AIB's UK arm puts NI branches up for sale

FIRST TRUST, the trading name of AIB’s banking division in Northern Ireland, has placed three of its bank branches on the market on a sale-and-leaseback basis.

The three premises are located in Newry, Co Down; Ballymena, Co Antrim; and Bangor, Co Down. Advertisements for the sale of the three premises appeared in the Belfast Telegraph last Tuesday.

Belfast-based commercial property consultants, BTW Shiells, who are handling the sale, are seeking offers exceeding £1.5 million (€1.7 million) for the 10,618sq ft premises in Newry.

The asking price for the 6,545sq ft premises on the main street of Bangor is £1.23 million, while the Ballymena premises, which encompasses an area of 6,085sq ft and six car-parking spaces, has a price tag of in excess of £1.08 million.

The three branches will be secured by long-term leases for a period of 20 years with a tenant-only break option in year 15. AIB Group (UK), the UK division of AIB which operates First Trust, will pay an initial rent of £94,015 a year for the Newry branch, £68,624 for Ballymena and £77,928 for Bangor. The leases will also be subject to five-year upwards-only rent reviews.

Since 2006, AIB has sold and leased back around 50 branches in the Republic of Ireland as part of a capital raising exercise. This is the first time group properties in Northern Ireland have been put on the market. As yet none of the bank’s properties in mainland Britain, which operate under the AIB Group (UK) division, have been put up for sale.

A spokesman for AIB said that the decision to sell three of its Northern Irish branches was part of a strategy by AIB and follows “the successful lease-back of a number of bank branches in the Republic in order to unlock value”.

The spokesman also stressed that the sale will have no impact on the services or operations at the branches concerned.

BTW Shiell’s Paddy Brennan, the selling agent handling the sale of the three branches, said that there has been a “very strong” response to the advertisements.

Northern Ireland’s commercial property market has been badly affected by the economic downturn over the past 18 months, with property losing up to 30 per cent of its value in some cases.

However, Chris Callan, of the Royal Institution of Chartered Surveyors, says that the decline in property values is slowing, and sale-to-lease may still be an attractive option. “UK banks have been selling property on a sale-to-lease basis for decades, and it’s seen as a good investment. The covenant is the big attraction.”

First Trust has 47 branches in the North and employs 1,700. The bank reported pretax losses of £41 million for the first half of 2009. Although it had operating profit before provisions of £50 million, it was forced to assign £91 million to cover potential bad loans.