AIB looks to raise €20m via branch sale and lease

AIB is looking to raise more capital via the sale and leaseback of seven branches in its property portfolio – a move which could raise an estimated €20 million for the bank.

The branches in question are at Swords, Co Dublin; Navan and Kells in Co Meath; Dundalk, Co Louth; Monaghan town and Castleblaney, Co Monaghan; and Maynooth in Co Kildare.

“Following on from the recent successful sale of three branches in Dublin, Naas and Mullingar, the bank is releasing another tranche of its branch network in the form of sale and leaseback investments. All of the branches will be secured by long-term leases to AIB for a period of 20 years with a break option in year 15 and the initial rents will be subject to upward only reviews at five-year intervals,” a bank statement said.

Property agency, CB Richard Ellis is looking after the latest sale and leaseback tranche for the bank.

It said yesterday that the branch in Monaghan town will be leased at a rent of €200,000, while it is expected to be sold for more than €2.7m, yielding in excess of 6.5%.

Castleblaney will have an initial rent of €86,000 and is expected to sell for €1m. Kells’ figures are expected to be in line with that, while the Swords branch could fetch around €3.4m; Maynooth €3.3m; Navan €5m and Dundalk around €3.4m.

“Even in a difficult market, discerning investors will find these investments attractive given the tenant covenant strength, the long lease commitment the bank is offering, the prominent high street locations and the affordable lot sizes involved,” said Colm Luddy of CB Richard Ellis.

Raising capital through sale and leaseback agreements has been a policy of AIB’s for a number of years now – since the sale of the group’s headquarters in Ballsbridge in Dublin, four years ago – and is part of an ongoing strategy aimed at unlocking shareholder equity for core business activities.