Hotel operator seals deal on rent arrears
NAMA has agreed to allow the company that operates eight Clarion and Quality hotels around the country five years to repay rent arrears.
The deal is part of a wider business plan agreed between Kasterlee Ltd and the National Asset Management Agency (NAMA), according to accounts filed with the Companies Registration Office (CRO).
NAMA is the landlord for all eight hotels run by Frankie Whelehan's Kasterlee Ltd.
"The deal with NAMA is absolutely vital," Frankie Whelehan told the Irish Independent.
He said the restructuring deal had taken eight months to agree with NAMA, and involved a huge amount of due diligence.
The negotiations were a "fight for our life", he said.
Kasterlee employs 260 staff at eight locations.
Under the business plan Kasterlee will continue to operate the hotels – seven in Ireland and one in Croydon in the UK.
The company does not own the hotels and has no property loans.
However, rent arrears built up after turnover dropped dramatically in late 2008 and 2009.
That debt is owed to NAMA because it controls the properties and is to be paid back over five years, in addition to current rents, under the plan.
In the meantime management contracts between the operator and NAMA as landlord will be maintained, and leases will be on an open-market rent basis – not kept at boom-era pricing, according to a note to the financial accounts.
Hotelier Frankie Whelehan founded Choice Hotels Ireland in 1998, it operates the Clarion and Quality hotel chains across the country and the new Gibson hotel in Dublin's Docklands.
Hotels operated by the chain include properties originally built and owned by developer Paddy Kelly.
Despite an operating profit of more than €12m in 2011, the company suffered a loss of €1.8m, down from €3.4m in 2010. Property costs were €6.5m in 2011.
Turnover in 2011 was €19.7m. That's up on the previous year but down from almost €60m in 2009 – though the number of hotels operated by Kasterlee is also down.