Value of Kerry five-star hotel written down by €16.9 million

THE VALUE of the five-star Aghadoe Heights Hotel in Co Kerry, in which developer Jerry O’Reilly is a biggest shareholder, was written down by €16.9 million in 2009, according to its latest accounts.

But the Killarney hotel returned to the black that year after its parent group – Gamine Trading Ltd – wrote off a €20.5 million loan.

The loan was written off as the directors believed that it could not be recovered given the economic circumstances.

Accounts for Dalegrove Taverns Ltd, which operates the hotel, show that it made an operating loss of €621,249 in 2009, down from a loss of just over €1 million in the previous year.

But it reported a surplus of €3.1 million when the property write down and parent loan were taken into account.

Interest payments of €435,870 left it a profit for the year of just under €2.7 million.

The directors of Dalegrove Taverns stated that the results for 2009 were “disappointing” and they expected “challenging trading conditions in the foreseeable future”.

The company said management accounts for 2010 showed it made an operating loss, before bank interest and depreciation, of €179,870.

A note on its status as a going concern states that its ability to trade is “contingent on the availability of continued financial support from its bankers”.

Since early 2009, its bankers have rolled up the interest due on the company’s borrowings, which stood at €11.2 million at the end of that year.

Dalegrove has borrowings with AIB and First Active, which is owned by Ulster Bank.

The directors said they were confident that its lenders would “in the short term” allow the interest roll up to continue to allow it to trade.

The bank loans are secured by a personal guarantee from Mr O’Reilly; a legal charge over the company’s property; and a guarantee from lessor, Aghadoe Partnership.

The Aghadoe Heights Hotel and Spa overlooks the lakes of Killarney.

Mr O’Reilly also operates hotels in Kilkenny and Limerick, while the Kerry native is a business partner of developer Bernard McNamara in a number of ventures, including the five-star Shelbourne Hotel in Dublin and the Radisson Blu Hotel in Galway.