New Burlington Hotel owners seek further properties

Private equity giant Blackstone, which has bought the Burlington Hotel for €67 million, is seeking further property investments in the Republic.

The New York-listed private equity fund, which manages $205 billion in investments that include a major stake in Eircom, was confirmed as the hotel’s new owner yesterday.

The company paid €67 million for the property, less than one-quarter of the €288 million developer Bernard McNamara paid for it at the height of the property bubble in 2007.

Blackstone is looking for other commercial properties in the Republic. The firm believes current prices offer good-value opportunities.

The fund has been interested in the Republic’s distressed assets for some time.

It attended the Global Irish Economic Forum in Dublin Castle last year and 12 months ago its chief executive, Stephen Schwarzman, met Taoiseach Enda Kenny.

The company plans to spend €16 million refurbishing the hotel, where a large number of the 501 bedrooms are said to need improvement. It is also likely to convert the nightclub into a gym.

The Burlington will trade under Hilton’s DoubleTree brand, which operates 200 four- and five-star hotels around the world. It will be the first property in the Republic to carry this brand.

It is estimated the Burlington made a profit of €5 million last year. According to Blackstone’s statement, Dublin hotels have made a “remarkable” recovery since 2010.

It quotes industry bible Smith Travel Research, which recently said room occupancy rates in Dublin have been in positive territory since September 2010, with revenue per room growing consistently for 26 months.

Blackstone is likely to sell the property over the next few years. Its real-estate management policy is to “buy it, fix it, sell it”.

Once the fund buys a property it generally moves quickly to address any issues, physical, capital or otherwise, before selling it on.

A year ago Blackstone bought Harbourmaster Capital, Eircom’s biggest lender. As a result, the fund is the biggest shareholder in the telecoms group.

In August 2011 it was one of a number of bidders for the Irish Bank Resolution Corporation’s (IBRC) €8 billion US loan book.

It was subsequently awarded the contract for overseeing the divestment of the former Anglo Irish Bank’s Irish and British loans.