Tetrarch Capital in talks with US investor Starwood

Investment group Tetrarch Capital is in talks with US investor Starwood about a joint venture partnership that would be worth several hundred million euro, and replace the Irish-owned hotelier's plan for a public flotation.

Tetrarch, which was founded by Irish businessman Michael McElligott, delayed plans for its initial public offering (IPO) last year amid ongoing market turmoil that had driven down the share prices of several Irish property companies.

Market sources told The Irish Times the the company began working on alternative arrangements to the flotation before Christmas. That has led to the ongoing talks with Starwood.

Any deal between the two would likely be for a significant sum, as it would have the same commercial objectives as the IPO, which had been mooted at the €400 million level.

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A partnership with Starwood would achieve many of the same goals, allowing early investors in Tetrarch to take cash off the table in an exit, as well as providing extra capital for investment in the future. Tetrarch refused to comment.

‘Red October’

Sources said that public markets effectively remain closed to new Irish property entrants. Tetrarch was one of several companies to stall plans for stock market listings after last year’s “Red October”, which saw share prices pummelled.

US investor Lone Star temporarily delayed for a publicly quoted homebuilder called D-Res, while earlier in the year, plans to float specialist industrial property and retail were also shelved by their backers. Paddy McKillen jnr also abandoned the public floatation of his Press Up entertainment group.

While this deal would be at a significantly larger scale, it is not the first time Tetrarch and Starwood have done business. The Connecticut headquartered investor financed Tetrarch purchase of Citywest, the largest hotel in the state, via a €60 million loan advanced by its European real estate arm last year.

Experienced player

The US investor, which has $51 billion in assets under management, is an experienced player in hospitality markets. It built up a stake in the Principal Hotel Company in Britain before selling up last year to French property investor Foncière des Regions, and it is a significant investor in the Yotel chain, which it sank $250 million into in 2017.

It has also provided financing for, or purchased, several office investments in Ireland. In 2015 it was behind the purchase of the Watermarque building in Dublin's Ringsend, where short-term letting site Airbnb has its Irish offices. It is partnering the State's main investment platform, the Irish Strategic Investment Fund (ISIF), to develop a €1 billion build-to-rent platform here called Urbeo.

City centre

Tetrarch, which was founded as Brehon Capital in 2011, owns or manages some of Ireland's best-known hotels, including the Powerscourt Hotel in Enniskerry and the five-star Marker in Dublin's Grand Canal Dock. It also purchased the Mount Juliet hotel and golf resort in Kilkenny.

It is planning to develop hotel projects in the city centre, including an expansion of its Dawson Hotel in Dublin into the neighbouring Royal Automobile Club, and a 158-bedroom hotel at Sackville Place in the north inner city.