Dalata takes freeholds at two Dublin hotels

Dalata Hotel Group announced on Thursday that it has entered into an agreement with Kieran Wallace as receiver to acquire the freehold interest of certain elements of the Clayton Hotel Cardiff Lane in Dublin 2 and the Clarion Hotel Liffey Valley, also in Dublin, for a consideration of €62.5m.

The London-listed firm said it expected that the transaction would complete in June, adding that it was subject to approval of the Competition and Consumer Protection Commission.

Clayton Hotel Cardiff Lane is a 4 star 304-bedroom hotel located in the South Docks area of Dublin.

Dalata agreed to acquire the freehold of the ground and lower ground floors - which contain the reception area, bar, restaurant, leisure centre and back of house facilities - 170 bedrooms and vacant ground floor area.

The company said it holds a lease on those elements until 2040, at an annual rent of €2.524m per annum, subject to upward-only rent reviews at five year intervals.

It said the transaction would bring the total number of bedrooms owned by Dalata in the hotel to 193, out of a total of 304 bedrooms.

Clarion Hotel Liffey Valley is a 4 star 353-bedroom hotel located to the west of Dublin adjacent to the orbital M50 motorway and Liffey Valley shopping centre, Dalata explained.

The company agreed to acquire the freehold of the core hotel - incorporating 159 bedrooms, the leisure centre, meeting rooms, reception, bar & restaurant, car-park and 2 vacant retail units.

Dalata currently managed the hotel under a short-term management agreement for the receiver, which generated €500k in fee income in 2016.

The remaining 194 rooms are owned by individual investors and were not included in the sale.

It was estimated that the portion of the hotel included in the transaction generated €2.5m of EBITDAR in 2016.

On completion, the hotel will be rebranded as Clayton Hotel Liffey Valley.

The consideration is payable in cash, Dalata confirmed.

At the same time, the company announced that it was in exclusive negotiations to sell and lease back one of its Clayton hotels in the UK.

It expected that contracts would be exchanged on the transaction within the coming weeks and close in the second half of June.

“We have been seeking to purchase as much of the freehold of Clayton Hotel Cardiff Lane as possible since we floated the company in March 2014,” said Dermot Crowley, deputy CEO of business development and finance.

“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 the transaction was also consistent with the company’s stated strategy of buying out the freehold interests of leased properties with future unpredictable rent reviews.

“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.”