Income decreased at Dublin’s Shelbourne Hotel last year.
As reported by The Irish Times, the five-star Shelbourne Hotel in Dublin took a €30 million revenue hit last year due to the impact of the COVID-19 pandemic on the economy, according to accounts just lodged for the company that operates the property.
The Shelbourne’s income reportedly declined by 71% from €42 million to €12.2 million.
Pre-tax losses at KW Shelbourne Ops Ltd reportedly increased to €8.52 million last year on the back of declining revenues compared with a deficit of €650,000 a year earlier. The firm’s loss last year reportedly takes account of non-cash depreciation costs of €4.94 million.
The directors reportedly stated in the accounts that the reduced turnover was as a result of government-imposed lockdown restrictions in response to the COVID-19 pandemic.
The directors reportedly stated that since the hotel reopened in June of 2021, “domestic trade has been robust and the return of international guests has commenced”.
The directors reportedly remain confident that “the company will return to a strong trading position as international guests return to pre-pandemic levels and functions can return to full attendance”.
The Shelbourne is owned by an entity connected to California-based real estate investment group Kennedy Wilson.
The accounts reportedly disclose that KW Irish Real Estate VII granted a major concession on the lease payments in light of the enforced closure of the hotel due to COVID-19 restrictions. This reportedly followed a rent review in the middle of 2019.
The cost of the five-year lease reportedly reduced from €43.2 million on January 1, 2020 to €13.3 million at the end of December of 2020. This reduction reportedly comprised a lease concession of €26.2 million and a depreciation charge of just more than €3.7 million.
US real estate specialists Kennedy Wilson assumed control of The Shelbourne when it reportedly paid €110 million in 2014 for the debts attached to the property.
The staff costs for the operation of The Shelbourne are reportedly borne by a separate company, Torriam Hotel Operating Company Ltd, which reportedly has a contract to manage the hotel until 2026.
Killeen Castle Dispute Admitted To Commercial Court
In other Irish hotel news, as also reported The Irish Times, a dispute between a project management company and developer Joe O’Reilly’s Castlethorn Construction group over the future of development land worth €18.5 million has been admitted to the Commercial Court after mediation efforts failed.
Businessman Patrick White and his companies reportedly say that they have a contract to buy from the Castlethorn group Killeen Castle, Dunsany, Co Meath, to develop a 177-bed hotel, leisure centre, golf course and 130 housing units at the 600 acre site.
White, and his companies Killeen Project Management Co and KC Killeen Holdings are reportedly seeking orders including that O’Reilly and his fellow Castlethorn director John Fitzsimons complete the sale of the land to his side.
The case is reportedly also against Castlethorn Construction Unlimited Co, Sasula Unlimited Co and Socnule Unlimited Co.
The defendants reportedly deny the claims.
Last month, Mr Justice Denis McDonald reportedly adjourned an application by the White side to enter the case into the fast track commercial list after he was told efforts were being made to resolve it through mediation.
This week, McDonald was reportedly told that mediation had failed and that both sides now wanted the case admitted to the Commercial Court for a speedy hearing.
McDonald reportedly said that he had been concerned about the delay in bringing the application to admit to the commercial list and that he was not sure that an affidavit from White sufficiently explained the period of delay.
McDonald reportedly said that the defendants had identified real prejudice as a result of the delay and in circumstances where the plaintiffs had registered a bar on dealing in the property pending legal proceedings – known as a lis pendens – it was therefore urgent from the defendants’ viewpoint that the matter be dealt with speedily.
McDonald reportedly therefore admitted the case to the list and adjourned it to February.
Kerry County Council Cracks Down On Short-Term Letting Of Homes
Meanwhile, as reported by The Irish Times as well, Kerry County Council has issued more than 180 warning letters to property owners in a major crackdown on short-term letting of homes, with over 90% of the cases in the Killarney area alone.
The council had reportedly sought almost €170,000 in government funding so that it could begin a clampdown on the widespread unauthorised use of property for short-term rent, Airbnb, and holiday home rentals.
The local authority reportedly said that it had since investigated 195 different properties with 183 warning letters issued to property owners.
It reportedly said that 93% – or 170 – of the warning letters had related to short-term lets in the local electoral area of Killarney, the county’s most important tourism location.
It reportedly said that 118 files remain open, with a further 77 closed where the owner had either formally registered their property for short-term lets or withdrawn it from the short-term rental market.
Reportedly according to internal records, Kerry Co Council applied for funding from the Department of Housing to carry out a blitz on short-term letting not long after Killarney was designated a rent pressure zone in April 2020.
In an application, the council reportedly said that their enforcement unit was already “extremely busy” dealing with their day-to-day work.
The funding letter reportedly said, “From research carried out during 2019, there were substantial numbers of properties registered on Airbnb for the Killarney [area] and Killarney Town in particular, where there were over 500 properties alone or on Airbnb.”
It reportedly said that it was looking for just under €170,000 so that they could hire two additional staff for a crackdown that would run between August 2020 and the end of next month.
In granting the funding, the department reportedly said that they would “expect to see positive results” once the new staff were in place.
It reportedly warned that funding must only be used for short-term letting enforcement, that staff could only be hired on a contract or temporary basis and that it would be seeking regular progress reports.
It reportedly said that they were also investigating options around legal searches to allow for “more efficient use of resources and the sharing of practical enforcement activity”.
Hammerson Submits Revised Plans For Redevelopment Of Dublin Plot
In another Irish accommodation venue-related news story, as reported by The Business Post, UK property firm Hammerson has submitted revised plans for the redevelopment of a 5.5-acre plot between Dublin’s Moore Street and O’Connell Street.
Hammerson is reportedly seeking permission to build a mixed-retail, office and residential development at the north inner city block formerly known as the Carlton site, and reportedly lodged an initial three of six planning applications in June.
Dublin City Council had reportedly raised a number of concerns about the redevelopment, including the proposed demolition of buildings on Henry Street and apartment standards under the build-to-rent units being proposed.
The first three applications reportedly focus on the redevelopment of Moore Street and Henry Street and reportedly include plans for a 150-bed hotel, 79 build-to-rent apartments, cafés, restaurants and retail space.
In total, the plan will reportedly have 8,000 square metres of shops, restaurants and cafés, 44,000 square metres of office space, 210 hotel rooms and 94 apartments.
In its inspectors report, the council reportedly raised concerns about the demolition of 38 Henry Street to create a passageway connecting Henry Street and Moore Lane, and reportedly said that an archway instead should be considered.
The Department of Housing, Local Government and Heritage in its submission to the council reportedly also said that it considered the total demolition of 38 Henry Street “unnecessary”.
In response, town planning consultants Stephen Little & Associates, on behalf of Hammerson, reportedly said that it was “crucial to create an opening of sufficient scale” to attract passers-by to the new development.
Furthermore, partial retention of 38 Henry Street was reportedly considered but that it would be “extremely difficult” to integrate the building with 37 and 39 under the proposed plans.
It reportedly said if the proposed laneway was reduced in size it “would likely attract anti-social behaviour” and that the demolition of 38 Henry Street is the “optimum solution”.
The developer has reportedly also proposed reducing the height of the hotel by 2.1 metres, but that it will remain nine storeys in height, after the council reportedly expressed concerns around the potential impact on the O’Connell Street area.
Responding to “serious concerns” expressed by the council about the level of daylight in one of the build-to-rent apartments, it has reportedly been proposed to lower the floor level by 15 centimetres and increase the level of glazing to “significantly” increase daylight levels.
The council reportedly also noted that north-facing studio apartments proposed as part of the development would have limited distance from residential units opposite. Raising privacy concerns, the planning authority reportedly said that it “compounds concern regarding the standard of internal amenity of these units”.
Reportedly according to the council, north-facing apartments should only be considered if overlooking a significant amenity like a public park, garden or formal space.
Responding to the local authority, Hammerson reportedly said that it considers these proposed units acceptable because only six single-aspect, north-facing units are proposed, that each is above the minimum floor requirement and that all units have an external balcony.
It is reportedly proposed to replace windows in these units with opaque glazing to mitigate potential privacy concerns.
The council has reportedly said the last day for observations for the proposed development is 13 December.
Following submission of the revised plans, traders on Moore Street reportedly wrote to the council last week objecting to the development and the impact it could have on the street’s businesses.
If planning permission is granted, construction is reportedly expected to start in 2023 and be completed in 2030.
More than 70 observation letters were reportedly received by Dublin City Council following the original planning application being submitted in June. Those who submitted observations reportedly included former Sinn Féin leader Gerry Adams, An Táisce and Fáilte Ireland.
Fáilte Ireland in its submission reportedly said that the inclusion of a hotel in the development “would be a welcome addition to the city’s bed stock and position it to avail of the international recovery in tourism and the long-term growth that will ensue.”
A number of TDs, MEPs and Councillors, meanwhile, reportedly raised concerns about the proposal.
Green Party MEP Ciarán Cuffe reportedly said that “it is a matter of deep concern that the existing street market is threatened by the proposed development” and that the “preponderance of build-to-rent units within the development seems inappropriate.”
Independent MEP Clare Daly reportedly said that the development was “out of context” with the adjoining national monument site while well-known Dublin tailor Louis Copeland reportedly said that the proposed development is a “huge opportunity” for the area’s regeneration.
The development reportedly forms part of the historic Moore Street “battlefield” site, which was reportedly declared a national monument in 2016.
Hammerson, which co-owns the nearby ILAC shopping centre and Dundrum Shopping Centre, has reportedly said that the site’s heritage will be “retained and celebrated” with a new archway on Moore Street to commemorate the Easter Rising.
Deka Immobilien Closing In On Purchase Of Airbnb HQ In Dublin
In further Irish accommodation-related news, as once again reported by The Irish Times, Deka Immobilien is closing in on the purchase of the European headquarters of Airbnb in Dublin’s south docklands.
While the sale of 8 Hanover Quay has reportedly yet to be completed, it is reportedly understood that Deka has agreed to pay in excess of the €41.5 million joint agents BNP Paribas Real Estate and Savills had reportedly been guiding when they brought it to the market last September. The property is reportedly being sold on behalf of a fund managed by BNP Paribas Real Estate Investment Managers (BNP Paribas REIM).
Outside of its strong tenant covenant and attractive yield, the property reportedly adjoins the Reflector and is reportedly linked to it on foot of the consent given by BNP Paribas REIM to break the ground floor boundary wall to allow for a seamless working environment for Airbnb employees. The company reportedly operates from 3,715sq m (40,000sq ft) across two and a half floors in the six-storey-over-basement Reflector building, while its Europe, Middle East and Africa headquarters reportedly occupy all 3,747sq m (40,343sq ft) of office accommodation at 8 Hanover Quay.
The original warehouse at 8 Hanover Quay reportedly served for many years as the former Raleigh bicycle factory before reportedly being redeveloped by Targeted Investment Opportunities, a joint venture involving Nama, Oaktree and Bennett Construction.
Practical completion was reportedly reached in 2016 and today the building reportedly benefits from a full-height central atrium featuring a natural auditorium that has made it one of the most-photographed office interiors in Dublin.
Number 8 is reportedly let in its entirety to Airbnb Ireland Limited under a full repairing and insuring lease, with a full parent company guarantee reportedly in place from Airbnb Inc, which reportedly underwent an initial public offering in December of 2020 and reportedly has a market capitalisation in excess of $100 billion.
The next break option in Airbnb’s lease is reportedly in March of 2030, reportedly giving 8 Hanover Quay an attractive term certain of 8½ years, and a weighted average unexpired lease term of 14½ years with the expiry in 2036.
Value Of Dublin’s Fitzwilliam Hotel Decreased Last Year Due To COVID-19 Pandemic
Additionally, as reported by The Irish Independent, the book value of Michael Holland’s upmarket Fitzwilliam Hotel on Dublin’s St. Stephen’s Green decreased by €14 million last year as its business was hit by the COVID-19 crisis.
Newly-filed accounts for Ampleforth, the company behind the five-star hotel, an adjacent restaurant and the Bailey Bar on nearby Duke Street reportedly reveal that the hotel was revalued at the end of 2020 by CBRE, reducing its value to €65 million. The company is reportedly obliged to have the property valued on a regular basis as part of its borrowing requirement with AIB.
The accounts reportedly note, “The most recent valuation was carried out by CBRE on behalf of AIB in December 2020 and the market value of the hotel on an existing use basis was €68.1m, including fixtures and fittings.
“The market value of other property was determined to be €1.8 million including fixtures and fittings.”
The accounts for Ampleforth reportedly reveal that the company’s revenue tumbled 76% last year to €3.7 million, while it reportedly posted a near €1.8 million loss compared to a €3 million profit the year before.
The accounts reportedly note, “Following restrictions placed on the group’s business as a result of the outbreak of the COVID-19 pandemic, the companies in the group temporarily ceased trading,”, and reportedly add, “The directors intend to recommence normal trading as soon as all restrictions have been lifted and plan to manage the activities of the group so that it will return to normal trading as soon as possible.
“In the intervening period, the group has reduced its cost base so that the burden of costs borne during the non-trading period is mitigated.”
Last year, Ampleforth reportedly refinanced its senior debt with AIB to ensure it has sufficient financial headroom during the COVID-19 crisis.
That deal was reportedly struck in April of last year, reportedly extending maturity on the debt for an additional five years.
The accounts reportedly reveal that Ampleforth had just under €19.8 million in bank loans, with €18.7 million of those reportedly maturing within two to five years from the end of 2020.
The directors reportedly said that they were confident the group will return to profitability following the lifting of the restrictions.
© 2021 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.