Dalata enters sale-and-leaseback on Cardiff property

Dalata Hotel Group announced on Tuesday that it agreed the sale and leaseback of its Clayton Hotel in Cardiff to M&G Real Estate - which it described as one of the “world's largest property investors”.

The AIM-traded firm said consideration for the transaction was £22.1m (€26m), and was expected to be completed by mid-June.

It said the hotel would be let on a new fully repairing and insuring lease for a 35 year term.

The agreed initial rent for the property was £1.15m per annum, and would be subject to five-yearly rent reviews, index-linked to the Retail Price Index.

Dalata would retain the fixtures and fittings within the hotel to the value of £2.1m, and also the benefit of a restaurant sublease to Viva Brazil Cardiff, located on the ground floor of the building, on a 20 year lease expiring in 2032.

The company described the Clayton Hotel Cardiff as a four-star hotel, located on St Mary Street in Cardiff city centre, a short walk from Cardiff Central train station and the Principality (formerly Millennium) Stadium.

It said the hotel contained 216 air conditioned bedrooms, a bar and restaurant, a fitness suite and extensive meeting room facilities.

In 2016 the Clayton Hotel Cardiff generated EBITDAR of £2.3m.

Dalata said the consideration was payable in cash, and the proceeds of the transaction would be used to reduce net debt arising from recent acquisitions.

“The sale and leaseback of Clayton Cardiff is consistent with our stated strategy of growing our UK portfolio primarily through operating leases,” said Dalata deputy CEO of business development and finance Dermot Crowley.

“We are delighted to be engaged with such a prestigious investment partner as M&G Real Estate who value our balance sheet and operating covenant appropriately.

“The hotel continues to perform strongly and this reaffirms our commitment to developing our hotel business within the UK.”