UK insurer Royal London, which previously traded as Royal Liver Group, has taken quite a hit on an AIB branch building in Kilkenny bought in a
sale and leaseback deal in 2007.

Agent CBRE has just sold the branch office for €2.9 million – a long way short of the €7 million paid six years ago, representing a drop of 59 per cent.

Royal Liver originally settled for a return of 3.48 per cent and the new owner will now get a yield of 8.96 per cent.

The four-storey over basement building extends to 796sq m (8,568sq ft), and has a handsome banking hall and offices on the ground floor.

AIB signed a 20-year lease from 2007 at a current rent of €271,800 per annum, subject to five yearly upwards-only rent reviews. The bank has a break option at the end of year 15.

CBRE research has shown that about €1.5 billion has been spent on investment properties let to banks since 2006.

This year alone, investment properties occupied by the banks and valued at €89 million, have been offered for sale and almost half of them have either been sold or agreed.

Natalie Brennan of CBRE reports that only 9 per cent of the overall spend this year on investment properties has been targeted at the retail market.

She said this figure did not reflect the enormous appetite for retail investments with strong covenants.