Dalata gets approval to raise €160m for expansion

Irish listed hotel group Dalata has received shareholder approval to raise €160 million in gross proceeds from the issuance of new shares. The move is designed to give the company the capacity to pursue additional acquisitions, build new hotels and expand its existing properties.

The new shares will carry a price of €3.75 apiece, representing a discount of 14 per cent to the €4.32 level that the stock was trading at in Dublin today.

At an extraordinary general meeting in Ballsbridge on Monday, both resolutions for the capital raising received more than 99 per cent of the votes cast.

Speaking after the EGM, Pat McCann, Dalata’s chief executive, said the proceeds would be used to acquire freehold assets in Ireland, to extend existing properties and to build new hotels in Dublin.

In terms of acquisitions, he cited a number of properties that are likely to come on the market, including the Clarions in Sligo and Limerick, the Pillo in Ashbourne, and the Gibson Hotel in Dublin’s docklands.

He said the company would also be interested in bidding for the four-star Gresham Hotel on Dublin's O'Connell Street but "we won't overpay". He expects the Gresham to be put up for the sale in the next three to six months.

Dalata will also seek planning permission to extend a number of its existing properties at a cost of around €30 million.

Mr McCann said the company would look to add between 20 and 40 rooms at the Clayton (formerly Bewley’s) in Ballsbridge, about 150 at the Clayton Dublin Airport, 60 in Belfast and 40 to 45 in the new Maldron in Galway.

“It will depend on planning, each one is different,” he said. “And there’s meeting space to go in as well.”

And it will seek new builds in Dublin, which he said could cost up to €55 million in total costs. These would be three or four star properties under either the Maldron or Clayton brands.

“We’re in discussions on probably about six or seven sites but the difficulty is that they’ll be competitive because if they’re suitable for offices we will be outbid, or even residential if that happens. We’ll have to fight for every site. If we got one or two out of that seven we’d be doing very well.”

Mr McCann said the closure of the Clyde Court hotel in Ballsbridge in January, which was announced last week, would result in a hit of between €700,000 and €800,000 to Dalata’s bottom line. The property is currently leased by Dalata but is set to be redeveloped for residential purposes by Chartered Land.

Dalata is the biggest hotel operator in Ireland with 40 hotels and more than 7,000 bedrooms. In March 2014, it raised €265 million through the issue of existing ordinary shares and listed on the AIM market in London and the ESM in Dublin.