Dalata Hotel Group agrees to $28M sale-leaseback of Cardiff hotel

Clayton Hotel Cardiff
Clayton Hotel Cardiff, Wales

Irish hotel group Dalata has agreed to the sale and leaseback of its Clayton Hotel in Cardiff, Wales for $28.61 million to investor M&G Real Estate. According to Business Irish, the sale is expected to be completed by mid-June. 

The hotel will be leased for a 35-year term, with Dalata paying rent on the property for $1.49 million per year and receiving rent reviews every five years. Dalata will keep the hotel's fixtures and fittings, which are valued at $2.71 million. 

According to Davy analysts, the acquisition, sale and leaseback will result in an initial rental saving of about $454,000 per year. These savings are payable in cash, and the proceeds of the transaction will be used to reduce net debt arising from recent acquisitions. 

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Dalata purchased the 216-room Clayton Hotel Cardiff in late October 2016 for about $31.07 million in an off-market deal from an undisclosed private investor. International real estate adviser Savills represented Dalata during the deal while Cardiff-based property advisory firm EJ Hales represented the vendor. This was the only hotel Dalata owned in Wales. 

According to a report of Dalata's 2016 performance, the hotel group added seven hotels and under 1,600 rooms to its portfolio last year. Now, Dalata has more than 1,200 rooms scheduled to open in 2018. It also opened four of its hotels under its Clayton brand and renovated 750 rooms for about $9.24 million. Within Dalata's 34-hotel portfolio, 24 hotels are owned, 10 are leased and seven are manages under two core brands.