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Archive for January, 2012

Someone should enlighten NAMA about so-called SMART objectives, with SMART standing for Specific, Measurable, Achievable, Realistic and Time-specified. Then we might get something less wishy-washy than the objectives for the Agency published this afternoon – available here. This summarises the main points

“Ensuring the implementation of schedules for asset sales that have been agreed with debtors.

Optimising cashflow to NAMA from loans and debtors with a view to paying down 25% of the Agency’s debts (€7.5 bn) by end 2013.

Adopting an active strategy and establishing a panel for selling loans.

Establishing mechanisms to attract international investor capital, such as Qualifying Investor Funds (QIFs).

Development of the Deferred Mortgage initiative for residential properties.

Rollout of vendor finance on the commercial property portfolio.”

It is heavily process-focussed which is typical of the Irish civil service, rather than objective-focussed. Okay the Agency says that it will “optimise” – in other words, “try its best to achieve” – cashflow so as to pay down 25% of Agency debt by the end of 2013. This is a self-imposed target and although the document makes reference to quarterly oversight by the bailout troika and even though NAMA chairman, Frank Daly has previously talked about the target being “copper-fastened” into agreements with the Troika, NAMA has not been able to point to specific wording in any agreement to support that claim. So to restate that objective – “NAMA will do its best working with loans and debtors in order to achieve a self-imposed and flexible target next year” As for 2012’s contribution to that target, who knows.

The “development of the deferred mortgage initiative” has been in the pipeline for at least eight months and the current position is the “initiative” is expected in the next month, NAMA has appointed a project team, but reading today’s report, the matter may lie in the hands of the European Commission to approve in competition terms.

“Rollout of vendor finance on the commercial property portfolio”, otherwise called staple financing was actually achieved in September 2011 when NAMA offered One Warrington Place for sale with upto 70% “staple financing” available. In the event, the buyer Prudential, didn’t opt for staple financing – perhaps it felt the 2.5% markup NAMA is making on its staple financing loans is excessive. But here you have NAMA stating an objective which was achieved four months ago!

And many of the objectives are outside the Agency’s control eg getting approval from the European Commission to a mortgage initiative about which there are serious competition concerns.

So no profit target, no cashflow target for 2012, no numbers for approval of business plans and a bunch of woolly unspecific, process-focussed, time-unknown objectives – “we’ll try our best”.

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Yes these are four months out of date, but today’s publication of the NAMA management accounts for the three months ending 30th September 2011 have actually been published in record time. NAMA handed over the accounts on 9th December, 2011 well before the deadline of 31st December 2011 specified in the NAMA Act, and the accounts have today been approved by the Department of Finance, though why there should be any delay, let alone a seven week delay – is still not clear to me.

The report is here. The accounts are here.There will be summary analysis here later with a detailed review tomorrow.  This is what NAMA wants you to know about the accounts [with comments added at this end]- not meaning to dwell on the negative but as has been frequently commented upon here, NAMA is running out of performing loans as it sells the “low-lying fruit” – see the last point (5) below:

“for the quarter ending 30th September 2011 the main points are:

(1) NAMA generated over €1.4 billion net cash from operating activities during the quarter, driven by cash receipts from debtors of €1.8 billion. [this €1.8bn comprises loan repayments and interest, and disposal of loans/properties - it is suspected that €800m of these receipts will relate to the sale of the Maybourne loans which was announced as a done transaction on 29th September 2011. NAMA is still obstructing any meaningful analysis of the cash receipts between interest, loan repayment and disposal]

(2) Cash outflows included €500 million in net debt repayment (bringing the total amount of debts repaid by NAMA since inception to €1.6 billion). Other outflows included €199 million in interest [€199m], expenses [€41m] and other funding costs and €71 million advanced to debtors to enable them to complete projects and to fund working capital [total of new cash advances to debtors is €477m and some €900m has been approved].

(3) Profit during the third quarter was €317 million. Cumulative profit for the first nine months of 2011 was €526 million. [This is profit before impairment charges. NAMA's latest forecast is that it makes  a €600m profit before impairment for 2011 and that would indeed seem feasible as it needs only book €74m of profit in Q4,2011 to achieve that. What will the impairment charge be for 2011? I would estimate €600m+, leading to an overall loss again for 2011]

(4) NAMA had total cash balances of €1.9 billion at the end of September. [This had grown to €3.8bn by the end of December 2011]

(5) The percentage of performing loans in the portfolio at the end of September was 21%, down from 23% in the previous quarter. This was largely due to the disposal of a number of income-generating assets.

NAMA also had a very strong final quarter in 2011 and ended the year with €3.8 billion of liquidity.”

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(The new properties added in December 2011, click to enlarge)

NAMA has today published its now regular monthly list of properties subjected to foreclosure action – the list shows NAMA foreclosed properties at the end of December 2011. The full list is here, the list of new properties added is here, and you will find previous editions of the monthly list which was first launched in July 2011, here.

You should read the full list of NAMA’s terms for accessing the lists here. But in summary, this is what you’re looking at:

(1) Real estate property subject to loans in NAMA to which receivers have been appointed. The receiver’s website is shown against each property.

(2) This is all the real estate foreclosed sorted by country, and then region.

(3) Not all of the property may be for sale.

(4) Contact the receiver with enquiries or expressions of interest in the first instance. Only pester NAMA if you’re not getting any response from the receiver and make allowances that receivers will be busy with queries, particularly after a new release of foreclosed property.

(5) If you think there are mistakes on the list, contact NAMA.

UPDATE: 31st January, 2012. So what’s new? 35 new foreclosed properties, none of which is available for sale, which might beg questions as to whether NAMA is falling behind in its work. The foreclosures reflect the companies to which receivers were appointed in December 2011 and include Cleary Doyle and Banna. NAMA’s description of the properties becomes more vague with each release it seems. How does “Listowel – Development- Not Commenced”  help you to identify the property?

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“As you know Vincent, there are good things starting to happen in this economy, exports are up.. money is actually flowing back into the Irish banks and this time last year money was flowing out of Irish banks like a burst water mains”
Deputy Liam Twomey, Fine Gael TD and vice-chairman of the the Oireachtas Committee on Finance, Public Sector and Reform, speaking on Tonight with Vincent Browne (from 31:00) on 19th January, 2012

“[Karl, is this true?] ..I hate to bring bad news, but the latest figures show the Irish economy contracted by 2% in the third quarter of last year, which I think is far from a healthy stabilisation. Look it’s not surprising, the whole of the European economy is suffering now through the euro crisis. But what do we know about the fourth quarter? We know that taxes fell further behind, the unemployment rate is sort of edging upwards. In the first half of last year, it may have started to stabilise and grow but it does look as if we are in recession again. In relation to deposits, we have stopped the large outflow of deposits that was happening around the time that the EU/IMF deal was concluded and after it, but there’s no big rush of money into this country”
Professor Karl Whelan, economics lecturer at UCD and former central bank employee speaking on the same programme

“customer deposits in the Irish Covered Banks have been stable since the middle of the year and in more recent months have shown modest growth in aggregate terms”. December 2011 information note from the Department of Finance

This morning, the Central Bank of Ireland (CBI) has released its monthly snapshot of the state of Irish banks focussing on deposits and lending. The data covers the period up to 31st December 2011 and shows that during the month of December 2011, deposits by ordinary households and businesses actually increased at the so-called “covered” or State-supported banks – essentially the two pillar banks, Bank of Ireland and AIB, and also Permanent TSB. The increase of €1,036m from €101.4bn in November 2011 to €102.5bn in December 2011 was the biggest monthly increase since April 2011, when confidence was high after the publication of the March 2011 bank stress tests. The monthly increase means we are now back at deposit levels seen in July 2011, and that is in general terms, positive news. On this blog the key focus each month is on the movement in private sector deposits at the covered banks, as this is seen as a signal of banks returning to sustainable financing. Private sector deposits fell at covered banks in the past 12 months by €11bn from €114bn to €103bn, but most of that fall took place in the first six months of 2011 and the final six months has looked stable despite the ongoing crisis in the EuroZone. I think it is fair to say there are signs of stabilisation, but it would be a gross exaggeration to claim “deposits were flowing” into Irish banks.

The CBI doesn’t provide an analysis of deposits at the covered banks – about the only analysis it doesn’t provide – but in terms of all banks operating in Ireland including foreign and IFSC banks, Irish household deposits rose by €0.6bn in December after a fall of €1.2bn in November. Household deposits at all banks are now back at July 2011 levels. Total deposits from all sources in all Irish banks fell €5.9bn in December, mostly as a result of a decline in €5.7bn in deposits held by MFIs (see below for an explanation of MFIs)

Here is the full set of deposit statistics for the different categories of bank operating in Ireland.

First up is the consolidated picture for all banks operating in Ireland including those 450-banks based in the IFSC which do not service the domestic economy.

Next up are the 20 banks which do service the domestic economy and include local subsidiaries of foreign banks like Danske, KBC and Rabobank. There is a list of all banks operating in Ireland here together with a note of the 20 that service the domestic economy.

And lastly the six State-guaranteed or “covered” financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS – Anglo and INBS have now been merged to form the Irish Banking Resolution Corporation, IBRC)

(1) Monetary Financial Institutions (MFIs) refers to credit institutions, as defined in Community Law, money market funds, and other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs, and, for their own account (at least in economic terms), to grant credits and/or to make investments in securities. Since January 2009, credit institutions include Credit Unions as regulated by the Registrar of Credit Unions. Under ESA 95, the Eurosystem (including the Central Bank of Ireland) and other non-euro area national central banks are included in the MFI institutional sector. In the tables presented here, however, central banks are not included in the loans and deposits series with respect to MFI counterparties.

(2) NR Euro are Non-Resident European depositors

(3) NR Row are Non-Resident Rest of World depositors (ie outside Europe)

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The “shock” is that the occupiers yesterday were actually able to identify and find what now does appear to have been a NAMA building, because the description of the building on the NAMA foreclosure list (see below) was so misleading as to confuse all but the most tenacious of protesters. God alone knows how misleading the NAMA description is for potential purchasers of NAMA property.

The building occupied by protesters yesterday was 66-67 Great Strand Street which is in central Dublin, the Smithfield area – Dublin 1 to be precise but close to Dublin 7. The postal number is important as you’ll see anon. Video and pictures from the interior of the building suggest it was suitable for office use, though it seems the last known use of the building was by Roches Stores for storage of merchandise.

It now seems that the property may well have been on the latest NAMA foreclosure list but shown as Dublin 2 – see below – which is the other side of the Liffey. There is no “Great Strand Street” in Dublin 2.Because the list is sorted by postal area if you looked in the correct place on the NAMA list -Dublin 1 – you wouldn’t find it. And the NAMA description omits any street number, it just says “Great Strand Street”. So if you are finding NAMA receivers or estate agents slow to respond to you – a not uncommon complaint – or you just want to get a rough assessment of the building without giving your name and details to the agent, then you’re pretty well obstructed. The NAMA description of the building is now “Development – commenced” but earlier last year in the July 2011 foreclosure list, there were two entries shown for Great Strand Street and one was in Dublin 1 and that entry was then shown as “warehouse”

NAMA came in for criticism from Fine Gael TD, Mary Mitchell O’Connor in the Dail last November 2011 for the Agency’s sloppy description of a property in Booterstown. And in a separate recent case, although the address was probably correct, NAMA seems to have confined the marketing of a 125-acre €4m development property in Cork, to erecting signage in a few fields in Cork. So if you were a Dublin, Limerick, Galway or Belfast developer in the market for a major €4m property, you would need to have been on quite a motoring detour to even see the sign.

NAMA started foreclosing on property in 2010 but it was only July 2011 that the Agency produced its first foreclosure list. The list is in a PDF format which cannot be sorted which makes establishing property removed from the previous list a major challenge. In fact NAMA seems to be going out of its way to obstruct the accurate advertising of the foreclosed property on which the Agency is mandated, by the NAMA Act to, sell so as to maximise returns to the taxpayer. So sloppy is the Agency that the last foreclosure list issued on 22nd December 2011 omitted all pre-November 2011 foreclosed property for sale. This error was corrected without any announcement by the Agency on 3rd January 2012.

The Agency previously reported that its first foreclosure list attracted some 98,000 hits on the NAMA website, but the Agency seems not to have been able to take the hint that this was, and is, the most valuable and sought-after information the Agency produces so it is in the Agency’s interest to ensure the listing is accurate and as easy to use as is feasible. No wonder Treasury Holdings don’t want NAMA appointed as receivers if this is the sort of sloppy administration and marketing, representative of the NAMA way of doing things.

So well done to the occupiers yesterday for actually being able to find 66-67 Great Strand Street (in Dublin 1). But spare a thought for potential buyers that might actually want to spend money on NAMA foreclosed assets.

NAMA will produce its seventh foreclosure list in the next couple of days. Will the Agency produce information in a sortable format? Will the Agency still need protesters and occupiers to uncover NAMA errors?

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Soundmigration posted the above video on youtube, which shows the building and illustrates the activity there today.

To be honest I’m not even sure the building is even in NAMA, but this morning a group of people gained access to an office building on Great Strand Streetin Smithfieldin Dublin1. There are claims that nos 66-67 Great Strand Streetbelonged to developer Hugh O’Regan who is indeed associated with NAMA. NAMA has recently sold his Morrison Hotel around the corner to Russian, Yelena Baturina for a reported €25m. There were claims that today’s occupied building is on the NAMA foreclosure list but if it is, it’s not immediately obvious, but then again NAMA has been criticised for poor addressing of properties in the past. There is a good collection of photographs here showing the occupation and condition of the building.

In any event, the aim of the day was to draw attention to empty buildings that could well be in NAMA, and to ask if there wasn’t a better, more immediate use to which these buildings could be put. The occupation was set to last for no more than 12 hours, and beyond making a point, it was to have included talks on NAMA, its lack of transparency and the issue of empty buildings. The occupying group published a programme for the day which was to have included presentations, it is claimed, by Michael Taft, economist from UNITE and Andy Storey, lecturer at UCD.

Reports claim that about 70 people turned up, that Conor McCabe, author of Sins of the Fathers, made a presentation, but at around 3pm, the boys and girls in blue turned up with solicitor in tow, and ordered the building to be cleared in 10 minutes. There is no suggestion of criminal damage being done to the building which is in pretty poor condition internally – there is evidence of severe water ingress and damage – and about an hour later, people had more or less left, and removed themselves to a nearby pub, Nealon’s on Capel Street, to complete what seems to have been a useful event.

NAMA might say that it doesn’t own property, it owns loans and that it is the responsibility of the developer to secure and maintain the building. Having said that, NAMA, has appointed receivers to about 1,000 properties, some of which contain multiple units. I understand that there is legal action afoot after protesters in Cork occupied an empty commercial building onOliver Plunkett Street over the Christmas period. The owner of the building, a company called Padlake Limited had previously been struck off and was seemingly restored at the Company Registration Office in order to pursue its legal action.

There is seemingly a group which organised the protest and occupation today called Unlock NAMA which says it has three demands “1) Make NAMA properties available for social and community use 2) Publish full addresses and details on all properties under NAMA 3) Publish full details on all sales of NAMA assets” Some 20-30% of Dublin’s commercial space is presently vacant, which is considerably above a long term average of 7% (though it has been suggested – unconvincingly in my view – in recent times that the “normal” vacancy rate is closer to 15%)

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On Thursday 19th January, 2012 two Irish ministers, Brendan Howlin and Michael Noonan held a news conference in Dublin to mark the successful conclusion of the latest bailout troika review mission. Minister Noonan made a gaffe by referring to the scourge of Irish emigration as a lifestyle choice, though the Minister claimed his remarks were taken out of context. By popular demand, here is the full transcript of the question and answer so that you can judge yourself. Of more concern on here was that the Minister – no doubt with a desire to talk up the prospects for the country – made a mistake by claiming unemployment had fallen by more than it actually has (see below).

Mark Simpson from the BBC, can I ask you two questions about emigration. I assume that you factor in some sort of projection in terms of emigration, in terms of your overall financial figures, if you have any latest projections, could you share them with us? And secondly, what is your overall attitude to young people here who, rather than putting on the Green Jersey, are putting on the Australian Jersey in many cases.

Minister for Finance, Michael Noonan: Well, we have the Central Statistics Office who monitor these issues and they come up in the statistics. They’re not specifically factored into the budgetary process. What is factored in is employment and unemployment. And employment has remained quite high, we still have 1.8m people working in Ireland. I remember in the 1980s when times were quite bad, employment dropped down to 940, almost half so the situation is quite different . In December, unemployment steadied, actually for the first time in three years the Live Register went down, went down by about 3,000, the last time that happened I think was in 2007, and we hope it wasn’t just a one month event, that there’s a stabilisation. [According to the CSO, the seasonally adjusted Live Register for November 2011 was 446,500 which fell by 3,200 to 443,200 in December 2011. But if the Minister is referring to the monthly fall of 3,200 then it was only in December 2010 that the Live Register was 446,000 and it fell by 4,300 to 441,700 in January 2011 and then rose]

There’s always young people coming and going from Ireland, some of them are emigrants in the traditional sense, others simply, it’s a small island and they want to get off the island, a lot of the people that go to Australia, it’s not being driven by unemployment at all, it’s driven by a desire to see another part of the world. I have five adult children, three of them living and working abroad, I don’t think any of the three would be described as an emigrant, it’s a free choice of lifestyle and what they wanted to do with their lives. There’s a lot of families like that. Now there are other people being driven abroad alright. Now what has happened is that the collapse of the building industry has created a lot of forced emigration. The immediate effect of that was that over about a 15-month period, 100,000 people with building skills lost their jobs. And they’ve lost their jobs with absolutely no hope of for the bulk of them being re-employed in the building industry in Ireland. Because we’re not going back to a building and construction industry that’s 20% of GDP. And we can’t hold down that hope. And in Irelandwe’re trying to re-skill them, going into different categories.

But quite a number of them have emigrated and quite a lot of them are in Australia, some of them are in the UK, some in Germany, Young men in particular with skills in the building industry. It’s a very identifiable tranche of Irish people.

It’s not about putting on the Green Jersey and taking off the Green Jersey, that’s life in modern Ireland, to do their best and I hope that they’re successful abroad. What we have to make sure is, that people have the best possible education right up to third level so when they go, they’re employed as young professionals in their country of destination rather than the traditional image of Irish people from the 1950s.

UPDATE: 29th January, 2012. You might be interested in a 2-part feature on here last year which examined emigration in Ireland, particularly in an historical context – part one is here and part two is here. The following table took some time to research and I think it shows the historical scourge of emigration in stark terms.

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Villain of the past week, the ECB – which forced IMF bailout-programme country, Ireland to pay €1.25bn to unsecured, unguaranteed bondholders at a defunct bank – really is taking the biscuit for distorting, and in some cases, damaging intervention in the economies and societies of Europe. In Ireland, we have experienced the ECB sit on its hands in the early 2000s as core European banks lent colossal sums of money to Irish banks which was then poured into property, causing a bubble which has now burst with disastrous consequences set to last generations. And the Irish nation has found itself paying back inter-bank lending, partly from a foolish bank guarantee and partly under duress from the ECB. And we have an ECB which doggedly sticks to its primary remit of price stability (keeping inflation in check) when the obvious need for the EuroZone as a whole is to print euros and let inflation rise beyond the 2% ECB target.

But consider the latest wheeze on the part of the ECB – the so-called “Longer Term Refinancing Operation” or LTRO in December 2011.  This saw €489bn lent by the ECB to banks operating in the EuroZone, the ECB loans were for three years and at the main ECB lending rate which is currently 1%. The banks placed collateral with the ECB as security, but it is widely acknowledged that the ECB lowered the quality of collateral accepted. The LTRO operation was undertaken as part of the ECB’s remit in support of monetary policy. Monetary policy is where a Government or central bank seeks to support an economy through interest rates and money supply.

We saw during the week that Irish banks have used the LTRO funding to buy Irish government bonds paying 5.15% per annum. Which is pretty good business for the banks – they borrow at 1% and get paid 5.15% on their borrowings. Not only that, but sitting on Irish government bonds for three years is far easier – and cheaper – than lending to pesky households and businesses. After all some of those households and businesses may not repay loans, others may get into difficulty and each represents a small connection and there is great cost in administering such loans. Nicer to kick back and wait for Irish government bonds to mature!

It gets better. In February 2012, the ECB will undertake another LTRO operation and Irish banks may be able to pledge the newly acquired Irish govt bonds as collateral. So they get more funds at 1% and can then buy even more government bonds that pay 5%-plus. Isn’t it great to be a bank! Prior to the December 2011 LTRO, the previous longest LTRO was for 1 year and was issued in 2009. There has been a 6-month LTRO also but generally LTROs are for three months.

Unlike other businesses or industry, banks can get access to this cheap 3-year money from the ECB. By comparison, spare a thought for poor old Michael O’Leary (pictured above, left) who is run ragged as the CEO of Ryanair trying to build the world’s biggest airline. Michael, the schmuck, labours away at providing a real service to consumers, and trying to make a profit on his enterprise. How peeved must he feel when he looks over at other businesses – banks – who simply get lent 3-year money at 1% which they then “invest” in 5%+ yielding investments? God knows what he thinks about the uneven playing field between banks and his own business when trying to attract equity investment. You can only speculate if Michael stays awake at night, sore at the fact that he can’t use the assets in his own balance sheet to get 1% 3-year money from the ECB and then stick that in Irish government bonds. The poor eejit!

On the other hand, if you happen to be say, the CEO of Anglo – or IBRC as it is now called – Mike Aynsley, (pictured above, right) and just happen to have a bank licence or are a bank shareholder, then the ECB largesse is like manna from heaven. Pity that the funding is not demonstrably going into the real economy – households and businesses. And isn’t this what monetary policy should support? And if so, isn’t the ECB queering that as well?

The ECB was asked to comment on any consideration it had paid to competition issues before devising its 3-year LTRO operation in December 2011. Ryanair’s spokesman, Stephen McNamara was asked whether Michael O’Leary felt like a right eejit for slaving away on a proper business whilst banks have been given a licence to print profits and whether Ryanair might consider legal action on competition grounds. Neither has yet commented.

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“NAMA, as promoter, is seeking proposals for the provision of investment management services for a Qualified Investment Fund” Tender posted by NAMA on 25th January 2012

NAMA is apparently about to set up one or more Qualifying Investment Funds. According to the tender document “NAMA intends to establish a Qualifying Investor Fund (QIF) as an investment company in accordance with Part XIII of the Companies Act 1990. The QIF will be established as an umbrella scheme with segregated liability between sub-funds which will invest in property and property related assets inIreland, theUK andEurope.”

The services are required for upto seven years.The Irish Funds Industry Association defines a QIF thusly : “The Qualifying Investor Fund (QIF) is a regulated, specialist investment fund targeted at sophisticated and institutional investors, who must meet minimum subscription and financial resources requirements. The main advantage of the QIF is the removal of the Financial Regulator’s general conditions relating to investment policies and borrowing, thereby enabling sophisticated investors to use this structure for a wide range of investment purposes. The QIF is the preferred structure used in the regulated alternative investment sphere.”

It is understood the minimum investment in a QIF is €100,000. NAMA has not commented on the tender, but it is known that NAMA wanted to see Real Estate Investment Trusts (REITs) adopted in Ireland to allow investors invest in property and loan funds in a tax efficient manner. Perhaps NAMA got fed with waiting for the Government to deliver on another one of its manifesto pledges.

UPDATE: 27th January, 2012. The Irish Times claims that the minimum investment will be €250,000 and that individuals will need demonstrate a net worth of €1.25m or in the case of companies, the company will need have a net worth of €25m. The article referes to Central Bank rules and these have been requested, and an update will be posted when they become available.

UPDATE: 7th February, 2012. To complete the fund management function tendered for above, NAMA is now seeking the provision of a custodian and fund administration service – the tender document is here.  The custodian service is to register the QIF’s interest in property and to collect income and make payments on behalf of the QIF. The fund administration function is quite diverse and involves keeping tabs of investors and their investment, preparing valuations for the fund and doing the accounts.

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News broke yesterday evening of imminent moves by NAMA to appoint receivers, Ernst and Young and, in addition, PwC to assets formerly controlled by Treasury Holdings, the Dublin property development company controlled by the colourful Johnny Ronan and the understated Richard Barrett. Treasury reacted to NAMA’s imminent move by going to Dublin’s High Court to seek an injunction preventing the appointment by NAMA of receivers. In addition, Treasury is reported to be seeking a judicial review of the way in which NAMA is engaging with Treasury’s loans. Both matters are scheduled to come before the courts at 11am this morning, though there is no mention of the applications in the Legal Diary, presumably because the applications were reportedly made minutes before 5pm yesterday.

So what’s at issue? Reporting suggests that Treasury believe that because two third part investment companies – identified as MacQuarie and Hines – are offering NAMA more for the Treasury loans than NAMA paid the banks. The figures being bandied about are that the Treasury loans have a par value of €2bn, were acquired by NAMA paying just 45c in the euro or €900m in total, and the two third party investors are said to be offering more – just “more”, no numbers yet on the value of these offers – than €900m for the loans. Treasury seem to be suggesting that NAMA should be accepting these offers because they are in excess of what NAMA paid. It’s hard to see how that would succeed in court, if that is indeed the Treasury argument. NAMA is set up to maximise income from its assets and although the Agency has said in the past that its main priority is to recoup what it paid for the assets – plus any additional advances to the developer in question – it is hard to see NAMA being bound by this. For its part, a NAMA spokesman is quoted in the Irish Times as claiming the Agency had “engaged rigorously with Treasury Holdings since 2010. Unfortunately, it has not been possible to achieve a mutually acceptable agreement on the way forward with respect to the group’s NAMA loans . . . NAMA analysed the two proposals made and they were not commercially acceptable. The NAMA board decided to proceed with the appointment of Receivers at the end of today’s standstill period.” It is also noteworthy that Treasury is criticising NAMA’s commercial engagement in this matter, and it is claimed that NAMA has not engaged in negotiation with the two third party investors, but has merely sought clarification of offers.

So the prospects for the injunction don’t look too bright from Treasury’s point of view. But with respect to the second matter, the application for a judicial review, that becomes less clear. We saw in the David Daly case last year that the courts weren’t very welcoming of objections from developers to NAMA’s treatment of its loans, when those objections were made late in the day. Remember Paddy McKillen objected to NAMA’s acquisition of his loans right from the start, and I think that was a critical factor in Paddy being eventually successful. The courts seemed to view developers objecting after NAMA had acquired loans, and after initial consensual engagement with NAMA, as rendering weak any claim by developers to entitlements not previously sought. NAMA acquired Treasury’s loans in the first half of 2010, and until the middle of last year, Treasury was regarded as a NAMA favoured developer, indeed the word on the street was that it might be the first developer to sign an agreement with NAMA – not just a memorandum of understanding and heads of terms. But things seemed to go downhill for the NAMA/Treasury relationship in the second half of the year and in December 2011, NAMA and other lenders had administrators appointed to NAMA’s most valuable asset, the Battersea Power Station which was controlled by a company, which was in turn controlled by Treasury. Since then the writing has been on the wall for Treasury.

So the betting on here is that NAMA succeeds in having receivers appointed. It is not clear what properties NAMA is targeting but reporting today has mentioned the PwC building in north Dublin Docklands (pictured below). Notably there is no mention of the National Convention Centre which was developed by Treasury. Other assets reported to be in NAMA’s cross-hairs include Central Park in Leopardstown and the Ballymun Shopping Centre. There is a related post on here which describes the ultimatum that NAMA had apparently given Treasury in the run-up to yesterday’s decision to appoint receivers. There will be updates here from 11am.

UPDATE (1): 26th January, 2012. Orla O’Donnell, legal correspondent from RTE tweets that there will be a hearing on 21st February 2012 where Treasury’s challenge to NAMA’s appointment of receivers will be dealt with. Orla also tweets that Treasury gave NAMA a commitment on 10th of January 2012 when the so-called standstill agreement was given that Treasury would not seek to challenge the appointment of receivers (“ah now, that’s not fair!” comes to mind). Orla tweets “NAMA says Treasury gave undertaking on Jan 10th that it wouldn’t challenge receivers if NAMA gave 14 day standstill period” and “Treasury Holdings’ challenge to appointment of receivers to some assets by NAMA to be heard Feb 21st”

UPDATE (2): 26th January, 2012. RTE is now providing a report on this morning’s scheduled proceedings. Receivers have now been appointed, apparently, and presumably PwC and Ernst and Young. But undertakings have been given between the parties as to the conduct of the receivers until the court has dealt with Treasury’s applications.  It seems that Treasury secured the services of Michael Cush SC to act as barrister on its behalf today – he was Paddy McKillen’s saviour but wasn’t all that effective in the David Daly case – and the respondents are to be expanded so that they now comprise NAMA, KBC, the Attorney General and Ireland – the last two indicating that constitutional matters will be raised in the course of the proceedings, and specifically the constitutionality of elements of the NAMA Act. It is reported that (unnamed) lawyers acting for NAMA wanted to put on the record “that NAMA received an unequivocal undertaking from Treasury Holdings that Treasury would not challenge the appointment of receivers if NAMA agreed to a two-week standstill period”  but it is further reported that “lawyers for Treasury said they did not agree with that statement” We still don’t have a comprehensive list of assets subject to foreclosure but presumably the January 2012 NAMA foreclosure list (due at the end of February 2012) will give the details.

UPDATE (3): 26th January, 2012. Just some housekeeping – according to RTE’s Legal Affairs Correspondent, Orla O’Donnell, NAMA was today represented in court by Cian Ferriter SC – details and photo here –  and the receivers appointed are David Hughes and Luke Charleton (both from Ernst and Young); PwC, a tenant in the Treasury-owned building beside the National Convention Centre appear not to be involved.

UPDATE: 27th January, 2012.  A little more detail emerging today in press reporting. The case on 21st February 2012 is pencilled in to last for four days. According to the Independent, NAMA has PwC as well as Ernst and Young appointed as receivers, which is noteworthy as PwC occupy a landmark building – owned by Treasury – beside the National Convention Centre – which is also owned by Treasury, but not referred to in recent reporting with respect to these receivership actions. The Independent names the following assets as now being “understood” to be under the control of the receivers – “PwC headquarters offices in the IFS, the Montevetro building that is in the process of being sold to Google .. and the Ballymun Shopping Centre” The Examiner has what seems like more credible reporting of the case. It refers to Ernst and Young receivers only, and identifies assets as the Alto Vetro on Barrow Street, Central Park in Leopardstown. It says 22 Treasury companies are involved in the action, and that it is yet to be decided if the four days in February pencilled in for the hearing will be for an interlocutary or a full hearing.

UPDATE: 28th January 2012. The Irish Times today says that PwC has also been appointed as receivers, but that it will not be involved with its own premises in Spencer Dock (next door to the National Convention Centre, both pictured above). So no conflict of interest so! REO (the Treasury controlled company which is also subject to proceedings) has requested the suspension of sharedealings at the London Stock Exchange and has issued a statement which says that NAMA has appointed receivers to nine of its companies, namely

(1) Wintertide Limited
(2) Radtip Properties Limited
(3) Tenderbrook Limited
(4) Sencode Limited
(5)  Lornabay Limited
(6) Twynholm Limited
(7)  Rigol Limited
(8) Ballymun Shopping Centre Limited
(9) Coolred Limited.

REO goes on to claim that NAMA’s receivers will give 48 hours notice before “initiating any process of sale”.  Together with another company, Montevetro II Limited. REO says NAMA is chasing it for amounts totalling €568,828,437. Meanwhile, Treasury is talking itself up with showing it is getting on with business and has announced €1.5m (presumably annual) new rental income from recent rental agreements. Mind you, according to JLL there is still 100,000+ sq ft available at Central Park.

UPDATE: 29th January, 2012. A note of the financial figures at the heart of the Treasury versus NAMA case. It is reported that the loans NAMA acquired from the banks relating to Treasury come to a total of €2bn. It is also reported that NAMA paid €900m for these loans, representing a 55% discount or haircut. It is further reported that of the €2bn of Treasury loans, some €500-900m relate to Johnny Ronan and his own companies; the remaining €1.1-1.5bn (reports vary) relates to Treasury proper and were reportedly acquired by NAMA for €560m. There are also claims that the offers made by MacQuarie and Hines were for €600m and related to the Treasury-proper loans. Since neither NAMA nor Treasury, nor indeed Hines or MacQuarie are commenting, the above might only have the status of speculation and indeed the reporting has confirmed errors – Ronald Quinlan claims NAMA took over Treasury’s loans in November 2009 (a month before NAMA came into being, and some three months before NAMA acquired a single loan).  Niamh Horan (or Niamh Whore On, as the feisty Sinead O’Connor might say) bases an entire report on an unnamed “source” and much of it is based on the “feelings” of the “source”.  In one account Ronald Quinlan refers to the loans as being worth €2bn with a NAMA acquisition price of €900m, and of these Johnny’s loans amount to €400-500m, and Treasury’s-proper to €1.5bn. In another report Ronald refers to the Treasury loans as being worth €1.1bn. So giant pinches of salt, but having said that, these are the only figures in the public domain.

UPDATE: 30th January, 2012. The are now two Treasury cases registered at the Courts Service, though it seems as if that is just an administrative error as both cases have the same reference – 2012/55 JR.  The solicitors on record for Treasury are DAC BEACHCROFT DUBLIN.

UPDATE: 8th February, 2012. In what looks like a whipsaw manoeuvre, Anglo (or rather the Irish Bank Resolution Corporation, IBRC) has appointed receivers to a company in which Treasury has a major stake. The bank is reported to have appointed David Hughes and Luke Charlton from Ernst and Young as share receivers to a company called Tora Company Limited, which is said to have been jointly controlled Treasury Holdings and entrepreneur, impresario and developer Harry Crosbie. The controlling company is called Brossbar Limited.  Tora’s main asset appears to be the Wool Store building – pictured here – in Dublin’s International Financial Services Centre in Dublin 1.

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