Successful Fota resort bidder could double money on deal

AN IRISH-LED consortium that is bidding to buy the Fota Island Resort in Cobh from the National Asset Management Agency (Nama) for up to €20 million expects to be able to sell it on for more than twice that amount after 2019.

Fota comprises a 27-hole golf course, a five-star hotel, a spa and fitness centre, and 54 lodges. There is planning permission for another 162 lodges.

The consortium, which is being led by former professional golfer John McHenry and hoteliers Carl and Gerard Hanratty, plans to “grow the asset value of the business with a view to achieving a target exit value of in excess of €40 million”, according to a confidential document circulated to potential investors recently.

The document has been seen by The Irish Times.

To sweeten the deal further for investors, a provision included in last year’s budget means the capital gain on this deal would be tax free if the property is held for seven years and then sold on.

Investors were also told they could expect to receive a dividend of 2.5 per cent in each of the first two years of ownership, rising to 5 per cent from year three.

The consortium engaged Roberts Nathan Corporate Private to raise €20 million to buy the hotel and golf resort, which is trading profitably.

The consortium has forecast revenue increases of 5 per cent a year at Fota – from €12.5 million in 2013 to €15.2 million in 2017.

Net profits, after all expenses have been deducted, are forecast to double over that period to €1.4 million in 2017.

Fota made an operating profit of €1.3 million on turnover of €11.9 million in the year to the end of August 2012 and has weathered the recession better than most of its rivals in Ireland. The 500-acre resort was developed by Cork property developer John Fleming at an estimated cost of €90 million. His loans have been transferred to Nama.

The consortium intends to spend €6.5 million upgrading the facilities and to seek permission to develop a retirement village and medical centre.

Bids for the resort were submitted to Nama’s receiver last week.