated sit-down social lounge for members and a co-working space

The dollars and sense

Altea Active Toronto will attract members at a price point comparable to fitness facilities offering far less. At a monthly rate starting at $105, the unparalleled value proposition will help to drive usage and membership loyalty.
In fact, the fitness industry is known for its strong margin profile and attractive cash flow characteristics. After all, fitness clubs operate as subscription-based models, with the majority of its revenue generated from ongoing dues. Prior clubs opened by the management team have demonstrated this:

  • Clubs are cash flow positive in year one
  • Clubs open two to three years generate EBITDA margins of more than 40 per cent
  • Minimal ongoing CapEx requirements
  • The ability to leverage overhead, further driving free cash levels

For NYX Capital, investing in high-quality commercial real estate development projects throughout Canada and targeting value-add opportunities through development, re-positioning and active asset management, we deliver compelling risk-adjusted returns to investors. And we offer clients an opportunity to invest directly in a variety of properties and operating businesses and co-invest in all projects under management and development. It all makes sense and properly aligns NYX Capital’s interests with investors in the limited partnership and co-ownership vehicles.

The fitness industry: Pumped for success

The $28-million development comes at a good time, as COVID-related lockdown restrictions and closures begin to ease, vaccination rates increase, and social restrictions are lifted. Historically, health clubs have shown resilience to economic downturns, due to the nature of the offering. Spending on fitness is considered to be a non-discretionary expense across many segments of the Canadian population, including college-educated 20- to 35-year-olds (2019 Avison Young Demographic Market Research). Fitness spending per person per year in Toronto alone is $1,306.
As gyms reopen and strong demand for new memberships increases, Altea Active Toronto will be poised to punctuate the city’s booming fitness industry.
According to IBIS World, the Canadian fitness club industry generated over $4.5 billion in revenue in 2019 and is estimated to grow 3.9 per cent annually through 2025, far outpacing other multi-billion-dollar industries. The increasing focus on the benefits of a healthy lifestyle is currently driving health club membership in Canada. Growing obesity rates among adults and children, and an increasing awareness of the associated risks, are encouraging more people to include exercise in their daily routines.

The work in progress: A visionary partnership

NYX Capital and Altea Active are actively overseeing the development of the flagship Toronto club location and four others. Club construction is set to begin in Milton in 2022. NYX works on financing, deal structure, investor compliance, raising capital and reporting. Altea Active focuses on design, layout, marketing, operating the business and growing the brand. Altea Active Toronto will be the first urban model after its previous suburban model success.
NYX Capital’s partnership closes the deal on encouraging people to get active, get connected and get social again.

Maxwell Vo is Chief Investment Officer at NYX Capital Corp., a private equity real estate investment company based in Toronto. nyxcapital.com. Altea Active Toronto (Liberty Village) opened in March 2022. Online registration at alteaactive.com