Hotels get star billing in Brehon property play

Brehon is seeking to establish itself as a major investment and development group in recovering Irish economy

Fri, Aug 22, 2014, 01:20

On Tuesday, the High Court gave the green light for the Killashee House Hotel near Naas in Co Kildare to be sold to Brehon Capital Partners and Midwest Holdings for €13 million, securing 182 jobs in the process.

The well-known four-star property had been placed into examinership in May, having been controlled by local developer Jack Tierney.

The hotel describes itself on its website as being “timeless, natural and elegant where we understand space, fun and food”. It heaves with weddings each year, hosting about 160 in 2013.

It is a successful hotel that was burdened by too much debt from the Celtic Tiger era.

Killashee was the fifth hotel acquired by Brehon and its investment partners after the Marker in Dublin’s docklands, Powerscourt (formerly the Ritz Carlton) in Enniskerry, Mount Juliet in Co Kilkenny and Mount Wolseley in Carlow.

It is also on the cusp of buying the Citywest complex in Saggart, Co Dublin, for about €30 million.

Improvements

All very different properties, with separate brands, targeting different segments of the market.

But they are all key parts of a jigsaw being pieced together by Brehon as it seeks to establish itself as a major investment and development group in the recovering Irish economy.

Kevin McGillycuddy, who heads Brehon, told The Irish Times yesterday that Killashee was a “fine hotel” with good growth prospects.

“It has solid cash flow and also a strong wedding business,” he said. “All the hotels we’re involved in have unique attractions. We feel we can make incremental improvements to them. Killashee is another place where we’d like to make improvements.”

Brehon and its partners are “currently evaluating” the level of investment needed for Killashee. He said the group would invest between €30 million and €40 million in the five hotels that are now part of its portfolio to enhance their product offerings.

While they are stand-alone investments, McGillycuddy said there are potential synergies from working with service providers across the portfolio.

The hotels can also leverage the expertise within Brehon, where Adrian Shanagher, formerly a senior executive with the Capital Bars hotel and pub group that was run by the O’Dwyer brothers, is acting as a consultant for Brehon.

“At senior management level, we have the ability to identify the synergies between the type of providers at the hotels to improve margins where we can,” McGillycuddy said.

McGillycuddy wouldn’t comment on the Citywest deal, which could be subject to a legal challenge from the family of the late Jim Mansfield, who developed the complex.

More than hotels

But it is understood that Brehon sees an opportunity to add additional revenue streams at what is the largest hotel resort in the country, with nearly 800 bedrooms, substantial function and convention space, and adjoining golf facilities.

Brehon is believed to be prepared to invest about €10 million in Citywest to upgrade the facilities, if it can close a deal.

Brehon, which has about €400 million in assets under management at present, is about more than hotels. It also acquired the Ulysses Portfolio of 25 properties that were previously associated with Liam Carroll and ended up with the National Asset Management Agency.

These properties largely stretch along the red Luas line in central Dublin from Smithfield down to Macken House in the IFSC. It recently secured UTV as a major tenant in Macken House for its new Dublin headquarters.