Dalata will size up €60m Gresham with €250m in firepower
Published 10/09/2015 | 02:30
Dublin's iconic Gresham Hotel - likely to have a €60m-plus price tag - is in Dalata's sights as the group plans to raise up to €80m in debt on top of a €160m equity raising it confirmed yesterday.
Dalata chief executive Pat McCann said he expects the Gresham, currently owned by Precinct Investments and controlled by Nama, to be put on the market within three to four weeks.
"We haven't seen numbers, but it will probably be somewhere north of €60m," said Mr McCann, when asked to speculate as to what price the Gresham, located on O'Connell Street, might be put on the market for.
"We are not going to buy properties just for the sake of buying properties," warned Mr McCann.
"We'll buy properties because we feel can get a return. If the Gresham comes up for sale, we'll look at it. If it doesn't meet our investment criteria, we won't do it. The question we'd ask ourselves is if there is hidden value in it. Because it's an older building, you'd have to look at how challenged it is in terms of refurb and structure."
Dalata spent almost €524m on hotel acquisitions in the first half of this year, including €452.3m to buy nine Moran Bewleys properties.
The Gresham, with over 300 bedrooms, opened in 1817. Precinct Investments, which is owned by builder Bryan Cullen, is the vehicle that was used to take the Gresham Hotel Group private in 2004 in a €117m deal.
It's understood that Dalata - Ireland's biggest hotel group - is also likely to bid for two other properties when they come up for sale this year.
Dalata currently manages both hotels on behalf of receivers. One is the Pillo Hotel in Ashbourne, Co Meath, which benefits from the nearby Tayto Park. The other is the Clarion in Sligo town.
Both are likely to be targeted for acquisition by the group.
Dalata deputy chief executive Dermot Crowley pointed out that Dalata had been outbid on other prime hotel properties in the capital and isn't prepared to overpay.
The group will use the equity proceeds raised yesterday to buy hotels coming to the market, for capital expenditure on existing properties, and developing brown-field sites for new hotels in Dublin. It owns or operates 42 hotels in Ireland and the UK.
Mr McCann said the company hopes to build three hotels in the city, and might complete some site acquisitions within the next four months or so.
The chief executive also called on the Government to retain the reduced 9pc VAT rate that applies to businesses ranging from hotels to pubs and hairdressers.
He also said that average hotel room revenues need to rise to make hotel development a more attractive proposition for investors. Dalata, which listed on the stock exchange in March last year, yesterday reported strong interim results.
Its revenue, including acquisitions, rose to €97.7m from €34.9m. Its underlying earnings before interest, tax, depreciation and amortisation jumped to €23.6m from €2.4m.