Jack Fagan has a rare weekend outing in today’s Irish Times where he reveals that a consortium of European investors has bought the four main office blocks of AIB’s Bankcentre in Ballsbridge opposite the RDS. The seller, Aviva is said to have accepted “just over €70m” for the sprawling 154,000 sq ft complex set over four buildings. The property was originally bought in April 2006, a year before the general peak in Irish commercial property, for €177m. Commercial property generally increased by just over 21% between Q1 2006 and Q1 2007 which would have indicated a notional peak valuation of €214m. A €70m price tag today represents a 67.3% decline which is in keeping with the general market as tracked by Ireland’s two commercial property indices from Jones Lang LaSalle and SCSI/IPD.
The tenant in the offices is the 99.8% state-owned AIB which has thus far cost us at least €20.7bn bailout and additional state-aid injected via the NAMA acquisition of loans. There is a lease which expires in 2026 yielding an annual rent of €7m or €41 psf on an upwards only rent review. The yield quoted by Jack Fagan today is 9.6%. Jones Lang LaSalle was the selling agent and the unnamed investors are reported to have been assemble by Davy.
So there you have it, a landmark office block in central Dublin yielding 9.6% per annum until 2026 from a government-backed bank with evidence of a 67% decline from peak.