ONE OF Ireland’s largest property development companies, the Cork-based O’Callaghan Properties, is to sell one of its flagship investment – the four-star River Lee Hotel in the city. The sale, which is likely to have been approved by Nama, is expected to yield between €24 million and €25 million.
The company headed by Owen O’Callaghan has completed a string of retail developments over the past 25 years, including the Liffey Valley shopping centre in west Dublin, Mahon Point and Paul Street shopping centres and the Opera Lane retail complex in Cork.
Last June, O’Callaghan brought a legal challenge to the Mahon planning tribunal findings that he was involved in making corrupt payments to councillors over the rezoning of the Quarryvale lands where Liffey Valley was built.
Savills estate agents have been appointed to handle the sale of the 182-bedroom Cork hotel, which is leased to PV Doyle Hotels for 35 years from 2006. The rent of €2,040,000 is subject to upwards-only reviews linked to the consumer price index. The investment will show a net initial return of about 8 per cent.
O’Callaghan Properties yesterday issued a statement explaining why it had decided to sell the hotel.
“There is an appetite in the market at present for good quality investments-new property, well let with long leases and good covenants. The River Lee hotel investment does not represent a core asset for our company and we have decided to extract value from it now rather than over the remaining 29 years of the lease.”
The hotel was built on the five-acre site of the former Jurys Hotel next to the river Lee. The facilities include a leisure centre, meeting rooms, bars and restaurants and an underground car park.
O’Callaghan Properties also built 150 apartments on the site, which it still owns. The remainder of the site was earmarked for a private hospital and although Cork City Council twice granted planning permission for the project, the planning appeals board overruled the local authority on both decisions.
Earlier this year Nama forced another Cork property developer, the Fleming Group, to seek a buyer for the 500-acre Fota resort which includes a five-star hotel, 59 lodges and two golf courses.
Marcus Magnier of Colliers, who is handling the sale, said yesterday that a number of interested parties were carrying out due diligence before making formal bids.
The asking price for the Fota estate is €20 million.
