AIB yesterday announced that it expects to make a total profit of about €160 million over three years from a €367 million deal to sell part of its bankcentre site at Ballsbridge in Dublin.
The deal, part of a sale and leaseback agreement, comes just days after the Jurys Doyle hotel group revealed it had sold part of its landmark site in the exclusive Ballsbridge area to developer Seán Dunne for €260 million.
The AIB site has been sold to the Serpentine consortium, a syndicate of private individuals and companies assembled by AIB private banking and Goodbody Stockbrokers.
AIB said the consortium was selected after a competitive bidding process.
Serpentine has engaged Blogram Ltd, a subsidiary of AIB, to develop the site, which extends to an area of 324,76sq ft. The site has been valued at €1.2 million.
The total sum to be paid by Serpentine for the purchase and development of the site is €367.75 million in cash. But once completed, it is intended that the development will be let to a company within the AIB group for up to 31 years.
The initial annual rent payable by the tenant will be €16.117 million a year, and will be subject to five-year rent reviews. AIB anticipates that this cost will easily be offset by savings on rent and other costs.
AIB added that it would reinvest the profits from the deal into its core banking business.
Despite local opposition, AIB received the go-ahead for the development from An Bord Pleanála last year. The bank is understood to have received up to 10 expressions of interest in relation to the sale and leaseback of the new office block.
Quinlan Private, which last year acquired the Savoy Hotel group for €1.2 billion, was rumoured to be among the institutions and private equity partnerships which received documentation regarding the transaction.
Other companies who have engaged in similar "sale and leaseback" transactions in the past include Jurys Doyle, which recently used the arrangement in the deal it signed for the redevelopment of its Cork hotel.
Such transactions allow the initial buyer to make full use of the asset, while avoiding tying capital up in that asset.
