Offices at Eastpoint sold for £4.3m-plus

A GROUP of investors is believed to have paid in excess of £4.3 million for an office building at the Eastpoint Business Park in the Dublin docklands. The block will be occupied by the German-based multinational company, AOL Bertlesmann Services Operation. The deal will produce a yield of around 8 per cent.

While details of the deal were not available from the agents, Jones Lang Wootton, other agents said the sale had shown institutions were willing to buy investments even though the tenant can opt out of the lease in the fifth and 10th years.

Bertlesmann has negotiated these rights in its 25-year lease but will have to meet a two-year rent penalty if the break is exercised at the end of the fifth year.

Otherwise the lease provides for five-yearly upward only rent reviews on a full repairing and insuring basis.

Several institutions are known to be anxious to strengthen their industrial portfolios but, as in this case, they will obviously discount the purchase price when break clauses are available to the tenant.

One agent specialising in investments said it seemed inevitable that an increasing number of investment properties coming on the market - particularly those occupied by overseas companies - will have break clauses in the leases and "the institutions will have no option but to accept them if they want to take them into their portfolios".

The sale of the Bertlesmann office block was helped by its location in one of the new enterprise areas where capital costs attract tax allowances.

In this case, 25 per cent of the construction costs can be written off in the first year and 4 per cent per annum in subsequent years until the entire 100 per cent has been claimed.

Bertlesmann will also qualify for a double rent allowance and a remission of rates.

The Bertlesmann building was marketed privately by Jones Lang Wootton in the run-up to the end of the tax year and attracted considerable attention from successful companies looking for a tax shelter.

Bertlesmann will be paying a rent of £377,000 for the 31,100 square feet of office space, the equivalent of £11.60 per square foot.

The rent includes payment for 72 car-parking spaces at £225 per space. The three-storey block will have raised access floors, suspended ceilings, an air-cooling system and carpets throughout.

The lease is to be guaranteed by the German-based Bertlesmann Group, the parent company which employs more than 50,000 people with media interests across Europe and the US. The group had a turnover of $11 billion in the year ended June, 1994, and net profits after tax of $476 million.