The slump in commercial property prices in central Dublin over the past number of years, and then their surprisingly robust resurgence, has been a rollercoaster ride in which a lot of people have lost their shirts and a smaller number have done quite well, thank you very much.
A second sensitive aspect of the whole affair has been the way so many of the losers were individual Irish citizens, while the winners have so often proven to be foreign funds with state-of-the-art tax planning sitting behind their investments.
One of the tales to be told is recounted in accounts just filed in the Luxembourg companies registry by a company called La Touche House Dublin (Luxembourg) Holdings Sarl, a company that does as it says on the tin and owns La Touche House in the IFSC. The building was bought 13 years ago by a group of 62 Irish investors who paid €82.5 million for it.
In 2013 it was bought by Credit Suisse on behalf of a Swiss-based fund for €35 million, a slide of 57 per cent in value.
According to the 2014 accounts for the Luxembourg company, the building had a fair value at the end of the year of €50.39 million, a cool €15 million increase on the price paid on April 30th, 2013. During 2014 itself, the book value of the property had risen from €38.6 million.
While those figures are very fine returns on such a large investment, 2014 was a year of sharp price increases in city centre commercial property, and a more than 30 per cent return was not unusual.
La Touche House Dublin (Luxembourg) Sarl was set up to buy and lease the one building and is part of Zurich-based Credit Suisse Real Estate Fund International. The Zurich company lent €26.6 million to the Luxembourg company, at a rate of 5.2 per cent, when the Dublin building was being bought, and the Luxembourg company, which has no employees, can repay the loan, and accumulated interest, at a month’s notice. The accounts show the rent and occupancy are moving in the right direction.
It is a picture replicated for top end property across the State, and is, as stated, another unfortunate aspect of the bust. When the new owners want to cash in their chips, the tax paid will be at the lower end of the scale, relative to profits made.
