Investments The EBS Building Society is to offload an office block with tax breaks in the heart of the IFSC which is let to JP Morgan Bank, writes Jack Fagan
The EBS Building Society is to sell a tax-driven office investment in Dublin's IFSC.
The 10-year-old block, 1 George's Dock, is expected to make between €45 million and €50 million when it is goes to tender on July 31st.
The five-storey over basement building is rented by JP Morgan Bank (Ireland) Ltd under a 25-year lease with another 15 years to run.
The overall rent for the 3,926sq m (42,255sq ft) block and 46 car-parking spaces is €2,243,627.
However, JP Morgan only pays 80.44 per cent of the full rent, equating to almost €2 million per annum.
That works out at €509 per sq m (€47.33 per sq ft) - a relatively strong rent considering that it was last set in December, 2001.
Although the next rent review is due in December, it is unlikely to yield an increase of any significance.
Moreover, the appeal of the IFSC is fading because of the premium rents being charged and the fact that an ever-increasing number of bluechip companies are moving to new office blocks along the south docklands.
Even Bank of Ireland and AIB have moved much of their operations out of the IFSC to avail of lower rents elsewhere in the city.
Number 1 George's Dock was originally bought in 1996 by Chase Manhattan (which has since merged with the JP Morgan group) who then embarked on a sale and leaseback with EBS.
The purchase price of £17 million (€21.59 million) gave the building society a yield of 5 per cent, as well as valuable capital allowances.
The geared rent agreement formed an important part of the deal.
Like other investors who bought buildings in the IFSC, the EBS was allowed to claim 54 per cent of the allowances in the first year and 4 per cent in each subsequent year.
With the sale of the office block at this stage, it is understood that a substantial proportion of the allowances will be clawed back. This could open the way for the new purchaser to possibly claim about 60 per cent of the capital allowances on the original purchase price.
A spokesman for the EBS said yesterday that he was not in a position to give details about the sale of 1 George's Dock.
The selling agent is Brendan J Walsh.
