Dalata Hotel Group has announced that it has agreed the sale and leaseback of its Clayton Hotel Charlemont in Dublin to Deka Immobilien for a consideration of €65 million.
The transaction is expected to be completed by the end of April.
The hotel will be let on a new fully repairing and insuring (FRI) lease for a 35-year term. The agreed initial rent for the property is €3.05 million per annum and will be subject to five yearly rent reviews, index-linked to the Consumer Price Index.
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As part of the agreement, Dalata will complete, at its cost, the final part of the hotel's development, which will see the conversion of 38 Charlemont Street into three additional Clayton bedrooms and a Red Bean Roastery café. These works are expected to be completed in 2020 and will result in no change to the property rent.
The Clayton Hotel Charlemont currently contains 187 bedrooms, a bar and restaurant, a fitness suite, and meeting room facilities.
To date, Dalata has invested €41.6 million in the property.
The consideration of €65 million is reflected in the contract by a purchase price of €61.95 million and a rent-free period of one year, equating to €3.05 million. The proceeds of the transaction will be retained as cash in Dalata.
Dalata's deputy chief executive of business development & finance, Dermot Crowley, stated, "Dalata has always prided itself on the strength of its partnerships and is delighted to collaborate again with Deka in a transaction. Since we entered into an agreement to lease Clayton Hotel Burlington Road in November 2016, our relationship has grown from strength to strength.
"We commenced work on this transaction in advance of the COVID-19 crisis. Completing a transaction such as this despite the onset of the crisis demonstrates the commitment of both Deka and Dalata to this partnership and their long-term commitments. The agreed terms for this transaction reflect both the quality of the asset and the strength of Dalata's Balance Sheet. I look forward to working further with Deka in the future.
"This transaction is another example of our ability to generate shareholder value through excellence at identifying, securing, developing and operating hotels. The transaction also demonstrates the underlying value of the assets on our balance sheet. The funds will further fortify the company's considerable cash resources during the current COVID-19 crisis."
© 2019 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.