The Maldron Hotel in Cork's city center is up for grabs, and Dalata—Ireland's largest hotel operator—wants it.
The 101-room hotel, described as "very busy," is priced at €6 million, and has been leased to Dalata by owner Tom Coyle in a 27-year deal set to expire in 2030. The hotel's annual rent is currently €400,000, and it also pays a percentage of turnover/return on rooms. The percentage rule pushed rents up to €534,000 for 2015, with further growth and higher occupancy expected in the next several years, so rents could rise even higher.
Agents Peter O’Flynn and Eoin Ryan of DTZ Sherry FitzGerald Cork noted a "relative dearth" of strong investment sales in Cork and the surrounding metro area for 2016 so far. But over the past two years, Cork’s hotel market has seen solid growth in both occupancy levels and ADR. “With upwards of an 11 percent increase in average room rates in Cork, in 2015, and with strong occupancy in the vast majority of Cork city center hotels for most of the year, the hotel market has strengthened quite significantly in the past two years,” O’Flynn said. Ryan cited “thriving market conditions, coupled with strong investor demand,” as driving investment demand.
Dalata estimates that its investment in Cork in the past few years to be close to €90 million, including acquisitions and upgrades. Last month, Dalata purchased an uncompleted hotel site in the city for €10 million from NAMA. It will spend another €10 million to finish the structure. When the property opens (currently expected for the first half of 2018), it will operate as another Maldron hotel. The company recently spent €40 million on four leased Irish hotels it operates in a deal that included the Clarion in Cork. The company is in the middle of a €2 million investment at the three-star Maldron Cork, and also owns the four-star Clarion, bought for €35 million and soon to be rebranded as a Clayton Hotel. It also owns the Clayton Silver Springs, and is investing €4 million in a renovation there.
Earlier this month, however, Dermot Crowley, Dalata’s deputy CEO for business development and finance, said that the company is not planning any further Cork hotel acquisitions for the immediate future. This leaves the extent of any Dalata bid for the Maldron hotel ambiguous.
The national planning board, An Bord Pleanála, granted permission for a hotel development on the site in November of last year. Dalata intends to begin construction of a Maldron Hotel in the final three months of this year with the ambition of having the hotel operational by mid 2018.
The firm said total investment into the project upon completion will be around €26 million.