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Archive for November 13th, 2012

A fortnight ago, the Irish Daily Mail – a newspaper which has achieved fame in recent months in US courts where NAMA has submitted its reports as evidence, much to the exasperation of the judge – reported a third sale of a property associated with the Dunnes, Sean and wife Gayle – The Dunner and The Dunnertrix.  The property at Number One Hidden Spring Lane in the New York suburb of Rye was reported by the Mail to have been purchased by “a trustee using the address of Mrs Dunne’s lawyers”  for USD 1.7m in May 2011 and was sold to the owner of a neighbouring property for USD 2.5m in October 2012. The paper alleges that “a quick” USD 700,000 profit was made on the property but the paper doesn’t directly say that the Dunnes benefitted, even though the paper obtained evidence of taxes being paid on the property with cheques apparently signed Gayle.

Deeds exclusively published on here today reinforce the perception that the Dunnes were indeed involved with the transaction but that there may be more to the transaction than reported by the Mail. Papers uncovered at the Office of the Westchester County Clerk, an office whose functions cover the geographical area which includes Rye, show the property was transferred at least three times between May 2011 and October 2012 and that the property was subdivided into two lots of approximately size which seems odd, given the ultimate buyer is reported by the Mail to be returning the property to nature.

The first document is a deed dated 5th October 2011 but which relates to a transaction on 8th July 2011 where an individual named Brendan O’Reilly whose status is that of a trustee, transfers  what appears to be the entire property at 1 Hidden Spring Land to another individual Raissis Scott another trustee for USD 10 (yes, ten dollars and “other [undisclosed] valuable consideration”)  The deed is submitted to the registrar by what looks like a firm of lawyers, McCullough, Goldberger and Staudt LLP with a submitter reference “Mountbrook USA – Deed”. We know that Mountbrook USA is associated with Sean Dunne.

The  second document is a deed dated 18thOctober 2012 but which relates to a transaction on 23rd August 2012 between Scott Raissis on the one hand and an individual named as Kevin McQuillan or Kevin A McQuillan on the other hand where what appears to be the property at 1 Hidden Spring Lane is transferred from Scott Raissis to Kevin McQuillan for ten dollars and “other [undisclosed] valuable consideration”

The third document is a deed dated 18th October 2012 also but which relates to a transaction on 9th October 2012 where what appears to be part only of the property is transferred from Kevin McQuillan to a company Hidden Spring Lane One LLC for USD 1,355,400. Evidence of a subdivision of the property into two lots, one 0.7 acres, the other 0.9 acres, is shown on the map below obtained from US zoning authorities.

There may be other documents and there is reference to a further transfer on transactions affecting the land, a transfer from Kevin McQuillan to Hidden Spring Lane Two LLC on 9th October 2012 for USD 1,154,600. In other words, there was a subdivision of the property, and at this stage it is unclear if the buyer named by the MoS, Jim Sandling bought one or both subdivisions. There is certainly a coincidence in the purchase price cited by the MoS being USD 2.5m and the sum of the two transfers from Kevin McQuillan being USD 2.5m, but there is also a possibility that one subdivision only was bought for USD 2.5m and that the other has been retained.

The Mail gave the impression that the original buyer of the property in May 2011 merely demolished the existing colonial mansion on the site and cut down a few trees. That being the case, and the Mail estimates the cost of the “works” would have been USD 100,000, it would seem that a far more significant profit was generated on the property than USD 700,000 if only one subdivision was sold for USD 2.5m.

And who are Brendan O’Reilly and Kevin McQuillan? We don’t know on here at this stage though the Mail reported “Other documents led the MoS [Mail on Sunday] to an Irish contractor whose name briefly appeared as the property’s trustee. He agreed to speak on condition of anonymity. .‘I had no idea who the Dunnes were when we were introduced because I’ve lived in America since the 1970s,’ he said..‘I was asked to be the trustee. I wasn’t sure what that meant exactly, but I signed the documents at the lawyer’s office. Our working relationship on Hidden Spring Lane lasted about a month.’ “

So the chap speaking on condition of anonymity would appear to be Brendan O’Reilly and the MoS didn’t appear to challenge his version of events – is it an everyday occurrence in the US to be asked to be a trustee of a million dollar property?  We don’t know who Kevin McQuillan is, but “McQuillan” is certainly an Irish, or at least Gaelic, name.

The existence of the reference “Mountbrook USA” isn’t probative of the involvement of the Dunnes but it in the circumstances along with the cheques apparently signed by Gayle on the property, it certainly prompts questions by NAMA which is generally alleging shenanigans against Gayle.

NAMA is at present trying to pursue Gayle and Sean Dunne in the US courts with claims of improper transfers of wealth between husband and wife, effected so as to place that wealth beyond the reach of creditors, and with a €185m judgment against Sean, NAMA is certainly a creditor! The Dunnes deny NAMA’s claims and accuse NAMA of undermining their reputation. The latest is we wait to hear if the Connecticut Superior Court will entertain a fresh application from NAMA pursuing Gayle in what NAMA says would be a complex court hearing.

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With a price tag of GBP 40m (€50m) equating to GBP 400 (€500) per square foot, it is a whopping asking price for an office block in Belfast. But as the headquarters of Invest Northern Ireland – the equivalent of Enterprise Ireland on this side of the Border – the building is set to generate GBP 115m for its owner over a 25 year period.

Today, we learn via the BBC that the 100,000 sq ft headquarters of Invest Northern Ireland on Bedford Street in central Belfast is coming on the market through Northern Ireland agents, Osborne King – at time of writing, neither a listing nor brochure appears on the Osborne King website. The building is being co-marketed by ASM Accountants, says the Belfast Telegraph.  Robert Ditty of Osborne King is reported as saying “we anticipate keen interest from institutional and overseas investors. This is a positive step in terms of attracting inward investment into the Northern Ireland economy. As a showcase example of a public private partnership working successfully since November 2005 and an office occupied by Government, we anticipate achieving a price in excess of £40m”

The owners of the block are a consortium which comprises McAleer and Rushe – which appears to be one of NAMA’s healthiest developers – and a successor to Liam Carroll’s Dunloe Ewart called Dunloe (NI). Whilst Dunloe Ewart is massively insolvent and Liam Carroll is in the wars with NAMA despite his acknowledged cooperation with creditors, Dunloe (NI)doesn’t appear to have issues and Liam Carroll is apparently no longer involved with that company. The consortium have a company Bedford Street Developments, the accounts for which indicate that NAMA is one of its lenders.  The building was apparently completed in 2005 under a public private partnership with the NI government, under a umbrella company called MRDE Limited.

The Sinn Fein Member of the Legislative Assembly (MLA) for Foyle, Martin Anderson submitted a parliamentary question to the Northern Ireland Assembly in 2008 which led to the revelation that the development of the property is set to cost the Northern Ireland taxpayer between GBP115-125 between 2005 and 2030. And indeed it seems that it is the lease with the public sector agencies – Invest Northern Ireland and the Public Prosecution Service and the Northern Ireland Law Commission – which confers much of the value to the property. In addition to 100,000 sq ft of existing accommodation, there are 71 car parking spaces and there have been plans to build an adjacent office tower and a warehouse refurbishment .

Contrast the asking price here with the GBP 3.1m (€3.9m) actual sale price of the 25,000 sq ft Killymeal House in central Belfast in May 2012. Even compared with the 175,000 sq ft state-of-the-art State Street building in south Dublin Docklands which is close to being sold for €105m (or €600 psf) but with three acres of adjacent development land thrown in, this asking price looks impressive but appears to be supported by the leases in place with blue chip public sector agencies.

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Last week, the focus on bankers’ salaries and pensions intensified and unfortunately for the bankers, I don’t think their time in that news cycle sun has expired just yet. But this morning, we turn to NAMA and its salaries and perks.

In the Dail last week, the Fianna Fail finance spokesperson Michael McGrath asked the Minister for Finance Michael Noonan to provide the salaries including perks of the NAMA staff. And it turns out that 12 of the 227 NAMA staff have packages worth more than €200,000 per year. It should be stressed that the figures provided include not just basic salary but also employer pension contributions – running at a modest 5% of salary on average at NAMA according to information recently released – plus allowances and benefits. “Allowances and benefits” might include private health insurance and car allowance.

There is one NAMA person whose salary and benefits are greater than €500,000 per annum and the betting would be that this is Brendan McDonagh, the NAMA CEO whose basic salary is €430,000 though he has waived 15% of this in 2012 and is now earning €365,500. It’s quite a leap from €365,500 to over €500,000 it must be said and given the average NAMA pension contribution of 5%, the difference is unlikely to be accounted for by pensions. Though having said that, Mike Aynsley the CEO of the Irish Bank Resolution Corporation gets a contribution to his pension of 25% of salary.

There’s one staff member on €400,000 – €500,000 and the betting would be that this is John Mulcahy, NAMA’s most senior property man and member of the NAMA board.

There are two staff members on €300,000 – €400,000 and it is less clear who these might be, but Head of Asset Recovery, Ronnie Hanna and CFO, Donal Rooney would clearly be in the frame.

There are a further nine staff members on €200,000 – €300,000. Again, it should be stressed that these financial figures include pension contributions and allowances.

All NAMA staff whose salary exceeded €200,000 were asked in December 2011 by Minister Noonan to waive 15% of their salaries in 2012 or the portion over €200,000 whichever was lesser. All complied but apparently the request contributed to the decision of NAMA’s Head of Lending, Graham Emmett to resign. In April 2012, Minister Noonan made a similar request to the 30 staff at IBRC whose annual salaries exceed €200,000 and they told the Minister, who is the sole shareholder in 100% of the shares of IBRC, to get lost.

The comparison with IBRC is shown above, and IBRC’s figures are extracted from this press report as the PQ from Deputy McGrath doesn’t appear to be online.

The full parliamentary question and response are here:

Deputy Michael McGrath: To ask the Minister for Finance the number of staff that are on a total remuneration package including pension payments, allowances and benefits between €100,000 and €200,000, between  €200,000 and €300,000, between €300,000 and €400,000, between €400,000 and €500,000; and the number with more than €500,000 at the National Assets Management Agency..

Minister for Finance, Michael Noonan: The National Asset Management Agency has no employees.  Rather, under Section 42 of the NAMA Act 2009, the National Treasury Management Agency (NTMA) assigns staff to the Agency.  As of end-October 2012, some 227 staff had been assigned by the NTMA to the Agency.  The Agency reimburses the NTMA the costs incurred in assigning these staff and in providing other business and support services.

The legislation which established the NTMA in 1990 deliberately positioned it outside of the wider public service structures with the operational freedom to negotiate market-competitive salaries to enable it to compete with the private sector to attract and retain staff with specialist and highly marketable skills.  Under this business model, there are no general pay grades and no pay scale and all staff are on individually negotiated contracts.

Other than a small number of staff reassigned from other functions within the NTMA, Agency staff are employed by the NTMA on the basis of specified purpose contracts – their employment lasts for as long as their particularly skills and experience are required.  The total remuneration of NTMA staff assigned to the Agency, which is set out below in tabular format, reflects the fact that, given the nature of the Agency’s activities, this staffing complement is primarily composed of experienced professional staff with substantial private-sector experience.   The total remuneration delineated below includes gross salary, employer pension contribution and, where applicable, other benefits.  Agency staff members are subject to the Public Service Pension Deduction.

Total Remuneration Band            Number

Under €100,000                108
Between €100,000 – €200,000     106
Between €201,000 – 300,000       9
Between €301,000 – €400,000     2
Between €401,000 – €500,000     1
> €501,000           1

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