AIB net €100m-plus on flagship London French Connection store

A seven-storey retail and office building on Oxford Street in London has increased in value by 47 per cent over six years, writes JACK FAGAN

AIB HAS FARED better than expected from the sale of the French Connection flagship store on Londons Oxford Street which it took control of last summer as part of a move against the little known Dublin property investor Liam Smyth.

A property receiver acting for the bank has sold the seven-storey retail and office building at 388-396 Oxford Street to the family behind the Selfridges department store for £86 million (just over €100 million) in a deal that will show a net yield of 3.54 per cent.

The investment, bought by Smyth in September, 2005, for £58.5 million (€67.5 million), will now show a 47 per cent return of £27.5 million (€ 32 million). Smyth was advised at the time by Rod Nowlan of Bannon.

The entire block is let to French Connection on a 25-year lease from 2000. There are no break options in the lease and the investment deal is further enhanced by a parent company guarantee from French Connection Group. The seven storey over basement building has retail use at ground, first and basement levels and offices overhead. Selfridges is close to French Connection and other neighbouring retailers including Marks Spencer, Debenhams and House of Fraser.

The sale of the building marks another stage in the steady withdrawal of many Irish investors from the London high street market. Some of those selling in the UK have been happy to take a profit and set it against their banking exposure in Ireland. Similarly, Irish investors are no longer chasing commercial properties in London with only one deal valued at over € 18 million reported to have been completed in the past year. At the height of the boom, in 2007, Irish investors spent almost €10 billion overseas with most of it going into the UK.

Meanwhile AIB has also appointed Paul McCann of Dublin-based Grant Thornton as receiver to two companies, controlled by Smyth, which own properties in Dublin. McCann is managing Kantington, which owns Corrib House at 52 Lower Leeson Street, and the adjoining Enterprise House at 57 Adelaide Road.

The second Smyth company, Lavister Investments, owns 18 and 19 Duke Street in the city centre. The building is occupied on a long term basis by American Holidays travel agency.

Both Kantington and Lavister Investments held shares in Oxford Investments which was the registered owner of the French Connection building.

Earlier this year, Anglo Irish bank secured court orders entitling it to recover some € 28 million against Smyth, of Clyde Road, Ballsbridge, Dublin 4, over unpaid property loans and guarantees. The bank also appointed a receiver to another Smyth company, Sanguinis, which owns the Ashbourne House Hotel in Ashbourne, Co Meath, and the Argentinian embassy in Ballsbridge.

A company controlled by Mr Smyth also owns JD Sports premises on Mary Street.