Accountancy firms pay £10 million for car-park in IFSC

A CONSORTIUM of four Dublin accountancy firms has paid £10 million for a newly developed multi-storey car-park in Dublin's International Financial Services Centre. The investment will produce a yield of 7 per cent on top of a tax shelter.

Eight groups tendered for the car-park primarily because of the availability of 100 per cent capital allowances, 54 per cent of them in the first year and the balance at 4 per cent per annum.

Niall and Alan McCormack of Alanis, who acted for the accountancy firms, said the deal would provide a yield of over 12 per cent after the tax breaks are taken into account.

Jones Lang Wootton handled the sale.

The price paid is considerably higher than expected - first indications were that it would make around £6.5 million - mainly because of the shortage of tax-driven investments in Dublin.

Yields have fallen steadily in the IFSC because of the intense competition between successful companies and individuals looking for tax shelters.

The profits from the four-storey, 392-space car-park will be shared equally between the developers, Hardwicke and British Land, and the Custom House Docks Development Authority.

The new owners are to offer short-term car-parking at around £1.20 to £1.30 per hour to maximise the return. However, the CHDDA has taken an option on 100 spaces, which will be leased to IFSC tenants for up to 25 years. The initial rent of £1,500 per year will be reviewed on a five-yearly basis.

Although the planning conditions allow the owners to contract out spaces, they are to run it on a short-term basis in the expectation of earning over £2,000 per space annually.

Because the facility is located next to Jury's Custom House Inn, hotel customers are likely to be offered preferential rates for overnight parking.

The new owners will have to pay 6 per cent stamp duty on the car-park and rates of £31,000 per annum because part of the building was originally used as a tobacco warehouse.

The developers are seeking a judicial review of the decision to impose a rates tariff.

Last year, the four same accountancy firms paid £30 million for George's Dock II and III, two offices buildings with a total of 70,000 square feet. They are rented to blue chip traders at £26 per square foot. The investment is producing a yield of around 6 per cent in addition to the tax breaks.