A LONG-RUNNING saga involving Eircom’s former corporate headquarters at St Stephen’s Green, Dublin 2, has taken a new twist with the decision by the telecommunications company to lease part of the long-vacant complex to an Irish software company and to look for further tenants for the building.
Back in February 2006, Eircom triggered a row with its landlord, the Royal College of Surgeons in Ireland (RCSI), when it accepted an unusually high premium of €5 million for its lease of the Ardilaun Centre.
The suitors were property developers Gerry O’Reilly and David Courtney of Radora Developments whose plan was to gain control of the site and redevelop it into a larger complex.
The move was seen as a fairly radical strategy of buying out a tenant’s lease to obtain a stake in the city centre complex and was viewed by some experts as risky as it required the consent of the Royal College of Surgeons.
The standard practice up to then had been for vacating companies such as Eircom to pay a reverse premium to reassign its lease, but in this case the Ardilaun Centre was regarded as ripe for redevelopment in one of the most prestigious locations in the city.
Although the RCSI stopped short of actually rejecting the transfer of the leasehold into Courtney and O’Reilly’s name – as this would probably have provoked legal repercussions from Eircom – the decision to withhold consent led to a lengthy stand-off between the landlord and tenant.
After 12 months of stalemate, Eircom then issued High Court proceedings based on the claim that RCSI was “unreasonably” withholding consent to the deal.
A settlement worked out on the steps of the High Court allowed Eircom to sublet the Ardilaun Centre to Radora Developments but made Eircom ultimately responsible for the rent roll.
Radora Developments subsequently went on to develop a major office and apartment development at Elm Park in Dublin 4, which ultimately ended up in receivership towards the end of 2010.
Though builder Bernard McNamara headed up that project, he was not directly linked to the Ardilaun saga as he had had a long-running relationship with the RCSI and was a member of its international development board.
McNamara was also part of a consortium along with O’Reilly and Courtney that purchased the Shelbourne Hotel and the Superquinn retail chain.
When Radora went into receivership, responsibility for the €5 million rent roll on the Ardilaun Centre reverted immediately to the original tenant, Eircom.
The lease does not run out until 2016.
Eircom has now appointed Ian Campbell of Lambert Smith Hampton to find tenants for the three blocks in the complex which have an overall floor area of 11,260sq m (121,200sq ft).
Campbell has just let part of the front block beside the Unitarian Church to the Escher Group which provides software for the postal services in a range of countries.
It is renting 975sq m (10,500sq ft) at about €193 per sq m (€18 per sq ft) – less than half the €430 per sq m (€40 per sq ft) Eircom is paying to the Royal College of Surgeons in Ireland.
The remainder of the space is also now on the letting market at between €161 and €193 per sq m (€15/€18 per sq ft).
