McKillen jnr to sell majority hotels stake to British property group and Elliot

Paddy McKillen jnr and his business partner, Matt Ryan, have agreed to sell a majority stake in the Dean Hotel Group to British property group Lifestyle Hospitality Capital (LHC) and Elliott Investment Management, the New York alternative investment giant founded by billionaire activist investor Paul Singer.

The new investors are acquiring more than 70 per cent of the business in a deal that values it at more than €350 million, well above the €250 million estimate value that was put on it by market experts when it was put up for sale earlier this year, according to sources.

The portfolio of eight hotels will continue to be managed and operated by the Dean Hotel Group under its own brands, including the Dean, the Mayson, the Clarence, the Devlin and the soon-to-open Leinster hotel in Dublin as well as Glasson Lakehouse near Athlone in Co Westmeath.

Lifestyle Hospitality Capital (LHC) and Elliott Investment Management plan to drive an expansion of the group’s brands in Europe and the United States, the sources said.

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The Dean Group recently acquired the freehold of the landmark Clarence hotel from U2′s Bono and the Edge, having held the leasehold for the Wellington Quay hotel since 2019.

The group also has hotels in development in Belfast and Birmingham which are expected to open by 2025. Restaurants and bars in the hotels will also continue to be operated internally by the Dean Hotel Group under brands such as Sophie’s, Ryleigh’s, Roberta’s and Layla’s, the group said in a statement.

[ Press Up: Paddy McKillen jnr and Matt Ryan’s hospitality leviathan not immune to economic headwinds ]

“We are delighted to have agreed this transaction, which will create a partnership between Ireland’s leading hospitality company and a best-in-class hospitality investment management platform,” said Mr McKillen. “We are confident that the Dean Hotel Group will continue to thrive as our partners at LHC both understand and embrace our distinctive Irish vision of hospitality.”

Lifestyle Hospitality Capital boss Keith Evans said: “As experienced investors in this space, we were drawn to the exceptional collection of locally designed and curated hotels, bars and restaurants that Paddy and his team have developed. We look forward to continuing to honour the Dean Hotel Group’s Irish heritage as we work together to deliver on the next phase of growth for the portfolio.”

The original hotel in the portfolio, the Dean on Harcourt Street in Dublin, was opened nine years ago by Press-Up Entertainment, the bars-to-restaurants group that was established by Mr McKillen and Mr Ryan in 2009.

The ultimate holding company above the Dean Hotel Group and Press-Up is Keillan Limited, registered in the Isle of Man. Press-Up is behind brands such as Wowburger, Elephant and Castle, the Irish franchise for Wagamama and Stella Cinema in Rathmines.

Mr McKillen jnr owns 50 per cent of the parent company, while his father, property developer Paddy McKillen snr, owns a further 25 per cent. The remainder of the group is split evenly between Mr Ryan and Liam Cunningham, a long-time associate of Mr McKillen snr.

A spokeswoman for the hotel group declined to comment on the financial terms of the deal, which is expected to close by the end of the month.

The structure of the deal will see a majority stake sold to an investment vehicle that is managed Lifestyle Hospitality Capital, which is led by Mr Evans, a hotel deal-making veteran, and backed by funds advised by Elliott Investment Management.

Mr Evans, a former senior executive in Starwood Capital’s European hotels business, was chief investment officer at Ennismore, the UK-based boutique hotels operator behind the Hoxton chain, between 2019 and the start of this year. He was heavily involved during this time in Ennismore’s setting up of a high-end hotels joint venture with France’s Accor.

The Deal Hotel Group is the seed portfolio of his new LHC venture.

Elliott, founded by Mr Singer in 1977, has almost $60 billion (€56.5 billion) of assets under management and is best know as an activist stock market and private-equity investments. Real-estate-related investments account for about $3 billion of its assets.

The deal by Mr McKillen jnr and Mr Ryan to sell a majority stake in the hotel portfolio comes five years after they pulled a planned initial public offering (IPO) of Press-Up, the venues management company within the wider group, due to volatile equity markets at the time. The subsequently abandoned a plan to raise up to €50 million through the sale of a 45 per cent stake in Press Up to investors.

Most of the underlying properties in the wider group are held by a vehicle called Oakmount.