Irish and UK investors head the queue to buy what is probably the best investment property to come on the market for years
THE FORTHCOMING sale of the AIB bank branch on Dublin’s Grafton Street has attracted more interest than any other investment property over the past two years.
Although the sale and leaseback of the premises was only announced two weeks ago, several formal bids have already been received from both Irish and UK investors. More than 30 private investors and investment funds have already registered their interest in the building which will be sold by private treaty over the coming weeks.
Colm Luddy of CB Richard Ellis said yesterday that, while the bank building was seen as the finest piece of real estate to have been offered for sale in Dublin in recent years, the unusually high level of interest also stemmed from the long lease and the strength of the covenant. AIB is to pay an initial rent of €1.8 million under a new 20-year lease with a break option in year 15.
Investment agents expect the bank investment to sell for around €25.5 million to €26.5 million – showing a return of 6.25 to 6.5 per cent.
Last summer German banking group DekaBank bought the Tommy Hilfiger store on the opposite side of Grafton Street for €25 million, reflecting a yield of 6.4 per cent.
The bank is an infinitely better investment with a ground floor area of 464sq m (5,000sq ft) and dual frontage onto Grafton and Wicklow streets.
Meanwhile, two UK funds and a private investor from the Middle East are expected to bid for a 50 per cent stake in the head office of solicitors Matheson Ormsby Prentice at Sir John Rogerson’s Quay in the south Dublin docklands.
John Moran of Jones Lang LaSalle is quoting €50 million for the half share in Riverside IV which will provide a net yield of 6.75 per cent. Industry sources suggest it would have been easier to have sold the entire building had owners Irish Life decided to offload it as a single investment.
Irish Life bought the then new office block at the height of the property market in July 2006 for €170 million. Taking account of the quoting price for a 50 per cent stake, the building has now fallen in value to €100 million.
Riverside IV was developed by businessman Sean Dunne and was sold to Irish Life in part exchange for Hume House next to his extensive hotel site in Ballsbridge. The MOPS building was then valued at €170 million while Hume House had a value of €130 million.
