The Irish hotel operator Dalata is about to buy its first hotel – the Pearse Hotel on Pearse Street in Dublin 2 – since raising €265 million from listing its shares on the Dublin and London Stock Exchanges.
The company is due to pay in excess of €13 million for the profitable Dublin hotel and two adjoining commercial investments which are producing a rental income of €102,500 per annum.
CBRE is handling the sale for David Hughes and Luke Charleton of EY, who were appointed receivers to Johnny Moran's Citywide Leisure Ltd.
That company had obtained funding for the hotel from the former Anglo Irish Bank.
The sale attracted a larger than expected level of interest because of its strong trading record – its profits generally range between €1.3 million and €1.5 million – and its strategic location close to the city centre.
The hotel also benefits considerably from its close proximity to the Bord Gáis Energy Theatre, the 02 arena, the Aviva Stadium, the Convention Centre and a range of international high-tech companies based in the south Dublin docklands.
CBRE had been quoting €9 million for the hotel and €1.55 million for the investment properties but did considerably better because of the high level of bidding from Irish and overseas hotel interests.
The sale was helped by a recent study that has shown that the 101 bedrooms in the Pearse Hotel could be increased to 170 by adding two floors.
Discussions on the project were held with city planners but a formal planning application was deferred when it became apparent that agents for the failed bank were about to appoint receivers.
The hotel has a bar and restaurant, five meeting rooms, a private gym for guests and 20 basement car parking spaces that are leased in. Double room rates are €79 per night.
Dublin’s hotel market has experienced a significant recovery over the past year as a result of a pick up in overseas visitor numbers and a much improved business sentiment at home. However, room rates are still 20 per cent below their 2006 level.
Dalata’s successful flotation – it raised substantially more than its targeted €150 to €200 million – will enable it to acquire and operate a string of hotels that have been struggling in recent years.
Dalata was founded in 2007 by Pat McCann, a former head of the Jurys Hotel Group, and currently operates 40 hotels including the 13-strong Maldron chain. The new plc is planning to assemble a portfolio of 16 to 25 hotels throughout Ireland. New acquisitions are unlikely to include the €60 million-priced Westin Hotel on Westmoreland Street because its management function is to be retained by Starworld Hotels & Resorts Worldwide for at least another 12 years.
However, Dalata will have little difficulty in finding alternative hotel investments, many of them still operating at a loss after being built to enable owners to avail of tax breaks.
