Legal Offices: Top law firm Dillon Eustace's sale and leaseback deal on new offices in Dublin's docklands is to provide a valuable windfall for its partners. Gretchen Friemann and Jack Fagan report.
Partners in another corporate law firm, Dillon Eustace, are expected to share up to €20 million through a sale and leaseback deal on their planned new headquarters at Grand Canal Harbour in the Dublin docklands.
Earlier this year another top legal firm, McCann FitzGerald, agreed sale and leaseback terms for a headquarters in the same area which will channel at least €30 million directly to its partners.
Under the terms of the latest agreement, the Irish Property Unit Trust is putting up €45 million to forward fund the new building which will be developed next to the Ferryman bar at Sir John Rogerson's Quay, close to the junction with Cardiff Lane in Dublin 2.
Dillon Eustace has already bought the riverside site for around €8 million and will also be responsible for the development and fitting out of the five-storey over basement block which will have to be finished to a high specification.
The cost of delivering a 4,434.7 sq m (47,833 sq ft) block and 22 car-parking spaces is expected to range between €15 million and €20 million, depending on the final fitout and standard of the furnishings chosen by Dillon Eustace. Industry sources believe the windfall will still be close to €20 million though the firm's property adviser, Ann Hargaden of Lisney, insisted yesterday that that figure was "wide of the mark". The firm's 18 partners are to share in the cash payment.
For IPUT, the forward funding of the block makes a lot of sense at a time when most institutions cannot find a home for substantial funds which have been building up over the past few years.
The Dillon Eustace building will perform better than most prime new investments, producing a rent roll of €2.1 million - equating to a yield of 5 per cent.
The 20-year lease entered into by the legal firm provides for five-yearly rent reviews, with the initial rent set at €457.50 per sq m (€42.50 per sq ft) and €3,100 per car space.
Unlike virtually every other office letting in the current oversupplied market, this deal does not include either a rent-free period or a break option after the usual 10 or 15-year period.
Hibernian Insurance is understood to have been a close runner-up for the contract to fund the Dillon Eustace headquarters.
IPUT's successful pitch for the Dillon Eustace headquarters will be seen as an important endorsement for the office market in the rapidly changing Grand Canal Harbour area, where a range of new developments are now under way.
Niall Gaffney of IPUT was unavailable for comment yesterday. The fund was advised by Palmer McCormack. Ironically, IPUT was also Dillon Eustace's landlord up to recently at Upper Grand Canal Street.
Another developer, Liam Carroll of Danninger, who has since bought this office building for €9.2 million, is currently developing a major new office scheme around the corner in Barrow Street.
Dillon Eustace was founded in 1992 and has a staff of almost 150. Interestingly, it earns as much as 65 per cent of its turnover from international work.
The partners are Michael Barker, Andrew Bates, Paul Breen, Mary Canning, Kieran Cowhey, Brian Dillon, David Dillon, John Doyle, Paul Eustace, Paul Gill, Paula Kelleher, Brian Kelliher, Lorna Kennedy, Patrick J Kevans, Denis Kinsella, Catherine McKnight, Mark Thorne and Lorcan Tiernan.
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