Dalata Group shores up hotel ownership with €69m spend

The Dalata Hotel Group is set to spend nearly €70m on taking majority ownership of three Irish hotels that it has to date run on a rental basis.

Dermot Crowley

The owner of the Clayton and Maldron hotel chains is also close to agreeing a sale of one of its UK-based properties.

Dalata has been eager to alter the ownership structure of some of its existing portfolio of owned, managed, and leased hotels by acquiring the freehold interests of certain properties it currently leases which have unpredictable rent reviews attached.

To that end, it is spending a combined €69.3m taking over the freehold interests to the Maldron Hotel in Portlaoise, the Clarion Hotel in Liffey Valley in west Dublin, and the Clayton Hotel on Cardiff Lane in Dublin’s docklands.

Regarding the latter hotel, Dalata will acquire the freehold to certain elements of the property. These will cover the ground floor and lower ground floor areas, which house the hotel’s reception area, bar, restaurant, leisure centre, and back-of-house facilities, as well as 170 bedrooms and an unused ground floor area which the group plans to convert into conference facilities.

Currently the group holds a lease on these elements of the hotel until 2040, at an annual rent of over €2.5m per year.

Both the Cardiff Lane and Liffey Valley transactions are due to be completed by the end of this month. Dalata has been attempting to secure as much of the freehold to the Clayton Hotel Cardiff Lane as possible since the group floated in 2014.

Nearly €7m of the combined overall spend will go on Dalata buying the freehold on the Maldron Hotel in Portlaoise, having reached agreement with the property’s receivers, Declan McDonald and Ken Tyrrell of PwC. Dalata paid €570,000 in rent on the three-star, 90-bedroom property last year.

The freehold also includes an adjoining foodcourt, which Dalata is set to sell after agreeing with a third party.

The four-star, 353-bedroom Clarion Liffey Valley has also been in partial receivership. Dalata is buying its core elements — 159 bedrooms, meeting rooms, car park, bar/restaurant, reception area, leisure centre, and two vacant retail units — before rebranding it as the Clayton Hotel Liffey Valley.

The remainder of the hotel — 194 bedrooms — is owned by individual investors.

Dalata has also entered exclusive negotiations on a sale and lease-back agreement for one of its Clayton hotels in the UK. The company didn’t name the specific hotel, but according to the group’s website it currently owns three hotels in the UK — two in London and one in Cardiff.

Dalata plans to open between 15 and 20 new hotels in the UK, largely on a leasehold basis, in the next three years as it ramps up its aims of becoming one of the biggest regional hotel operators in Britain.

“We have managed the Clarion Hotel Liffey Valley since March 2016 and are very excited about the potential of this hotel under the Clayton brand. We believe the proposed sale and lease-back of one of our UK properties represents a very good opportunity to utilise the strength of our balance sheet,” said Dermot Crowley, deputy chief executive and head of business development and finance.

Dalata’s share price — up nearly 12% since the start of the year and 9% ahead on a 52-week basis — was largely unmoved yesterday.

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