Portfolio Sale:Irish Life has emerged as the "preferred bidder" to buy 12 Irish investment properties from Scottish Provident for around €140 million.

More than a dozen groups had initially expressed interest in acquiring the portfolio but the list was eventually whittled down to three - Irish Life, Davy Private Clients and Canada Life. These were then invited to submit unconditional bids on a strictly confidential basis.

The high level of interest in the sale is due to the immense shortage of investment properties and the fact that at least half the properties are top class while the remainder have the potential to do reasonably well if tightly managed.

Irish Life, which is being advised by Hamilton Osborne King, has been under pressure - like many of the other institutions - to find investment opportunities for the ever-increasing flow of money coming in to its property funds because of disillusionment with the stock markets.

With property investment stock at home difficult to source, the company has been channelling a good proportion of these funds into the UK where property investments are easier but not always as rewarding.

The most sought-after property in the Scottish Provident portfolio is undoubtedly Hambleden House, a recently upgraded office block formerly owned by Irish Cement at Pembroke Street in Dublin 2, which has a value of at least €20 million. The 3,716sq m (40,000sq ft) building is producing a rent roll of €1.25 million from a range of tenants who also have the use of 60 car-parking spaces in a nearby surface car-park.

Equally attractive is 25 St Stephen's Green, a modern retail and office building close to the Shelbourne Hotel which once housed Compustore on the ground floor and is known as Scottish Provident House. The 120.7sq m (13,000sq ft) block is producing a rent roll of €600,000 from several tenants, including Friends First General Insurance Company, Northern Telecom and Bristol Myers Squibbs.

This investment is certain to have been valued at at least €13.5 million given that rents are around €376 per sq m (€35 per sq ft) and the yield is likely to be 4.5 per cent.

The building, which is noted for high service charges, could benefit from an upgrade, according to one agent who viewed it.

Another sought-after investment was a block at Eastpoint Business Park in the Dublin docklands where Oracle is paying a rent of €1 million for 3,901sq m (40,000sq ft). Some of the experts viewing it may have under valued it slightly at €16 million based on a yield of 6 per cent. Though the lease provides for two break options, Eastpoint continues to do particularly well and, if Oracle was to move out, there should not be any undue delay in finding a replacement.

The four retail investments included in the portfolio would all be much sought-after. These include 4 Henry Street, let to Envy at a rent of almost €300,000 per annum, and valued at close to €7 million; the Specsavers store around the corner in Upper Liffey Street which is rented at €75,000, and two retail investments at Cruises Street in Limerick which are producing a combined rent of around €200,000.

There are also two office buildings in Richview Business Park in Clonshaugh, each with 603.8sq m (6,500sq ft). One of them is let at €200,000 but the other is unoccupied and likely to remain so for some time because of the oversupply of suburban office space on the market.

Scottish Provident also held investments in two relatively new office buildings at Ashtown, opposite the old Phoenix Park racecourse. The total space runs to about 3,158sq m (34,000sq ft) and, with half of it let, it is producing €380,000. One of the three-storey blocks has two empty floors, the other has one vacant but the leases are relatively short term with break clauses.

The least attractive part of the portfolio are the Westlink (dubbed the weakest link) Industrial Estate on the Kylemore Road in west Dublin and the Woodford Business Park in Santry.

Westlink has quite a few vacant buildings and little prospect of filling them up, as industrial tenants now generally buy rather than rent because of the 50-year low mortgage rates.

Woodford has similar problems but might do better because of its Santry location. But then the new owners could always sell off the two parks.