Irish Life outbids all to buy AIB’s Grafton Street branch

Property fund spends €50m on investment which sold for €28m in 2010

AIB on Grafton Street: Irish Life is expected to earn a net initial yield of 3.5 per cent based on current rent roll of €1.8 million.

AIB on Grafton Street: Irish Life is expected to earn a net initial yield of 3.5 per cent based on current rent roll of €1.8 million.

 

Irish Life has outbid strong domestic and overseas competition to buy AIB’s principal branch office which fronts on to both Grafton Street and Wicklow Street in Dublin city centre.

Ireland’s largest property fund was the highest bidder at about €50 million for the investment, which previously changed hands at €28 million in 2010, when it was bought at the height of the property crash by the German fund manager GLL Real Estate.

Irish Life is expected to earn a net initial yield of 3.5 per cent on the bank investment, which produces a rent roll of €1.8 million. The sale price equates to a capital value of €2,800/sq ft.

CBRE handled the sale, which is understood to have attracted bids from an unnamed private Irish investor as well as IPUT and two European investment funds.

GLL’s success in flipping the bank premises at a profit of €22 million was widely expected in a commercial property market that is still recovering despite a shortage of high-quality investments.

However, some agents are expecting an increased level of investment activity in the second half of the year with one of them, JLL, forecasting that more than €1.3 billion of assets are either for sale at the moment or will come on the market in the next few weeks.

Handsome profit

The handsome profit made by GLL, a Munich-based investment fund, could trigger the sale of two other commercial investments it owns near the bottom of Grafton Street: the River Island store and the adjoining Cath Kidson retail outlet.

The fund acquired these two buildings at the beginning of 2013 for about €40 million – a long way from the €115 million paid for them in 2007 by Dublin property developer David Daly.

The 65 per cent fall in value was one of the highest recorded on Grafton Street during the property crisis.

Irish Life’s purchase of the best located bank premises in Dublin will strengthen its role as the largest owner of buildings on Grafton Street, with no fewer than 18 retail properties in a range of funds.

The company figured in the largest single deal on the street when it bought the Sovereign Portfolio in 2015 from the former Royal Liver Assurance for €154 million. The portfolio included McDonald’s as well as Office Shoes, Health Matters, The Body Shop, Clarks Shoes and Pamela Scott.

Irish Life’s property funds are now valued at close to €3 billion.