Tuesday 27 September 2016

IDA left counting the cost of leasehold due to Israeli embassy security concerns

Simon Rowe

Published 07/08/2016 | 02:30

Carrisbrook House in Dublin 4, home of the Israeli embassy
Carrisbrook House in Dublin 4, home of the Israeli embassy

Fears over security threats and public protests targeting the Israeli embassy in Dublin are believed to have scuppered talks to secure commercial tenants for troubled Carrisbrook House - the building leased by the IDA and Forfas that had an 85pc vacancy rate for seven years - costing taxpayers €1m a year in rent.

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The Israeli embassy has leased the fifth floor of eight-storey Carrisbrook House in Pembroke Road, since 1995. But the remaining seven storeys have lain empty since 2008.

AIB Fund Managers quit the building in 2008 after it exercised a break option citing "international security concerns", according to documents seen by the Sunday Independent. This is thought to refer to increasing political tensions between Israel and Hamas in the months preceding the 2008 Gaza War.

Records show the Dublin 4 embassy has been the focus of numerous public protests over Israel's Gaza blockade since 2007. The embassy was also the victim of a bomb alert in 2009, and a bomb scare in 2012 led to the evacuation of the entire building.

The then Forfas chief and now IDA boss Martin Shanahan signalled concerns over the security situation at Carrisbrook House in correspondence to the Dail's Public Accounts Committee as far back as late 2013.

In addition to concerns over the age, condition and configuration of the building, he explained that "security issues in the area have proved a deterrent in securing some prospective tenants, and have counterbalanced the advantages of the prime location, car parking and accessibility of the site".

"Despite ongoing marketing efforts" and appeals to the likes of Enterprise Ireland, OPW, DCU, TCD, IDA client companies and start-ups, not having vacant possession of the building was "a distinct drawback in terms of securing a party interested in the leasehold interest and in marketing it over the period 2008 to 2012", documents reveal.

State agencies held discussions with the Israeli embassy about relocating, but to no avail. "In relation to achieving vacant possession, from 2005 Forfas engaged with the tenants on a number of issues, including possible relocation.

"While these initial negotiations proved unsuccessful, they were reopened at the time of the lessees' break clause in 2010/2011. This included a search for alternative locations, which again did not result in agreement for vacant possession," the papers reveal.

Describing it as "the least costly option to the State", the IDA has terminated its 65-year lease at Carrisbrook House by paying €9.4m to exit the agreement.

With taxpayers exposed to a further €22.5m in payments over the remaining 19 years of a lease on the largely vacant building, the IDA - which assumed control of the leasehold interest after it was transferred from Forfas in 2013 - decided to cuts its losses.

The Israeli embassy in Dublin, which did not avail of a second break clause in its lease in 2015, declined to comment on the nature of its negotiations with the IDA or Forfas.

"The embassy of Israel signed a lease agreement with Forfas in 1995 for a term of 30 years. However, it is the policy of the embassy not to disclose details of any commercial agreements it has with third parties," a spokesperson said.

Sunday Indo Business

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