FBD Hotels, the wholly owned subsidiary of Farmer Business Developments, has announced plans for a €55m development of its La Cala resort in Spain. The development, which will be carried out as part of a joint venture (JV) with British construction firm Taylor Wimpey, will see the construction of 107 apartments and 41 townhouses at the La Cala site.

As part of the JV, FBD Hotels will provide the land, while Taylor Wimpey will finance the project and build the units. For FBD Hotels, it is a low-risk strategy to release cash from its land holding at La Cala.

About 25% of profits from the sale of the units goes back to FBD Hotels.

The 1,000ac La Cala site was first acquired by FBD Hotels in the 1980s and is currently valued in the region of €55m. Approximately 500 acres of this is given over to a large golf resort, with a further 125 acres given over to roads, pools and sports facilities.

In recent years, FBD Hotels have been developing the remaining lands in partnership with Taylor Wimpey and this will be the third such JV.

The first JV was carried out in 2014 and saw the €20m development of 60 apartments, which were sold out in 12 months.

The second JV began in February this year with the €40m development of 103 new housing units at La Cala. About 30% of these units have been sold to date. FBD Hotels expect works on the third JV to begin in autumn 2017.

Tower Hotel

Earlier this month, FBD Hotels sold the Tower Hotel in Waterford to the Neville Hotel group, which owns the River Court Hotel in Kilkenny, in a private off-market deal. While the sale price was not disclosed, FBD Hotels carried the property at a book value of €11m.

This leaves FBD Hotels operating just two hotels in Ireland; the Castleknock Hotel in Dublin and Faithlegg Hotel in Waterford. It also owns the Sunset Beach and La Cala resorts in Spain.

Last year, Farmer Business Developments took full control of FBD Hotels when it purchased the remaining 50% stake in the business from FBD Insurance for a total of €48.5m.

The Tower Hotel recorded earnings of €900,000 in 2015, which equated to 10% of FBD Hotels’ total earnings. The proceeds from the sale are likely to go towards FBD Hotels’ €46m debt.

Farmer Business Developments has stated its strategy is to exit the hotels business in time, but only when the maximum value can be extracted from the individual assets. As well as the new JV at La Cala, FBD Hotels is also investing €7m in an expansion of the Castleknock Hotel, which will increase room capacity to 190.