Thursday 14 December 2017

Sale of former Burlington to German bank secures its future as a landmark hotel

The former Burlington Hotel – now trading as the DoubleTree by Hilton – is expected to continue as a four-star hotel after its sale
The former Burlington Hotel – now trading as the DoubleTree by Hilton – is expected to continue as a four-star hotel after its sale

Ronald Quinlan Commercial Property Editor

The future of the former Burlington Hotel in Dublin 4 as a four-star hotel and conference venue is set to be secured following the entry of German asset manager DekaBank into exclusive talks with its owners, the US private equity giant, Blackstone.

Acquired by Blackstone for €67m in 2012, the Ballsbridge hotel, which now trades as the DoubleTree by Hilton, is expected to sell for around €180m once a deal is concluded.

Having invested approximately €20m in the refurbishment of the hotel, Blackstone stands to almost double its money.

A part of the wider Deka Group which has customer assets of some €240bn, DekaBank fended off rival bids for the former Burlington Hotel from the Abu Dhabi Investment Authority and the US-owned Hyatt Hotels and Host Hotels & Resorts.

News of the hotel's expected sale by Blackstone is being viewed by industry sources as a positive development, and indicative of the beginning of a transfer of the ownership of major real estate assets from funds with short-term investment horizons to those interested in holding assets as long-term investments.

While DekaBank is seeking to acquire the former Burlington Hotel property, the involvement of the Dalata Hotel Group in talks to acquire its leasehold serves as a further indicator that the famed Dublin 4 hotel's operations will be maintained.

While concerns have been expressed that Dalata's considerable presence in the Dublin hotel market could see its efforts to secure the leasehold of the hotel subjected to scrutiny by the Competition and Consumer Protection Commission, the expiration of its lease on the Ballsbridge Hotel in March 2018 should address that issue.

With the removal of the Ballsbridge Hotel's 399 rooms from Dalata's overall Dublin room count of approximately 3,200 rooms, the addition of the 502 rooms at the former Burlington would see its total room count in the capital rise by just 103.

The plan for the former Burlington Hotel to continue operating as four-star hotel will be a welcome boon to the tourism industry, given the ongoing dearth of hotel rooms in Dublin.

Immediately prior to the crash and its later purchase by Blackstone, the hotel's previous owner, developer Bernard McNamara, secured planning permission from Dublin City Council to deliver a €1bn mixed-use development on its site and adjacent former headquarters of Allianz Insurance.

Mr McNamara paid a combined €393m for the two properties, with €288m of that being accounted for by his purchase of the Burlington Hotel and €105m by the Allianz property.

The former Allianz premises was acquired in June 2014 by developer Johnny Ronan in a joint venture with U+I (formerly Development Securities) and the Belfast-born property investor Paddy McKillen and Colony Capital.

The Burlington Road building has since been demolished and is being redeveloped as the Vertium which, upon completion, is set to be occupied by Amazon.

The online retail giant has agreed to pay blended rent of approximately €50 per sq ft for the property which will extend to 15,992sq m (172,000sq ft).

Irish Independent

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