AIB’s high-profile Grafton Street branch for sale for €48m

German fund manager GLL Real Estate is to sell AIB's most important branch office, which has dual frontage on to Grafton Street and Wicklow Street in Dublin city centre.

The Munich-based investment fund is seeking €48 million for the high-profile premises that it bought near the height of the property crash in July 2010 for €28 million.

Property adviser CBRE estimates that a sale at the asking price will give the next owner a net initial yield of 3.58 per cent.

GLL’s plan to flip on the investment at a profit of about €20 million had been expected since the beginning of the year, following the sharp recovery in values at the top end of the market and the continuing demand by Irish and overseas institutional buyers for strongly performing high-street properties.

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Should the sale of the AIB branch go as well as expected, it will be no surprise if GLL also opts to offload two other investments it owns near the bottom of Grafton Street: the River Island store and the adjoining Cath Kidston outlet.

The fund acquired these two buildings in January 2013 for about €40 million – a huge discount on the €115 million paid for them in 2007 by Dublin property developer David Daly. The buildings fell in value by some 65 per cent when the property market collapsed.

The AIB building extends to more than 1,677sq m (18,060sq ft) and has 13m of frontage on to Grafton Street and another 11m facing directly on to Wicklow Street. The bank trades on a 20-year lease from July 2010, at a rent of €1.8 million.

The premises are among the best located in the city centre – beside Weirs Jewellers, Marks & Spencer and Brown Thomas.

Natalie Brennan, who is handling the sale, said CBRE was expecting a strong demand from a wide cohort of investors, given the ownership changes on the street over the past three years and the interest shown by Irish institutions and European funds in investment opportunities.

According to CBRE, there have been 12 transactions on Grafton Street, with a total value of €253 million, between 2013 and 2016.

A closer look at the figure shows that 43 per cent of the properties were bought by Irish institutions, such as Irish Life and IPUT, while 37 per cent were acquired by European and international investors.

Owner estimates

CBRE estimates that about 60 per cent of the retail buildings on Grafton Street are now owned by pension funds and other institutions, and 40 per cent are held by either private investors or owner-occupiers.

Irish Life figured in the largest recent single deal in Grafton Street when it bought the Sovereign Portfolio in 2015 from the former Royal Liver Assurance for €154 million.

It included McDonald’s large outlet as well as Office Shoes, Health Matters, The Body Shop, Clarks Shoes and the Pamela Scott fashion outlet.

Grafton Street has by far the highest footfall of any street in Ireland, with visitor numbers last year exceeding 53.5 million.