Twelve of AIB's best-located bank branches in Dublin are to be offered for sale in one or more lots. The bank portfolio was assembled by investor and developer Gerry Gannon in 2006 – two years before the property crash – for a figure thought to be around €100 million.
James Meagher of agents Knight Frank is now guiding in excess of €48 million for the branch network which is producing a rental income of €3.29 million, giving a single purchaser an initial yield of just over 6.6 per cent.
With individual lots varying in value from €2.5 million to €8 million, the sale is expected to appeal to a broad range of businesspeople and investment funds anxious to buy good-quality investments while values are still well below their peak.
However, the prices now being quoted would have been somewhat lower but for the fact that Mr Gannon held out until now before putting the portfolio on the market.
High-profile positions
The portfolio includes
AIB
branches in Dame Street, O’Connell Street, Ranelagh, Donnybrook, Sandymount, Artane, Crumlin, Dundrum, Dún Laoghaire, Drumcondra, Tallaght and Stillorgan.
All the buildings occupy high-profile positions, none more so than the branches in Dame Street and O’Connell Street, both particularly striking in scale and architectural significance.
All the branches are well maintained and are let on 25-year leases from 2006 with five-yearly upwards-only reviews. There are tenant break options on the expiry of the 15th year of the leases, providing investors with over six years of secure income.
Given the prime locations of the various bank branches, the properties have the potential to be put to alternative use in the unlikely event of the bank choosing to close some of its busiest branches. The most obvious assets of this kind include Ranelagh, Dame Street and Sandymount.
The property in Ranelagh lends itself to a variety of mixed uses along with the development of its forecourt; Sandymount would readily appeal to restaurateurs and retailers while Dame Street, a distinctive landmark property, would almost certainly attract interest from international retailers waiting to enter the Dublin market.
At the opposite end of the street, College Green, the giant fashion multiple H&M is preparing to open a flagship store in the former National Irish Bank while a few doors away Abercrombie & Fitch is trading its socks off in an old Bank of Ireland premises.
Trophy asset
Dame Street has the highest valuation at over €8 million, which would provide an investor with a yield of 7.06 per cent. The branch is seen as a trophy asset in an area that has become predominantly an entertainment and leisure quarter with high volumes of bars, restaurants, cafes and tourist meeting spots. The period building has an overall floor area of 1,900sq m (20,451sq ft) and is rented at €590, 214.
Next in line is the equally impressive period building in O’Connell Street, extending to 1,350sq m (14,531sq ft) and going on the market at over €5.75 million. The current rent of €399,080 will give a net return of 6.64 per cent. The bank is located at the bottom end of O’Connell Street next to a site earmarked for a major shopping complex.
The agents are quoting over €4.6 million for the Stillorgan bank branch which is located opposite the shopping centre and beside Lidl. An adjoining site provides 15 car-parking spaces. The 697sq m (7,502sq ft) building is rented at €310,400 per annum and has a formal management structure in place. The successful investor will get a return of 6.46 per cent.
Knight Frank is quoting €4.25 million for the Dún Laoghaire bank branch which is located along the main street close to Dunnes Stores and Dún Laoghaire shopping centre. The 915sq m (9,848sq ft) block could easily be reconfigured to provide a retail-friendly frontage with large display windows. The bank is paying a current rent of €306,720 which will show a yield of 7.55 per cent.
Next in line based on its valuation is the Ranelagh branch, priced at over €4 million and occupying a generous central site with dedicated parking. The rent of €214,570 per annum will give the purchaser a return of 5.14 per cent. The 437sq m (4,703sq ft) block would be in immediate demand for use as a shop or restaurant if the bank decided to withdraw its representation in this affluent area.
The asking price for the Drumcondra branch is over €3.75 million and with the rent fixed at €266,421 the investment will show a yield of 6.8 per cent. The 812sq m (8,740sq ft) building could easily be split into two separate units at little cost and is located along the busy route between the city and Dublin Airport.
The Dundrum branch is marginally cheaper at €3.7 million and with the rent set at €250,260 per annum it will show a return of 6.47 per cent. The 556sq m (5,984sq ft) branch comes with 17 car-parking places. It is located on Main Street, close to Ireland’s most successful shopping centre.
Mixed use
Priced at over €3.1 million, the Crumlin branch also comes with dedicated parking, and with the rent now standing at €207,250 per annum the return will be around 6.4 per cent. The building extends to 814sq m (8,761sq ft) and could possibly be put to mixed use if the circumstances changed.
Only marginally cheaper is the Donnybrook branch at €3 million-plus which occupies a high-profile corner pitch in a busy business area close to Boots and Donnybrook Fair.
The rent for the 360sq m (3,874sq ft) building is €174,820.
Knight Frank expects to secure over €2.7 million for the modern AIB branch in Artane which is rented at €212,820, and will give a return of 7.55 per cent. The 695sq m (7,480sq ft) block comes with good parking facilities and could also be used as a shop or office.
The guide price for AIB in Tallaght stands at over €2.6 million and with the rent now at €195,882 per annum, the income return would be 7.21 per cent. The building is located in the village centre and has a floor area of 569sq m (6,124sq ft).
The lowest asking price at €2.5 million is, surprisingly,for the Sandymount branch, an easily managed 323sq m (3,476sq ft) building rented at €159,525 per annum. The net return in this case will be 6.11 per cent.
AIB will be viewed as a strong covenant because it is 98 per cent owned by the Government. The recent stress tests carried out by the European Central Bank found that the AIB Group has capital buffers comfortably above the minimum requirements. The bank reported a pre-tax profit of €437 million for the first half of 2014.
The bank has 2.2 million private, business and corporate customers.
