Saturday 1 October 2016

Bank of Ireland branch sold at height of boom on market for €3.6m

Published 15/09/2016 | 02:30

The Bank of Ireland's Stephen Street branch in Sligo offers investors a net initial yield of 6.52pc
The Bank of Ireland's Stephen Street branch in Sligo offers investors a net initial yield of 6.52pc

A Bank of Ireland branch which sold to private investors for more than €5.7m at the height of the boom has been brought to the market, with joint selling agents Lisney and DNG Flanagan Ford seeking offers in excess of €3.6m.

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The property, a protected three-storey buillding on Stephen Street in Sligo extending to approximately 950 sq m (10,240 sq ft) and sitting on a site of some 0.37 acres, was sold previously in 2006 as part of the Bank of Ireland's sale and leaseback of 36 branch premises across the country.

As part of that sale, the bank offered prospective buyers 25-year leases in all cases with no breaks on 18 of the best-located branches. Seventeen of the other branches offered in the sell-off came with tenant breaks in year 15.

In the case of the Sligo premises which are now for sale, the entire is leased to the Bank of Ireland on a 25-year FRI lease from December 2006 at a contracted rent of €245,131 per annum. The Stephen Street building lease benefits from upward-only rent reviews every five years with no break options. The remaining secure lease term is just over 15.2 years.

With offers in excess of €3.6m being sought for the property, the joint selling agents estimate a net initial yield of 6.52pc, allowing for purchaser's costs at 4.46pc.

The property includes a protected three-storey period building facing onto Stephen Street, a former two-storey stable building situated within a large walled courtyard to the rear, and two modern extensions. The premises is located on the south side of Stephen Street in the centre of the city, next to Stephen Street Car Park.

Strong interest is expected from private investors for the property as a result of the 15.2 years remaining on the lease and other attractive lease terms including upwards only rent reviews. Further incentives include contractual obligations on tenants to repair and insure the property, and to make quarterly rental payments in advance.

In addition, the property provides further scope for development in the long term, subject to planning permission, on grounds overlooking the Garvoge River to its rear.

The Bank of Ireland's Stephen Street premises are just the latest in a string of branch buildings that it sold in the boom years to have come back on the market. Last June, agents Murphy Mulhall put five Bank of Ireland branches in Leinster and Connaught with a guide price of €9.34m. Earlier, in October 2015, they had put four of the bank's premises in Dublin and Cork up for sale at a guide price of €8.75m. All nine premises had been purchased previously by Joe Layden's Layden Group in 2007 as part of its acquisition of 29 Bank of Ireland branches for €94m. The Sligo premises now for sale are not a part of the Layden Group portfolio.

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