The rent being paid by the Commissioners of Public Works (OPW) in respect of the offices at Block 1, Miesian Plaza is in accordance with the terms of the lease. However, the OPW has acknowledged that an error occurred and that they should have engaged with the Landlord and sought to recalibrate the rental rate as a result of the new measurement standard, International Property Management Standard 3, (IPMS3) introduced in early 2016.
The annual rent associated with the additional area under IPMS3 is €279,827 plus VAT. The impact to date is in the region of €1.4m plus VAT and if the situation continues unabated the impact over the 25 years of the lease could amount to between €7.7m and €8.6m plus VAT depending on the rate of inflation.
The issue was first identified during the course of an OPW internal review and subsequently in a Comptroller & Auditor General examination of the lease process in early 2018. Since then the OPW has continued to engage with the landlord in relation to the measurement standard applied as the basis of calculation of the annual rent. Further, without prejudice, meetings between the OPW and the Landlord were held over the last few months with the most recent meeting taking place at the end of September. The matters under consideration involve complex, commercial, property transactions and while there was constructive discussion around possible solutions towards resolution of the measurement issue at these meetings, further discussions will be necessary to bring the matter to a conclusion. Both the OPW and the Landlord are committed to continuing this process with a view to establishing if a solution that is acceptable to both parties can be reached.
I am informed by the OPW that a similar issue has not arisen in respect of any other lease held by them.
