InvestmentPortfolios: AIB is selling only two high-value properties in its first tranche of bank branches currently on the market, writes Jack Fagan.
AIB has left itself the option of selling all 12 bank branches in the first tranche of its branch sell-off to one buyer when best offers close on September 21st.
However, there is likely to be any number of offers from private investors for individual branches which are expected to make between €4.3 million and €15 million.
The portfolio is valued at more than €87 million, according to Hamilton Osborne King. This would reflect a yield of between 3.25 and 3.5 per cent.
AIB's decision to consider a single purchaser has the distinct advantage for the bank of having one landlord rather than a dozen to deal with in the future.
Bank of Ireland is also leaving open the choice of selling its first 36 branches in one lot, as well as in individual lots.
The bank has apparently had approaches from a number of institutions who would be happy to buy the lot.
On the face of it, the range of BoI buildings and locations look infinitely more attractive than the first tranche of properties advertised by AIB. Only two AIB branches will be of interest to serious investors - Dame Street, which has a guide price of €15.1 million, and O'Connell Street, which is expected to make around €11 million.
This might well leave the way open for private investors to pick up some interesting suburban buildings.
However, the expectation is that AIB will be bringing higher value properties on to the market once it is satisfied that the exercise is sufficiently profitable. Michael Clarke of HOK says that, although the present list of properties is held on long-term leases (20-year leases with tenant break options in year 15), several of them occupy pivotal sites and would offer potential for alternative uses in the long term.
BoI's strategy differs from its competitor: it is about to seek buyers for many of its best branches in the first round of sales through CB Richard Ellis. These will include branches at St Stephen's Green, O'Connell Street, Camden Street and Dún Laoghaire while in the provinces there will be landmark branches for sale at Eyre Square in Galway, South Mall in Cork, O'Connell Street in Limerick, The Quays in Waterford, as well as in Kilkenny, Tralee, Newbridge, Clonmel and Ennis.
With AIB equally committed to a more widespread disposal of its branch network to free-up working capital, the second and subsequent rounds of sales will inevitably throw up more interesting - and more valuable buildings - in Dublin and elsewhere. The most sought-after AIB branch of all is located on Dublin's Grafton Street and has a value of over €70 million.
For those with more modest demands, HOK is quoting a guide price of €8.2 million for 103/104 George's Street in Dún Laoghaire which will be rented at €306,270; €7.9 million for the AIB branch at The Plaza in Stillorgan which will produce a rent of €310,412; €7.1 million for Lower Drumcondra Road, which will have a rent of €266,412; €6.7 million for Main Street, Dundrum, which will be rented at €250,250; and €5.9 million for Ranelagh Road which will be rented at €214,509.
The agent is also quoting €5.45 million for St Bridget's Road in Artane which will be rented at €212,884; €5.3 million for Crumlin Road in Crumlin which will be rented at €207,249; €5.25 million for Old Bawn Road in Tallaght which will be rented at €195,868; €4.8 million for Morehampton Road in Donnybrook which will be rented at €174,829; and €4.3 million for University Branch in Clonskeagh which will be rented at €155,740.
