Hotel sales prove resilient despite impact of Covid-19

Recent sale of Slieve Donard shows prices firm as international investors come to town

Slieve Donard in Co Down:  five-star hotel is to be acquired by US-based AJ Capital Partners in a deal valued at £40 million.

Slieve Donard in Co Down: five-star hotel is to be acquired by US-based AJ Capital Partners in a deal valued at £40 million.

 

Hotel sales have proven resilient in 2021, with transactions in the first nine months of the year worth exactly double what was achieved in all of 2020, and reports of strong pent-up demand from investors making for a busy end-of-year ahead.

The big bounce back of 2021 was undoubtedly the sale of Dublin’s Morrison Hotel to London-based private equity firm Zetland Capital, for a sum reportedly in excess of €65 million.

The 145-bedroom boutique hotel on Dublin’s quays was owned by Russian billionaire investor Elena Baturina, who bought it from Nama in 2012 for €22 million. It was taken off the market in 2020 as the State went into the first and most severe Covid-19 lockdown.

While the sale of The Morrison was a big, public vote of confidence, it was not the first; the 157-bed Moxy Dublin City hotel, just off O’Connell Street, was announced 10 days earlier for €35 million.

The Moxy was sold by the Spitzer family’s Midwest Holding group to the MHL Hotel Collection, whose Irish properties also include The Westin, The Intercontinental and the Powerscourt Resort Hotel in Co Wicklow.

The hotel chain was formed in 2013 by its three partners – John Malone, an Irish-American billionaire who is a major investor in Virgin Media-owner Liberty Global; and property developers Paul Higgins and John Lally.

€70m deal

In June, it was announced that Glenveagh Properties has sold the planned 262-bedroom Premier Inn hotel at its Castleforbes development in the Dublin docklands to German-based Union Investment in a €70 million deal. Glenveagh said the transaction had been structured in a forward-funding arrangement that would result in Union Investment taking ownership of the hotel.

The Morrison Hotel: reportedly sold for in excess of €65 million earlier this year. Photograph: Dave Meehan
The Morrison Hotel: reportedly sold for in excess of €65 million earlier this year. Photograph: Dave Meehan

The hotel will be operated by UK-headquartered hotel group Whitbread under its Premier Inn brand, as had previously been announced by Glenveagh.

More recently, it was reported that Slieve Donard, a five-star hotel in Co Down, is to be acquired by US-based AJ Capital Partners in a deal valued at £40 million (€47 million).

Alex Sheeran, senior analyst with CBRE’s hotels team, says it is notable that foreign capital was involved in so many of the sales. She says CBRE continues to see strong pent-up demand from international investors, “several of whom have taken the opportunity to travel and inspect opportunities since travel restrictions have eased”.

According to CBRE figures, the hotel sector saw 12 major sales completed in Ireland in the first nine months of 2021, bringing total spend to more than €330 million – exactly double the value of deals in the Irish market over the whole of 2020. Those figures don’t include the Slieve Donard deal, which will be included in CBRE’s fourth-quarter statistics.

While the value of hotel sales in 2021 will not exceed that of pre-pandemic 2019, they will comfortably more then double last year’s business, while 2022 looks set to be busier again.

Pipeline

Hotel developments in the pipeline also remain strong. Earlier this month, An Bord Pleanála upheld Dublin City Council’s decision to grant permission for the development of a four-storey over-basement hotel along the narrow walkway connecting Temple Bar Square to the Ha’penny Bridge. It was the third time that Tom Doone, the owner of the adjoining Merchant’s Arch pub, had sought to develop the site.

The Moxy, on Sackville Place: sold for €35 million in May. Photograph: Dara Mac Dónaill
The Moxy, on Sackville Place: sold for €35 million in May. Photograph: Dara Mac Dónaill

Plans for a new 54-bedroom hotel in Dublin’s north inner city have also been approved, by Dublin City Council, which granted planning permission for the eight-storey development including a rooftop bar and restaurant on Meetinghouse Lane near Capel Street. The development is proposed by property firm Development Ocht, led by businessman Pádraig Kehoe.

In addition, Dublin might be getting another new hotel now that a site with full planning permission for a 244-bedroom hotel has come to market seeking €15 million in the Liberties in the heart of Dublin’s city centre.

Located at Molyneux Yard in Dublin 8, the 0.12 hectare (0.29 acre) site is between Temple Bar, St Stephen’s Green and St James’s Gate. The proposed development will comprise an eight-storey-over-basement-level contemporary hotel, with cafe, restaurant and bar.

“There is great interest in Dublin 8 now,” says Ms Sheeran who noted the district was nominated by TimeOut magazine as the 15th coolest neighbourhood in the world in which to live. She says there are major developments in planning, particularly those by Guinness’s parent, Diageo, to redevelop 12 acres of its complex at St James’s Gate .