AIB is to sell and leaseback 12 of its Dublin branches in a deal that should net the Republic's biggest bank around €80 million. It intends to use the funds to meet strong demand for lending from its clients, it said.
The move follows the sale and leaseback of AIB's Ballsbridge headquarters - in two lots, in 2005 and last April - raising €746 million.
Twelve of AIB's Dublin branches will be advertised for sale from today by its advisers, Hamilton Osborne King. The branches being disposed of are in Artane, Clonskeagh Road, Crumlin Road, Dame Street, Morehampton Road in Donnybrook, Drumcondra, Dundrum, Dun Laoghaire, 37/38 O'Connell Street, Ranelagh, Stillorgan and Tallaght.
All of the buildings will be leased back to AIB for 20 years and will continue to operate as AIB branches. The properties produce rent rolls of between €155,000 and €590,000 with a total income of €3.28 million.
Yesterday, the bank said: "AIB's sale and leaseback of a number of its premises, including its head office building in Ballsbridge, enables the bank to further grow its business by freeing up capital to fuel lending growth to satisfy increasing customer demand in a continuing strong economy." The closing date for offers is September 21st and the bank has also indicated that it may sell more of its 275 branches as part of its efforts to generate capital for lending.
AIB appears to have upstaged its main competitor, Bank of Ireland, with the sale of some of its best-located branches ahead of its rival putting up to 36 branches on the market in the coming weeks.
The bank's strategy of selling some of its most valuable property assets at what may turn out to be the height of the boom has prompted some comment about its own lack of confidence in the sector going ahead.
AIB group chief executive Eugene Sheehy has publicly expressed disappointment at that suggestion, saying that the bank's move was "a vote of confidence" in the Irish property market.
He says the bank doesn't have a function in the property market, but does need sufficient capital to fund its growth.
In April, property developer Sean Dunne and Hibernian Life & Pensions acquired eight office blocks and the surrounding land to the front of AIB's Ballsbridge headquarters for €377.7 million.
Mr Dunne's company, Mountbrook Homes, paid €200 million of the total €377.7 million for the front four blocks and adjoining land that is on 3.75 acres.
The property and lands acquired by Mr Dunne will be leased back to the AIB group on a 20-year basis, with a break clause exercisable by either party after four years and 11 months.
The initial annual rent payable on both lots by AIB will be €11.6 million a year and will be subject to adjustment in five-year rent reviews.
Last year, the Serpentine Consortium - a syndicate of wealthy individuals and companies assembled by AIB's private banking unit and its stockbroking subsidiary, Goodbody Stockbrokers - bought the planned new extension to the bank centre for € 367.75 million in a similar deal.
The extension acquired by the Serpentine Consortium, which is due to be completed in 2008, together with the blocks owned by Hibernian Life & Pensions, are expected to be sufficiently large to accommodate AIB's staff requirements, leaving Mr Dunne clear to redevelop his part of the site within the next five years. AIB said that it would realise a €230 million profit from the deal, which was expected to be completed during the second quarter of 2006.
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