A dispute over rent due to 40 investors in the Clarion Hotel Liffey Valley and a receiver appointed by ACC Bank has escalated with their attempt to seize almost two-thirds of the rooms from a Nama-appointed receiver running the hotel.
About 40 investors who injected €30 million into the west Dublin hotel have joined forces with the ACC-appointed receiver and served a 21-day notice on Nama’s receiver to vacate about 200 of the 360 bedrooms in a bid to kick-start talks.
The investors, who haven’t been paid rent by Nama’s receiver, Kieran Wallace of KPMG, since he was appointed in March 2011, along with ACC’s receiver Martin Ferris, served the notice of forfeiture on Mr Wallace last week in relation to their 200 bedrooms.
Mr Wallace runs the hotel through a third-party operator and has control over all of the common areas in the hotel.If no compromise is reached, the hotel will be left in the unusual position of the operator not having access to the majority of the bedrooms.
The investors hope that the forfeiture notice will bring Mr Wallace to the negotiating table for talks on the unpaid rent and a long-term deal on their rooms. He could, however, resist by continuing to run the hotel with more than 100 rooms controlled by the State agency.
There is about €60 million of debt owing on the hotel, which was built by Co Clare developer Sean Lyne, whose debts to AIB have been transferred to Nama. He borrowed €20 million from AIB while the investors borrowed most of the €30 million they paid for their rooms. ACC is owed a further €10 million over the debts of developer Paddy Kelly, another investor.
Nama seized the hotel last year, appointing Mr Wallace. He retained hotelier Frankie Whelehan’s Choice Hotels to continue running the hotel.
A stand-off developed between the investors and ACC-appointed receiver on one side and Nama’s receiver on the other over the outstanding rent. Under the proposed division of profits, Nama receives €900,000 a year in rent while the investors are due to receive €338,000 a year despite owning the majority of the rooms.Investors don’t want the long-term €338,000-a-year rental deal sought by Mr Wallace as they believe it will damage the capital value of their rooms, jeopardising their ability to repay bank debt drawn to make their original investments.
