The London-based SW3 Capital has added to its property assets on Dublin’s Dawson Street, Merrion Square and College Green by buying an early 20th-century building rented by two commercial tenants at the junction of Jervis Street and Upper Abbey Street.

The fund has paid €4.15 million for the three-storey over basement Twilfit House which is producing a combined rent of €350,000 a year. The investment will provide an initial yield of 8 per cent after standard purchaser costs are taken into account.

SW3 Capital outbid several parties for the building which was marketed by BNP Paribas Real Estate. Agents Murphy Mulhall acted on behalf of the purchaser which will place the property in its Qualifying Investor Fund.

Although the €4.15 million selling price is considerably stronger than the initial guide price of €2.5 million it is a long way from the €8 million offered for the former corset factory in the mid-1990s by developer Liam Carroll who later pulled out of the deal because he could not get vacant possession.

While the building will be producing rental income up to 2023 the new owner may be able to secure vacant possession in 2020 because of mutual landlord and tenant options allowing for a redevelopment of the site.

The National Leprechaun Museum occupies the ground floor and basement on a 10-year lease at a rent of €229,000 a year. A separate entrance on Jervis Street provides access to the first and second floors where Ben Dunne Gyms operate a health and fitness club. It pays a rent of €130,000 which will eventually rise to €145,000.

In 2005 city planners granted permission for the demolition of Twilfit House and its replacement by a seven-storey retail and office building with 6,810sq m (73,300sq ft), setting a precedent for the future scale of the block. It is in a busy city-centre location beside the Luas red line.