Davy Research

Dalata Hotel Group

Announces three freehold property purchases
Hotels
Dalata Hotel Group

DAVY VIEW

Dalata has announced three transactions this morning, in line with its stated strategy of acquiring those properties in its portfolio that are subject to unpredictable upward only rent reviews. The total consideration for the deals is €69.3m. Once complete, we estimate that the group will make combined annual rental savings of close to €3.1m, while the initial incremental earnings from taking ownership of its Liffey Valley hotel will be €2m. In addition, we think there is now good scope to materially grow the earnings at each of the acquired hotels which will act to push up the overall return on the transaction.

Dalata also announced an imminent sale and leaseback of one of the group's UK properties. This will part-fund the acquisitions, although the details of this transaction have yet to be fully disclosed. We expect the group to continue to pursue an asset-light model in the UK, while the Irish acquisitions announced give management far more control over the future earnings power of the properties.

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  • RATINGS AND PRICE CORRECT AT TIME OF ISSUE


  • Dalata Hotel Group

    Closing Price: 494c

  • RATING 09/09/14

  • PREVIOUS RATING 03/09/14

    Under Review

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