PFPC paid inducement to occupy office

The developers of the Riverside Two office block at the south docks in Dublin paid a $5.42 million (€4.57 million) "inducement" to US finance firm PFPC for a long lease to occupy four floors of the building, new filings reveal.

The payment was made by the Riverside Partnership, which includes building firm P Elliot and members of the Kelly, McCormack and Flynn families.

PFPC says in newly-filed accounts that the payment was worth €4.57 million at exchange rates when the deal was struck in January last year, and equated to €100 per square foot.

The inducement was the equivalent of more than twice PFPC's annual leasehold expense of $2.53 million, the accounts indicate. The Riverside Partnership later sold the building to Irish Life. Two floors are occupied by Beauchamps solicitors.

Inducements are not unusual, though they often take the form of an agreement on a rent-free period at the start of a lease. While the transaction was agreed at a time of relative weakness in the office market, conditions have improved since then.

PFPC managing director Mark Mannion declined to discuss the inducement.

In Ireland since 1994, the group is among several international fund administration groups to establish a presence here. The business provides administration services for investment funds and Ucits investment products.

PFPC's Irish unit is expanding rapidly and the level of funds under management will rise above $100 billion before the end of this month, Mr Mannion said.

He made light of the defection of six senior executives last year, stating that PFPC was taking advantage of a big increase in assets under management.

The accounts for PFPC International, which carries out the bulk of its activities in Ireland, show that pretax profits rose 63 per cent to $9.27 million in 2006, from $5.69 million a year earlier.

Administration fees rose to $68.57 million from $56.59 million, with fund administration fees at $56.3 million and transfer agency fees from investment funds at $12.27 million. Other income, including out-of-pocket revenue and bank interest, rose to $4.1 million from $2.72 million. Expenses rose to $63.4 million from $53.62 million in 2005.

PFPC's parent is PNC Financial Services Group in Pennsylvania. Mr Mannion said the Irish unit, which has some operations in Luxembourg, would contribute about 20 per cent of its parent's profits this year, up from 10-15 per cent last year.

A separate legal entity called PFPC Trustee & Custodial Services was renamed PFPC Bank. Pretax profits at this company, which carries out treasury management and foreign exchange functions, rose last year to $6.09 million from $4.76 million.

PFPC will set up a banking subsidiary for this business in Luxembourg. "As a result of being a bank in Ireland, we can increase our activities in Luxembourg," Mr Mannion said.

PFPC has 615 staff in Ireland.