The faltering recovery in the holiday market is forcing one Irish bank to speed up the disposal of its hotel assets — with other lenders almost certain to follow.
Ulster Bank has confirmed the hiring of agents CBRE and professional services company KPMG to oversee the sale of a portfolio of eight hotel and two hostels. The package — expected to raise at least €200m (£159m) — is the bank’s biggest single hotel sell-off.
Although the bank has been advised to clear the 10-property Project Nadal in one deal it may well decide to bring the businesses to market individually. All the properties were launched during the boom years with investors anxious to take advantage of generous tax breaks.
A number of other bank-funded hotels opened during the past 10 years are also due to come on the market shortly. Some are understood to have been financed by Ulster Bank’s parent, Royal Bank of Scotland, which has reportedly identified “a broad pool of commercial property assets valued at £9bn (£7bn)” which it is lining up to off load.
Among the mix of properties in the Ulster Bank sale is the four-star Clayton Hotel at Ballybrit in Galway and which opened in 2007. The 195-bedroom business is expected to sell for between €12 and €14m (£9.5 and £11m) –far below its original cost.
Two of Dublin’s well known city centre hotels are also on the list. Jacobs Hostel, off Talbot Street near the central bus station, has 400 beds and is likely to be priced between €6 and €8m (£4.7 and £6.3m). Hostel Avalon, on Aungier Street (pictured), with accommodation for about 300 guests has a guide price of €5m.
Twelve miles from Dublin, the Dunboyne Castle Hotel has been valued at between €10 and €12m (£8 and £9.5). The four-star establishment was designed around a classical period castle and has a three-floor spa and 150 bedrooms.
Uncertainty surrounds the remaining properties. One remains unnamed and neither Ulster Bank nor its agents would confirm the identities of the other five, although a report in The Irish Times named them as:
“Although there are definite signs of recovery, the hotel sector has not bounced back as swiftly as other assets,” commented one Dublin fund manager. “With plenty of other places to put your money we are going to see an increasing number of banks and institutions disposing of their risky hotel entanglements over the next year or two.”
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