22nd Apr 2020 09:57
(Alliance News) - Dalata Hotel Group PLC on Tuesday said it has agreed the sale and leaseback of its four-star Clayton Hotel Charlemont in Dublin to Deka Immobilien for EUR65 million.
Shares in Dalata were untraded on Wednesday, having last closed at 242.00 pence.
The deal is set to complete by the end of April with the hotel to be let on a new fully repairing and insuring lease with a 35-year term. Dalata will pay an initial rent for the hotel of EUR3.1 million per year, subject to five yearly rent reviews.
Under the deal, Dalata is to complete the final part of the development of Clayton Hotel Charlemont at its cost, converting 38 Charlemont Street into another three Clayton bedrooms as well as a Red Bean Roastery Cafe. Works for this are to complete by the end of 2020 with no change in the rent to result from these changes.
At present, the hotel has 186 rooms, as well as a restaurant, bar, and fitness suite, and meeting room facilities. To date, Dalata has invested EUR41.6 million to buy the site and build the hotel. In 2019, its first year of operating, Clayton Hotel Charlemont contributed EUR4.3 million to Dalata's earnings before interest, tax, depreciation, amortisation, and restructuring or rent costs.
At the end of 2019, the hotel was valued at EUR77.4 million on the basis of Dalata both owning and operating it, thus retaining all earnings.
Dalata said the EUR65 million price "is reflected in the contract by a purchase price of EUR61.95 million and a rent-free period of one year, equating to EUR3.1 million".
Dermot Crowley, deputy chief executive of Business Development & Finance at Dalata, said: "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."
By Anna Farley; [email protected]
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