Dalata spending spree goes on with €35m Cork deal
Published 14/10/2015 | 02:30
Ireland's largest hotels group Dalata has agreed to buy the Clarion Hotel in Cork for €35.1m.
The deal - the largest ever hotel sale in the Cork City market - is expected to complete this month.
Dalata chief executive Pat McCann said the property is "a superb quality hotel finished to a very high specification and one of the finest, if not the finest hotel in Cork City."
"The asset generates a high quality and secure rental income stream, underpinned by a highly profitable Hotel operation," he added.
Dalata shares were up almost 2pc at €4.38 - just below the all-time high of €4.42 - approaching noon.
Goodbody analysts estimate the acquisition will add around 3pc to full-year 2016 earnings before interest, tax, depreciation and amortisation (EBITDA) forecasts.
Davy analysts said that following the company's recent €160m equity raise, they estimate Dalata has the capacity to fund up to €250m of further investment.
"It has now started putting this to work... the investment will generate an initial return on investment of 6.9pc with upward rent reviews every five years.
"As Ireland's leading hotel operator, Dalata remains very well positioned to benefit from what are highly favourable trading conditions across the country."
The Clarion is a four-star hotel with 191 bedrooms on Lapp's Quay in Cork City centre. JLL and Savills were joint selling agents for the deal.
Dalata has been on a spending spree since its flotation last year. Its most high-profile acquisition was most of the Moran Bewley's hotel group, including the Bewley's Hotel in Ballsbridge which has now been rebranded as a Clayton hotel.
Mr McCann has also said that the company would consider buying the landmark Gresham Hotel on Dublin's O'Connell Street, but added that the company would not buy properties for the sake of it.
Meanwhile, the company behind the five-star Fitzwilliam Hotel on Dublin's St Stephen's Green posted a 16pc increase in EBITDA, to €3.9m on turnover of €32.7m.
The company, Ampleforth, is controlled by Michael Holland and also owns the Bailey Bar close to Grafton Street.