Wednesday 28 June 2017

Bank of Ireland branch sold in 2012 for €3.5m fetches €4.2m

The Bank of Ireland has occupied the premises in Drogheda on a 25-year full repairing and insuring lease since late 2006
The Bank of Ireland has occupied the premises in Drogheda on a 25-year full repairing and insuring lease since late 2006
Ronald Quinlan

Ronald Quinlan

The Appian Burlington Property Fund has acquired the Bank of Ireland premises in Drogheda for €4.2m, exceeding the guide price of €4.08m.

The sale of the property, which was conducted by Ollie Lyons of TWM on behalf of the vendor Independent Trustee Ltd, marks the second time the premises has changed hands in recent years.

In 2012, the building was sold to the current vendor by Avestus Capital Partners (formerly Quinlan Private) for €3.5m.

Refurbished in 2006, the Bank of Ireland Drogheda branch is a landmark semi-detached Victorian building with a modern extension to the rear.

Bank of Ireland has occupied the property on a 25-year full repairing and insuring lease since December 2006 with no break options, which reflects a 15-year secure income stream on the duration of the lease. The investment also benefits from upward-only rent reviews with a contracted rent of €309,635 per annum providing the new purchaser, the Appian Burlington Property Fund, with a net initial yield of 7.05pc (assuming standard purchasing costs of 4.46pc).

Lyons said that the long, secure income and high yield had been the primary factors in achieving a sale price in excess of the guide.

Following the completion of the sale, the Appian Burlington Fund is continuing to target relatively high-yielding assets with good covenant strength and potential for capital appreciation outside the main Dublin market.

The Appian Burlington Fund was established in November after Appian Asset Management and Burlington Real Estate came together to invest €50m in commercial real estate across Ireland over an 18-month period. Appian is responsible for managing the fund, while Burlington Real Estate advises on the fund's property strategy and provides management services.

The fund has already been quite active. Only three weeks ago it agreed the acquisition of Fenward House, a 1,858 sq m (20,000sq ft) office building on Arkle Road, in Sandyford, Co Dublin, for around €5m. The property is let to a leading software company with a rent roll which is set to increase to €430,000 from this year.

The deal, which was brokered by agent CBRE, is set to deliver a yield of approximately 8pc.

The acquisitions of both Fenward House and the Bank of Ireland premises are in line with the Appian Burlington Fund's stated aim of focusing 80pc of its activity in the greater Dublin area, with the remainder being deployed in large regional cities.

Burlington Real Estate's managing director John Bruder expressed confidence last week in the prospects for Irish property in an interview with Irish Independent columnist Paul McNeive.

He said: "A lot of commentators have called the Irish market, as if it's had its run, but that's fundamentally wrong. Dublin is in the top five cities perceived by investors as having the most attractive prospects for 2017.

"Market perceptions tend to focus on Grafton Street, and offices in Dublin 2 and 4, which have recovered most, but that perception can miss very good value outside those areas. The IPD index showed total returns from property of 40pc in 2014, 24pc in 2015 and 12.8pc last year. So there has been significant moderation in returns, but they are still very healthy."

Sunday Independent

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