AVIVA INVESTORS is seeking a buyer for four office blocks which form the centrepiece of the AIB Bankcentre in Ballsbridge, Dublin 4. Max Reilly of Jones Lang LaSalle is understood to be in discussions with a number of overseas funds about the sale of the investment which is expected to make €85 million.
The original trading company involved, Hibernian Life and Pensions, paid in the region of €177 million for the four buildings at the peak of the property market in April, 2006. Hugh Linehan, who handled the purchase for the UK fund, is now employed as a senior portfolio manager by Nama. The significant price adjustment since then – it is down in value by 52 per cent – means the original yield of around 4 per cent is now set to almost double to 8 per cent for a cash-rich purchaser. Aviva is anxious to sell the four buildings as part of a broader programme to increase diversification across its asset portfolio.
Almost three years ago, Aviva sought more than €50 million for two of the blocks with a floor area of 7,432sq m (80,000sq ft) and a rent roll of €3,654,746.
An investment vehicle, Claret Capital, was in advanced discussions to make a purchase but the deal collapsed.
With most Irish investors still hamstrung by the liquidity crisis, UK funds in particular are expected to pitch for the four blocks given that they have been upgraded and modernised on several occasions and link in directly to the major new extension completed by the bank in 2008. The Aviva blocks extend to 14,280sq m (153,709sq ft) and along with 175 car parking spaces are rented by the bank on 20-year leases from 2006. The current rent roll of €7,070,000 equates to a rent of €441 per sq m (€41 per sq ft). Not surprisingly, the first rent review last year came and went without any change because of the depressed state of the property market. The next upwards-only reviews fall due in 2016 and 2021.
With the Government now controlling AIB, the management has opted to maximise the use of the Bankcentre by relocating staff there from its International Centre in the IFSC and by extending its lease on four other office blocks also bought in 2006 by Seán Dunne’s Mountbrook Homes.
