Who will go head to head with Dalata in bidding for the investment sale of the Maldron Hotel, in the historic heart of Cork City centre, under Shandon Steeple?
The offer comprises a very busy, leased, 101-bedroom hotel and high-quality leisure centre, within 250 metres of the Opera House.
Priced at €6m, the investment is a refurbished and extended hotel, which grew out of the former North Infirmary hospital, and it is let to the country’s largest hotel operator, Dalata, on a lease due to run until 2030.
Dalata will have an interest in buying the property for full control, as will other investors, and, possibly even other hotel chains, with an eye to the long haul, and a growing income stream, due to a percentage of rent based on turnover.
At present, the Maldron Cork, under Dalata, pays an annual rent of €400,000, plus a percentage of turnover/return on rooms.
That extra clause saw rents rise to €534,000 for the very busy 2015, with further growth and higher occupancy expected in the next several years, so rents could rise even higher.
Dalata is in the midst of a €2m investment at the three-star Maldron Cork, and also owns the four-star Clarion, bought for €35m and soon to be rebranded as a Clayton Hotel.
It also owns the Clayton Silversprings, where it is investing €4m. The hotel group estimates its investment in Cork in the past few years to be close to €90m.
Last month, Dalata finalised the purchase of the uncompleted hotel site on Parnell Place/South Mall and Beasley Street for €10m.
It will spend over €10m more completing it, and will run it as a four-star Maldron, strengthening its brand profile in Cork City all the more.
The company quite recently spent €40m, acquiring the freehold of four leased Irish hotels it operates, in a deal which included the Clarion, Cork.
Agents, Peter O’Flynn and Eoin Ryan, of DTZ Sherry FitzGerald Cork, bill the Maldron investment sale as a prime commercial offer, and note a relative dearth of strong investment sales in the region, so far, in 2016.
It’s offered for receiver, Aiden Murphy, of Crowe Horwath, “and is is likely to appeal to a wide range of investors, including hotel operators,” they say.
The building is historic, designed by architect William Hill, and includes distinctive yellow-brick bays; it opened as an infirmary in the 1830s, was later run by the Daughters of Charity, and grew to become a sizeable city hospital, closing despite local protests in 1987.
It was developed as an hotel by Galway-based developer, Tom Coyle, who ran it as the Shandon Court Hotel, and who later leased it to what’s now Dalata, in 2003, on a 27-year lease. It got major investment, including a four-storey extension, in 2001, which added 40 extra rooms.
With the ongoing, €2m upgrade, the original 60 rooms, in the former Infirmary building, have surpassed those 40 in quality terms. Also redone was the gym, changing rooms, lobby/front of house and corridors, etc.
Client base is wide, with a mix of business users and family breaks at the weekends, thanks to its gym/pool and city centre proximity with surface car parking.
Pick-up in Cork’s hotel market over the past two years has seen occupancy levels, and rates, rise strongly.
“With upwards of an 11% increase in average room rates in Cork, in 2015, and with strong occupancy in the vast majority of Cork City centre hotels for most of the year, the hotel market has strengthened quite significantly in the past two years,” notes Mr O’Flynn.
The lease has five-year reviews, on upward-only terms linked to ‘open market rent’, says Eoin Ryan, with favourable repair and ‘yield up’ clauses from a landlord’s perspective.
“Thriving market conditions, coupled with strong investor demand, will ensure strong interest in this investment opportunity,” Mr Ryan says.
“The Maldron hotel will be attractive to a wide range of investors, due to the security of income, the quality of the tenant, the recent investment in the property and the long, unexpired term offered,” say DTZ adding that “people will be surprised by the high quality of accommodation provided at the hotel, following its substantial refurbishment and the resulting, strong increase in turnover, which has fed directly into the rent receivable.”
Details: DTZ 021-4275454
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