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Dalata strikes €62.5mln deal to acquire freehold for two Dublin hotels

"We will be able to add much needed conference facilities to the hotel in an area of the property that is currently in a shell and core condition," said Dermot Crowley.
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Irish hospitality firm Dalata Hotel Group Plc (LON:DAL) has struck a €62.5mln deal to consolidate its interest in two Dublin hotels, acquiring freehold interests in certain elements of Clayton Hotels sites from the receiver.

It is acquiring certain freehold interests in the Clayton Hotel Cardiff Lane, in Dublin’s South Docks area, where it already has a long term lease (through to 2040).

The deal sees the company take the freehold of the ground and lower ground floors - which hosts facilities such as the reception area, bar, restaurant and leisure centre - as well as 170 bedrooms and vacant ground floor area. It also means the company now owns 193 of the site’s 304 bedrooms.

Dermot Crowley, Dalata deputy chief executive, highlighted that the deal marks a long targeted milestone for the group, as it has wanted to acquire the freehold to the Cardiff Lane site since the 2014 stock market float.

“I am delighted that we will now own the majority of the hotel and that as a result of this transaction, we will be able to add much needed conference facilities to the hotel in an area of the property that is currently in a shell and core condition,” Crowley said.

“This transaction is also consistent with our stated strategy of buying out the freehold interests of those leased properties with future unpredictable rent reviews.”

It is also acquiring interests in the Clarion Hotel Liffey Valley, which is located next to the M50 orbital motorway and the Liffey Valley retail centre.

Here, it is picking up freehold of the core hotel – comprising 159 bedrooms, eisure centre, meeting rooms, reception, bar & restaurant, car-park and 2 vacant retail units – which it is already managing under a short-term management agreement with the receiver.

Dalata had generated €500k in fee income under the management agreement during 2016, though the company noted that some 194 other rooms at the hotel are owned by individual investors and they are not included in the acquisition.

The portion of the hotel being acquired by Dalata is said to have generated some €2.5mln of earnings (EBITDAR) in 2016.

The company intends to rebrand the hotel as ‘Clayton Hotel Liffey Valley’ after the deal’s completion. Dalata is paying cash for the assets, not shares.

Separately, the company also noted that it is in talks over a potential sale-and-lease-back deal for one of its Clayton branded hotels in the UK. It anticipates that contracts will be exchanged in the coming weeks, ahead of transaction close in the second half of June.

Crowley added: “We have managed the Clarion Hotel Liffey Valley since March 2016 and are very excited about the potential of this hotel under the Clayton brand. We believe the proposed sale and leaseback of one of our UK properties represents a very good opportunity to utilise the strength of our balance sheet."

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