IRISH LIFE is in dispute with a Luxembourg developer over a €170 million property deal that the pensions and investment group believes it is no longer obliged to honour.
Irish Life agreed to buy a 240,000 sq m office block from local developer Vertigo for €170 million in 2007.
The deal was due to be completed in January of this year, but the Irish company says that a clause in the original contract allows it to back out of the agreement as the property’s price has fallen sharply since 2007.
However, Vertigo argues that the company is still obliged to go ahead with the agreement.
The matter went into arbitration last April.
Both sides have been preparing written submissions for the arbitration and a formal hearing is due shortly.
They expect an outcome some time in November. Disputes over property deals are normally settled in arbitration.
Irish Life is understood to be relying on a clause in the original contract that allowed it to walk away if the value of the asset fell by €8 million or more. The group believes this to be the case.
The clause also works in the developer’s favour, allowing them to exit if the value were to increase by €8 million or more.
Irish Life confirmed yesterday that it has entered a formal arbitration process with the seller of the property and added that it was looking forward to a favourable outcome to the proceedings.
The dispute with Vertigo in Luxembourg sparked some speculation locally that Irish Life is looking to get out of various investments that it made in Europe during better times.
It is understood that the reason it wants to exit the Vertigo deal is because there has been a material change in the property’s value.
In 2008, Irish Life bought into a 20,000 sq m office development on Brussel’s Avenue Leopold for €70 million. The building is due to be completed in 2012, although the developer has yet to get vacant possession of the site. Work was due to begin on the new building last year.
Irish Life is in talks with the developer HerpainUbis as is normal in such deals. It is not in dispute with the Belgian developer at this stage.
