Dermot Crowley
ELSEWHERE IN this issue (see p23) the finances of the listed Dalata Hotels Group are analysed. One “case study” included relates to the opening of a new Maldron hotel last summer on the site of the old Tara Towers hotel in Booterstown, south Co Dublin. Presumably, Dalata chief executive Dermot Crowley is proud of the project to give it such high-profile treatment in the accounts.
Goldhawk, however, finds the financial details most underwhelming. The Tara Towers was bought for just over €13m in September 2016 and a €4.5m refurbishment programme was initially planned. The property acquired included a one-acre development site on which Dalata – where Dermot Crowley was then development director – built 69 apartments in what is described as a “co-development” with I-Res Reit, which bought the completed apartment scheme for a chunky €42.6m last year. This works out at no less than €617,000 per apartment.
On paper, this looks like a fabulous deal for Dalata but, according to the annual report, the group made just on €1.6m on the sale, which implies a cost of €594,000 per apartment to develop. This simply doesn’t make sense.
Assuming that the whole of the €13m purchase of the Tara Towers and adjacent site was loaded against the apartment development, this would bring the cost of developing each of these apartments down to a still gobsmacking €406,000 per apartment. This represents a development cost per foot of €580, even though apartments were being built in 2019 for around €400 per foot.
Moreover, rather than upgrading the existing hotel building, the Booterstown development involved knocking down the Tara Towers and replacing it with similar looking new building, working out at a development cost for the hotel of just over €31m.
Assuming Crowley loaded the apartment development site with the whole of the €13m acquisition cost, if the original plan had been followed Dalata would be sitting on a refurbished 111-bedroom hotel at a cost of €4.5m, representing a cost per room of just over €40,000. Instead, it has a shiny new hotel with a development cost per room of €236,000.
Dermot Crowley claims the new Maldron is worth over €36m on the basis of a “valuation uplift” of €5.9m. He could, however, have sold the apartment development site (with planning permission) in 2019 for around €15m or, if Dalata had developed the apartment scheme in a suitably cost-effective manner, the company could probably have cleared up to €25m on the deal, rather than the paltry €1.6m boasted of.
In London, the new 192-bedroom Maldron Hotel at Finsbury Park cost £44m. While this is expensive, the €266,000 cost per bedroom is quite the bargain when compared with the €236,000 per room Maldron in Booterstown.
