Tuesday 23 January 2018

Massive docklands property deal falls down over tax bill

The block is let mainly to PwC. Photo: Caroline Quinn
The block is let mainly to PwC. Photo: Caroline Quinn
Peter Flanagan

Peter Flanagan

A DUBLIN property deal worth almost a quarter of a billion euro fell apart amid worries that the deal could create a huge tax liability for the buyer.

US investment firm Hines pulled the plug on a deal to take over the One Spencer Dock office block in the capital's docklands area for €242m.

Hines is understood to have been acting effectively as a broker on the deal, and had brought in a large European investment fund to take over the property, which is let mainly to PwC.

The deal - among the largest ever for a single office building in Dublin - collapsed last week amid recriminations on both sides.

The property was put up for sale in December by receivers Luke Charleton and David Hughes of EY on the instructions of Nama with an asking price of over €240m.

The deal finally fell through last week after an extensive due diligence process by Hines.

It is now understood that the agreement collapsed because the structure of the deal would leave the fund that was to buy it with a large, unexpected, tax liability.

The 226,624 sq ft block is almost entirely leased to PwC.

Although it has sub-let some space to other companies, the building is seen as a "clean" asset with strong covenants around it.

That means there is nothing obvious about the property or its location that would raise any red flags for a potential buyer.

A sale of the property may yet go through before the end of this month.

Another fund is believed to have been lined up some weeks ago once it became clear that Hines may not proceed with the deal.

At €240m, One Spencer Dock is seen as a "European-sized deal" rather than just a Dublin one.

One industry player said the asking price was "a lot to put into one asset in a market the size of Dublin".

"That pricing level really excludes a lot of funds that would have been interested in something like this," they added.

Savills and CBRE are managing the sale.

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