Burlington Hotel on 3.8 acres may make over €300m

The Burlington Hotel site in Dublin 4 is likely to be redeveloped for a large mixed-use scheme, writes Jack Fagan.

Dublin's Burlington Hotel is expected to be redeveloped for shopping, offices, apartments and possibly a smaller hotel when it is sold at tender on March 28th. The 3.8-acre site will almost certainly be the most important and most expensive to come on the market in the Dublin area this year.

The selling price will be over €275 million but, given that up to a dozen private equity firms, private banks and large developers are expected to pitch for it, the final figure could well be over €300 million.

Pat Gunne of CB Richard Ellis, who is handling the sale, said yesterday that they would not be giving a guide price because of the multiplicity of options in relation to both the type and scale of the development that would replace the Burlington Hotel. The sale is being managed for the remaining Jurys Doyle shareholders (JHD Acquisitions) by Crownway Investments, the investment vehicle controlled by Bernie and John Gallagher.

Mr Gallagher told The Irish Times that there would be no private negotiations with interested parties before the tender date. "This will be run as an independent process and the property will be sold to the best and highest bidder on the day."

Mr Gallagher described the Burlington as "a stand alone site with independent access".

In fact, it has more than 135 metres of frontage onto Upper Leeson Street, Sussex Street and Burlington Road which will give new owners the huge advantage of being able to accommodate a broadly mixed-use scheme.

Mr Gallagher said the site was "more flexible" than the Ballsbridge hotel sites. Here, developer Sean Dunne paid Jurys Doyle €380 million for the Jurys, The Towers and Berkeley Court hotels which stand on five acres.

All the parties bidding for the Burlington will have different ideas on how to maximise the value of the site which, according to Pat Gunne, is a mere 950 metres from St Stephen's Green. He says it is unique to have a "blank canvas of 3.8 acres in what is clearly Dublin's most exclusive area".

A valuation of €275 million is based on a projected four-to-one plot ratio for the site. However, the latest indications from the city planners suggest that the issue of density will in many cases be determined by the quality of the design and the building materials used. One approach to the Burlington site might be to provide two or three levels of car-parking underground, about 14,864sq m (160,000sq ft) of retail at ground floor level, and a mix of offices and apartments on the upper floor.

It is conceivable that the planners will allow a staggered development of up to eight storeys. Developers could probably get permission for a higher residential content by including a hotel which would be welcomed by the planners. The ready availability of equity funds from the private sector means that all the usual players - Davys, Goodbodys, NCB and the private banking arms of AIB, Bank of Ireland and Anglo Irish Bank, along with possibly Quinlan Private and Warren Private - will be vying to line up development partners to buy the Burlington site.

Developers with an interest in the site are likely to include Bernard McNamara, Treasury, Castlethorn and Park Developments, though, like other occasions, there could also be some smaller players waiting to break on to the national stage.

McNamara will be one of the first into the fray after paying over €100 million for the Allianz office block at the rear of the hotel on Burlington Road. The price here equates to almost €75 million an acre. The 1980s block will be demolished and, should the Clare businessman get the Burlington, he will have control of no less than 4.8 acres in Dublin 4 - what CBRE describes as "a development oasis within an otherwise protected area of Dublin".

Last autumn McNamara teamed up with the DDDA and the financier Derek Quinlan to buy the 24-acre Glass Bottle site in Ringsend for €412 million. A company controlled by McNamara put up €57.5 million of which €52.25 million came from a group of investors assembled by Davys.