Executives spend over £22m on IFSC blocks

TWO separate groups of Irish business executives are spending £22.5 million on the acquisition of two office blocks being built in Dublin's International Financial Services Centre. The investments will provide net yields of under 5.5 per cent in addition to valuable tax breaks.

The deals provide further evidence of the rush by successful business executives to find tax shelters even at the expense of low returns on the investments.

Ann Hargaden of Lisney has agreed sale terms at slightly over £12.5 million for Block III in the Custom House Plaza, which is nearing completion. The 26,538-square-foot block stands five storeys over a 29-space basement car-park. When fully let it will produce £740,000 for the new owners. Maxol has agreed to lease 10,500 square feet at £27.50 per square foot and £1,250 per car-parking space.

Discussions are at an advanced stage to lease the remainder of the space.

The new owners will be able to avail of 54 per cent of the capital allowances in the first year and 4 per cent per annum thereafter.

It is the first investment sale in the plaza development. Last autumn, ABN Amro Bank bought the first block of 42,000 square feet. The bank is expected to move into the offices in early May.

Lisney has also agreed sale terms at £10 million for Block IV a 20,000-square-foot building which is being bought by Douglas Newman Good on behalf of a second consortium.

Irish Permanent is to occupy 7,000 square feet of the building under a 25-year lease and the remainder of the space is expected to be let in the coming weeks at a rent of £27.50 per square foot.

The plaza development, which will have a total of 175,000 square feet of space, occupies the former Sheriff Street sorting office site.

Meanwhile, CIE has drawn up a short list of developers and building contractors from which a company will be chosen to develop a 38,000-square-foot office block at Connolly railway station in Dublin.

Reports that neither of the two existing developers in the IFSC - the Hardwicke/British Land group and Mr Brian Rhatigan's company - are on the short list could not be confirmed.

The scheme will qualify for the same tax incentives that are available in the IFSC.

The planned three-storey block is expected to cost round £5 million. The companies on the short list are now being invited to quote for the upgrading of the railway concourse before a final selection is made.

The successful developer will have to pay CIE £500,000 on top of a proportion of the rent accruing from the office block. CIE is also insisting that rent reviews over a 300-year term should be on an upwards-only basis. Developers will have to cover any shortfall to CIE if rents do not move up when the tax breaks run out.