STATE STREET has offered to renegotiate the lease terms on its Irish banking headquarters with the successful bidder who acquires the investment later this month.
More than a dozen funds have bid for the building in the south Dublin docklands, which is likely to make in excess of €100 million. Savills are expected to call for a best and final offer early next week.
The unusually high level of interest has meant that there is now well in excess of €1 billion chasing the building, which is general acknowledged to be probably the best in the Dublin docklands.
State Street’s property investment adviser, Ann Hargaden of Lisney, has made it known to all the interested parties that the bank will consider regearing its lease in return for a reduction in rent.
Under the current 25-year lease from 2009, State Street has a break option in 2019. The lease also allows for rent increases in years 6, 8, 9 and 10 in line with the Consumer Price Index. The current rent of €452 per sq m (€42 per sq ft) is considerably above the going rate in the docklands of €269 to €323 per sq m (€25 to €30 per sq ft).
Ms Hargaden said yesterday that the bank would consider extending the lease up to 2027 provided the rent was reduced. Such an extension of the lease would undoubtedly make it easier to finance the investment.
Under the terms of the original lease, State Street has the right of “first offer”, allowing it to purchase the building if it is willing to match the highest bid.
The 16,266sq m (174,653sq ft) building was developed by Liam Carroll’s Danninger Group with funding from the Ulster Bank. The development company is in receivership.
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