Blackstone to potentially buy 25% stake in former Dunne hotels

Blackstone is looking to position itself for a future tilt at the prime Ballsbridge hotel assets bought for €380 million by Seán Dunne, after it emerged yesterday that the private equity giant is in talks to buy the 25 per cent stake held by Kaupthing, an Icelandic bank.

The former Berkeley Court and Jurys properties are now known as the Clyde Court and Ballsbridge hotels. They are operated by Pat McCann’s Dalata group on behalf of a three-bank consortium – consisting of Ulster Bank, Kaupthing and Rabobank – that seized the hotels from Dunne in 2009.

Bloomberg reported yesterday that the administrator to Kaupthing’s UK operations is in talks to offload its stake to Blackstone, which last year paid €67 million for the nearby Burlington hotel, since trading as a Doubletree by Hilton.

Ulster Bank was the lead financer of Dunne’s 2005 purchase, which was the high-water mark of the property boom in terms of the price paid per acre. The bank owns 50 per cent of the properties.

Blackstone declined to comment yesterday. Ulster Bank was unavailable for comment.

Industry sources said it was not expected Ulster or Rabobank would look to sell their respective stakes at this time. The Kaupthing stake came on to the market only because of the progression of that institution’s administration, a source said.

Industry observers speculated that the other two banks are thought likely to sit on their combined 75 per cent share for a couple of years, until the nascent revival currently under way in the Dublin hotels market has taken hold and asset values have increased.

If Blackstone completes a purchase of Kaupthing’s stake, it will be unable to take control of the Dublin properties until the other banks make their move.

However, it would be well placed to negotiate a deal with the other banks for their 75 per cent, possibly preventing an open-market bidding process. The hotels, which are adjacent to each other on one the city’s prime development sites, are likely to attract huge interest if they came on to the market.

Blackstone, which owns the suite of Hilton hotel brands, is known to be keen to assemble a portfolio of Irish hotels assets. It is spending €16 million on an upgrade of the Burlington, which it bought for less than a quarter of the price paid by Bernard McNamara at the height of the boom.

If Blackstone eventually gained control of the two hotels it is possible it could see the entry into the Irish market of its premier five-star brand, Waldorf Astoria. Hilton already operates a 500-bedroom Doubletree within a half mile of the Ballsbridge site, so Blackstone would be unlikely to develop the hotels for that brand.

Hilton also already has a five-star Conrad Hilton in central Dublin, as well two four-star Hilton hotels, leaving Waldorf Astoria as the most likely contender should it ever get to develop the site.