Saturday 1 October 2016

Burlington and Gresham to spark hotel sales wave

Published 02/06/2016 | 02:30

The Gresham is likely to sell for close to €85m
The Gresham is likely to sell for close to €85m

The sales of the Gresham and Burlington hotels may spark a rash of smaller hotel sales in the months ahead if they change hands for the strong prices they are expected to make.

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Bidding for the Gresham is at an advanced stage with four bidders - US firms Cerberus Capital Management, Apollo Capital Management, a joint bid by Tifco and Goldman Sachs, as well as Spanish giant Riu Hotels & Resorts - offering more than €85m for the O'Connell Street hotel.

The former Burlington Hotel in Dublin 4 meanwhile - now renamed the Doubletree by Hilton Burlington Road - is on the block for close to €180m. First round bids for that hotel were due last week.

At those rates, the two hotels are likely to sell for between €320,000 and €380,000 per room. That sort of figure is far above what the market has seen so far in the current cycle, and would push hotel prices above replacement value - a crucial benchmark of the health of the market.

Industry experts believe that if those levels can be achieved it will likely encourage owners of smaller hotels valued at between €5m and €20m to cash in on what seems to be an improving market.

One industry source said the bulk of activity will be in the four star sector of the market if the Gresham and Burlington deals go through.

"There is the desire to sell among many owners who have held their hotel through difficult times and now are ready to move forward.

"If there are strong prices for the two big hotels, that will spur sellers to finally take the plunge and go to market," he said.

A number of hotel owners are known to be sitting on their properties and waiting for the market to return to a level that could attract significant interest for their asset and give them a good chance of seeing a return on their investment.

Nama still has a number of hotels to work out of its portfolio, while there have already been significant sales of four star hotels in that price range in recent weeks.

Hotel management group Prem Group this week completed a deal to take over the Tulfarris Hotel & Golf Resort in Co Wicklow for €8m.

That deal came days after Dublin GAA stars Alan and Bernard Brogan along with their father Bernard Brogan Sr, forked out €8m for the Pillo Hotel in Ashbourne, Co Meath. The four-star, 148-bedroom hotel, which opened in 2007, was put on the market last January.

Prem Group meanwhile has also completed a deal to buy the four star Cahernane House Hotel in Co Kerry.

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