TWO BANK branches bought by developer Bernard McNamara for his “personal pension fund” at the height of the boom are to be offered for sale at substantial discounts on the original prices paid.
The high profile Bank of Ireland building at the junction of St Stephen’s Green and Merrion Row and a branch at Arran Quay, overlooking the Liffey, are among the first distressed property assets owned personally by McNamara to be advertised for sale on the instructions of asset managers Farrell Grant Sparks which is acting for Nama. McNamara has debts estimated at €1.5 billion following the property crash.
Agent Knight Frank is expected to seek around €6.25 million for the landmark bank branch near the Shelbourne Hotel (where McNamara also has a substantial stake) which was bought for around €12 million in a sale-and-leaseback deal with Bank of Ireland towards the end of 2006.
A new buyer can expect a return of 6.2 per cent after costs compared to McNamara’s net yield of 3.1 per cent. One of the branch’s attractions is that the lease has 19 years to run, ending in 2031. The rent of €404,484 per annum equates to €579 per sq m (€53.85 per sq ft). Given that that rent level is above average, it’s not surprising that last year’s rent review did not trigger an increase. The three-storey building with a two-storey return, all over basement, has 697sq m (7,511sq ft) and carries a “protected” status.
The Arran Quay bank branch will not have anything like the same appeal given its secondary location and the fact that the lease has a break option in November, 2021, leaving another nine years and 11 months to run. The asking price is expected to be €1.3 million, short of the near €3 million paid for it by McNamara. A new owner can get an initial return of 8.3 per cent. The Tudor Gothic terraced building has been used as a bank for over a century and produces a rent of €111,272 per annum – breaking back at €288 per sq m (€26.82 per sq ft). The three-storey over basement building has 385sq m (4,148sq ft).
McNamara’s decision to buy the Arran Quay bank may have formed part of a plan to assemble a substantial redevelopment site in the area. He also bought a third branch at Upper Leeson Street but Bank of Ireland availed of a break option and surrendered its lease on the building last October.
