Developer Paddy McKillen jnr and his business partner, Matt Ryan, have completed the sale of the Dean Hotel Group to British property group Lifestyle Hospitality Capital (LHC) and Elliott Investment Management, the New York-headquartered investment giant founded by billionaire Paul Singer. The deal, which The Irish Times understands was finalised recently, values the hotels at about €355 million and gives LHC and Elliott a stake of more than 70 per cent.
Although the €355 million valuation is substantially more than the €250 million that had been guided for the group when it was first brought to the market by Eastdil Secured in a confidential sale and managed-back process in February of last year, the deal with LHC and Elliott comprises eight hotels and the businesses of a further two under development as opposed to the five venues that were included in the initial offering.
At the outset of the sale process, codenamed “Project Dagda”, Mr McKillen jnr and Mr Ryan’s development company, Oakmount, had been seeking a buyer for a portfolio consisting of the Dean Dublin, the Mayson, the Devlin, the Dean Cork and the Dean Galway.
Although several parties expressed an interest in this original portfolio, it later came to include the Clarence Hotel on Wellington Quay, the Leinster Hotel that recently opened for business on Lower Mount Street, and the Glasson Lakehouse near Athlone in Co Westmeath. In the case of the Clarence, Mr McKillen jnr and Mr Ryan acquired the landmark property’s freehold interest from its longstanding owners, U2′s Bono and The Edge and their business partner Paddy McKillen snr just weeks before they agreed the sale of the wider Dean Hotel Group. The duo’s Press Up Entertainment Hospitality Group had been operating the hotel for several years after securing the property’s leasehold interest in 2019.
Quite apart from securing ownership of the eight hotels already in operation, LHC and Elliott Investment Management have also acquired the businesses of two Dean hotels that are due to be developed in Belfast and Birmingham. Ownership of the properties themselves is set to be retained by Mr McKillen jnr and Mr Ryan’s development company, Oakmount. The overall hotel portfolio will continue to be managed and operated by the Dean Hotel Group under its own brands, with Mr McKillen jnr and Mr Ryan working in partnership with LHC and Elliott Investment Management to drive the group’s expansion in Europe and the United States.
The ultimate holding company above the Dean Hotel Group and Press Up is Keillan Limited, registered in the Isle of Man. Press Up is behind brands such as Wowburger, Elephant and Castle, the Irish franchise for Wagamama and Stella Cinema in Rathmines. Mr McKillen jnr owns 50 per cent of the parent company, while his father, property developer Mr McKillen snr, owns a further 25 per cent. The remainder of the group is split evenly between Mr Ryan and Liam Cunningham, a long-time associate of Mr McKillen snr.
A majority stake in the Dean Hotel Group has now been sold to an investment vehicle that is managed by Lifestyle Hospitality Capital, which is led by Keith Evans, a hotel deal-making veteran, and backed by funds advised by Elliott Investment Management.
Mr Evans, a former senior executive in Starwood Capital’s European hotels business, was chief investment officer at Ennismore, the UK-based boutique hotels operator behind the Hoxton chain, between 2019 and the start of this year. He was heavily involved during this time in Ennismore’s setting up of a high-end hotels joint venture with France’s Accor.
The Dean Hotel Group is the seed portfolio of the new LHC venture.
Elliott, founded by Mr Singer in 1977, has almost $60 billion (€56.5 billion) of assets under management and is best known as an activist stock market and private-equity investments. Real-estate-related investments account for about $3 billion of its assets.
The sale of the Dean Hotel Group comes just over four years after Mr McKillen jnr and Mr Ryan abandoned a plan to raise up to €50 million through the sale of a 45 per cent stake in their Press Up Entertainment Hospitality Group business to investors. The intended share sale had related to Press Up’s trading operations only and did not involve any of the Oakmount-owned properties in which its bars, restaurants and hotels operate.
Press Up had previously engaged Goodbody in early 2018 to assess its funding options, including an initial public offering (IPO) of shares on the stock market, with a view to raising as much as €60 million. The proposed IPO did not proceed.
