Dalata in €100m deal to acquire London hotel being developed

Dalata Hotel Group has announced a €100 million deal to acquire a hotel that is currently being developed in London, and will operate under its Clayton brand.

Dalata is Ireland’s largest hotel operator, with a current portfolio of 39 three- and four-star hotels with more than 7,900 rooms. The company operates Ireland’s two largest hotel brands, the Clayton and the Maldron Hotels across Ireland and Britain.

The company said in November it was targeting a 10-15 per cent share of the regional hotel market in the UK, looking at adding 8,000 rooms to that hotel market over the next five to seven years.

In a statement to Euronext Dublin, formerly the Irish Stock Exchange, on Wednesday, Dalata said it had acquired the long leasehold interest of the hotel located at Aldgate, London. As part of the deal, Dalata will acquire the entire issued share capital of Hintergard from Aldgate Hotel Holdco LLC, an investment vehicle of an international private equity real estate investor. Hintergard owns the 300-year leasehold interest of the hotel.

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Conditional

The deal is conditional on the completion of the hotel to an “agreed specification”. The construction of the hotel, which will be branded Clayton Hotel Aldgate London, is expected to be completed and operational towards the end of this year.

The hotel will have 212 rooms, with a restaurant, bar and access to a fitness centre. It will be located adjacent to Aldgate East Underground Station and close to the new Liverpool St and Whitechapel Crossrail stations, both of which are to open in December.

The deal will be funded by an additional debt facility which has been secured from the company’s existing banking partners.

An analyst with stockbroker Davy said the acquisition would boost earnings for the company.

“We believe this flagship acquisition will be highly accretive, strengthening Dalata’s UK brand and portfolio while further supporting its stated growth ambition,” he said.

Dermot Crowley, Dalata deputy chief executive, business development and finance, said he was pleased to add another London hotel to the company's portfolio.

“We are delighted to secure this new hotel in Aldgate, London,” he said. “We already successfully operate two Clayton hotels in the Greater London area at Chiswick and Cricklewood.

“This new hotel gives us a presence in a key central location within the city and is ideally located for corporate customers who want to be close to the City of London and leisure guests visiting the many attractions that the city has to offer.

Gateway city

“Access to the Aldgate area will be further enhanced with the opening of two new Crossrail stations at Liverpool Street and Whitechapel in December 2018.”

Although revenue per available room has “fallen slightly” in London over the last 12 months, Mr Crowley said London remains a “key gateway city” in Europe that will continue to benefit from the growth in international travel.

“Our gearing levels will increase in the short term as a result of this transaction but will still remain below our guided upper level of three and a half times net debt to earnings before interest, taxes, depreciation, and amortisation,” he said.

“The hotel is projected to be earnings per share enhancing from its first year of operation.

“The announcement today represents another very important milestone in the growth of Dalata in the UK. We now have a pipeline of almost 2,000 rooms across key UK cities such as London, Birmingham, Glasgow, Manchester and Bristol.”

Separately, Irish hoteliers Prem Group has announced a new hotel in Belgium. The company, is opening a new Premier Suites branded-property in Antwerp, which has 110 units.

The group currently operates 19 hotels in Belgium, although this is the first under the Premier Suites brand.

Prem Group, which recorded €125 million in managed revenues last year, has 4,500 beds across the company. It operates 10 hotel brands in seven countries and employs 1,600 people.

Hotels in Ireland owned by Prem include Tulfarris Hotel & Golf Resort, Wicklow, The Osprey Hotel, Naas, Cahernane House Hotel, Killarney, The Viking in Waterford.