Irish Life is offering investors a stake in the St Stephen's Green Shopping Centre. A syndicate of private investors is being formed with an initial tranche of £30 million (€38.1m) - £15 million (€19.05m) in equity and £15 million in borrowings - which will, in effect, give it ownership of 21 per cent of the centre.

The deal is directed at high net worth investors who are seeking a safer home for their funds at a time when equities are under threat.

This is Irish Life's third syndicated investment fund that is directly linked to a named property. The last one was established last autumn and involved an investment of £8 million (€10.2m) in the East Point Business Park. This also involved a 50/50 split between equity and borrowings, and has already covered its acquisition costs, according to Irish Life.

The new fund will have a minimum entry level of £50,000 (€63,500), with a seven and a half year life. Investors will receive no income over the life of the fund. The share of rental income from the centre will be earmarked to service the borrowings but if there is an excess, there will be an option to pay off the loan early. The centre has rent reviews in 2003 and in 2008 - the year earmarked for the sale of the investment.

Investors will be relying on a rise in the capital value of the centre to realise a gain. Capital values should be boosted by the rent reviews. Also, Zone A rents are still only £130 (€165) per sq ft, or less than half the level in Grafton Street. Irish Life is convinced that the gap between the two will narrow, which augurs well for the future rental stream from the centre. The yield on the investment is 4.82 per cent, and that should rise to 5.6 per cent on the basis of the 2003 reviews.

Investors should also benefit from the 50/50 gearing. The borrowings from Irish Life will be on a non-recourse basis. Investors will have to pay a 23 per cent tax on any gain on exit; 20 per cent life fund tax and 3 per cent roll-up tax.

Irish Life will have a 73 per cent stake in the St Stephen's Green Shopping Centre. This arises in a swap deal with British Land, which in return gets over 40 per cent of the Ilac centre. Under the deal Irish Life is paying British Land more than £50 million (€63.5m). Irish Life had wanted to reduce its stake in the Ilac because it accounted for too large a proportion of its property portfolio. But British Land didn't move, until last month, because of the prospects of adding on additional retail space as long as the adjoining site remained undeveloped. However, the Doyle family has now opted to proceed with a retail and office scheme.