FBD Property & Leisure (FBDPLL) has announced a €7m expansion of its Castleknock Hotel in Dublin. The expansion will increase room capacity to 190 with 43 new rooms and three suites added to the current capacity at the hotel.

When the expansion at Castleknock was originally announced in December last year, the project was expected to cost €5.5m. However, most likely due to increased building costs, the total cost of the expansion at Castleknock has been increased to €7m.

David Kelly, chief executive of FBD Property & Leisure, said that the capital project at Castleknock is timely. “Castleknock Hotel has been performing consistently well since the economic recovery began. With all the indicators pointing to a continued demand for hotel rooms in the capital, our expansion is timely,” he said. Construction is expected to begin in November and completed by early 2018.

Debt burden

Despite significant bank debts of more than €46m, FBD Property & Leisure is committed to further investment in its hotels business, three of which are located in Ireland with a further two resorts situated in Spain. In an interview with the Irish Farmers Journal last November, chief executive David Kelly said that hotels need constant capital investment and FBDPLL was in a position to meet that investment need having re-financed its debt facilities with lender AIB for another three years.

FBDPLL’s debts of more than €46m arose last year when it came under the full control of the investment group, Farmer Business Developments. Developments had previously held a 50% stake in FBDPLL with its joint venture partner FBD Holdings. In October 2015, Developments took sole control of FBDPLL when it paid €48.5m to FBD Holdings for its 50% stake.

To fund the €48.5m buyout, the bulk of this money was borrowed against the value of the hotels business and is now on the FBDPLL balance sheet. According to Kelly, it will cost FBDPLL up to €1.5m per year to service this debt.

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