Two Bank of Ireland branches – one in Drogheda, the other in Ballinasloe – are back on the market offering better returns
TWO Bank of Ireland branches sold as investments at the height of the property boom in 2006 are back on the market again at much enhanced purchase terms.
Both investments will now show returns of over 7 per cent compared to around 3 per cent when they were first acquired in a sale and leaseback deal with Quinlan Private, now trading as Avestus.
Michelle Jackson, investment director at DTZ Sherry FitzGerald, is now seeking in excess of €4 million for the Bank of Ireland branch at Laurence Street in Drogheda and €3.1 million for another one in Ballinasloe, Co Galway.
The Drogheda investment will show a net yield of 7.14 per cent following a decision by the vendor to top up the rent until there is a fixed rental uplift of 15 per cent from next December.
At that stage the rent will increase to €309,635 per annum and there will be upwards only reviews to open market value at each subsequent review. There are over 20 years remaining on the Drogheda lease.
The bank building adjoins the Laurence shopping centre where traders include Marks Spencer, Boots and Tommy Hilfiger.
The two-storey end of terrace Victorian bank building has a cut-stone granite facade and an overall floor area of 645sq m (6,942 sq ft) including a handsome banking hall.
The freehold Ballinasloe bank branch also has landmark status. It is a detached four-storey over basement cut-stone building with six bays set behind cast iron railings. The accommodation comprises a ground floor banking hall with offices and storage on the other floors. Total floor area runs to 944sq m (10,161sq ft) and there is a car park at the rear with parking for 37 cars.
The property is let to Bank of Ireland on a 25-year lease from December 2006, with a tenant break in year 15. The passing rent is subject to a fixed 15 per cent uplift from December next, bringing it up to an annual rate of €246,936.
In the meantime the vendor is to top up the rent until the automatic increase kicks in. The lease provides for upwards only reviews to an open market rental value at each subsequent review. The net initial yield in this case will be 7.34 per cent.
Michelle Jackson said that with increasing evidence of a flight to quality by investors, the two bank branches would have broad appeal because they offered solid secure income with a strong underlying covenant. There was particular interest in single tenant buildings that were well located and offered long secure income. “There is a shortage of such investments in the market and we are seeing demand judging from recent transactional experience,” she said.
