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Archive for January 23rd, 2013

News this evening that the 438-room LaGuardia Aiport Marriott in New York state has been sold by AIB and another lender, Capmark to Rubicon Companies, a Connecticut real estate investment company. The hotel was originally owned by RLJ Lodging Trust, a company you won’t be familiar with and was subject to an AIB loan which was foreclosed.

The sale price has raised some eyebrows in the New York real estate community. At a sale price of USD 22m ( €17m) or USD 50,000 per room for a hotel which boasts 80% occupancy and nightly rates of USD 159, it looks as if AIB has taken a bath on the transaction – the hotel was originally bought by RLJ from LaSalle Hotel Properties for USD 69m in 2008. According to the Wall Street Journal, the average sale price per room for New York hotels is USD 163,130.

AIB and Capmark were represented by Cushman and Wakefield.

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British commercial property is down almost 40% from peak, a fact we sometimes overlook in Ireland when we are busy beating ourselves up. This decline has been masked by the relatively robust performance of the London market, where a lot of Irish-bought property has been sold off since 2009 – NAMA has been very active across London. But today, we are reminded that outside London, it is still grim with news from the UK’s commercial property portal, CoStar that NAMA developer, Alanis Capital has sold its landmark property, the 136,000 Met Quarter shopping centre in Liverpool for just GBP 21m (€25m) which is a whopping 76% less than the GBP 87m paid for the property in 2007.

The purchaser was Columbus UK Real Estate Fund. CoStar say the yield is 8.4% and that the price works out at GBP 154 (€183) psf.

Alanis is owned by the McCormack family who featured on here recently with news that NAMA is cutting a break to a company in which they have an interest, and is allowing rent arrears on hotels to be paid back over five years. Alanis was founded by John McCormack who runs the business with his sons, Alan, Brian and Niall. It is not clear if this building was subject to a NAMA loan or if NAMA had in fact any involvement in this particular sale.

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As NAMA gets stuck into its asset management phase, we should be coming across far more individual properties where the Agency is deploying one of its five strategies (1) sell (2) rent (3) develop (4) mothball and (5) demolish. Of course, these five strategies will be refined with third party risk-financing and the “sell” might be of the actual loan or the underlying property.

You can’t really improve on Jack Fagan’s report in today’s Irish Times (assuming all the facts and claims are correct). He reports that part of Bernard McNamara’s former portfolio on Grafton Street is being developed, specifically two adjoining buildings at 57/58 Grafton Street are being merged so as to give a flagship 8,000 sq ft footplate. There will be two upper floors of offices as well. The cost of the development is put at €1.5m.

What about the economics of it? Apparently Bernard bought the two buildings as part of his grand “Monopoly style” design to own a new street in central Dublin which would be built between Grafton Street west to South William Street. The purchase price is reported to have been €25m. It’s not known what NAMA paid for the loan, but it had receivers, RSM Farrell Grant Sparks appointed as receivers.

It seems that NAMA might be reacting to the paucity of larger footplate outlets on Grafton Street – if you’ve walked down that street recently, it ain’t Bond Street with newsagents, juicebars, sandwich shops, mobile phone shops, fast food outlets, gift shops and other low-rent outlets. There are at least two vacant units also, Korky’s old store at 47 Grafton Street and an adjoining unit. The thinking behind NAMA’s development is that a large footplate store might attract a flagship retail outlet, Boots is mentioned.

The enlarged shop should rent for €750,000 or just under €100 psf reports Jack Fagan and Savills will be marketing the property. So the strategy is to develop and rent (and hope capital values recover to enable a sale later on).

NAMA has committed to investing €2bn in its properties in the four years up to 2016. This is on top of other working capital advances. So far, we know about NAMA funding the Bailey brothers’ Charlestown shopping centre in Finglas, the Cosgraves’ Dun Laoghaire Golf Club, but we are all waiting to hear if NAMA will take the plunge and commit to develop a 100,000 sq ft plus office in the city centre.

UPDATE: 3rd April, 2013. News this afternoon via the Daily Business Post that Savills is offering the HMV store on Grafton Street for rent at €1m per annum. HMV went into receivership in January 2013, and the 19,000 sq ft premises is said to be the biggest retail footplate presently available on Grafton Street. The rent works out at €53 psf and there was talk recently that Hilco, the Dublin based company that took over the remnants of HMV would try to renegotiate the rent at €700-800,000 (or €37-€42 psf).

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The new property tax that will take effect from 1st July 2013 was rushed through the Dail before Christmas, with the debate about its many and draconian provisions cut farcically short – in the end there were about three minutes per proposed amendment allotted for debates, and it was a pantomime display of democracy in action to see a Budget announcement one day, an expert report (which had been sitting on a minister’s desk for six months) published the next day and the next day still, 70-pages of new legislation.

In the rush, you might have missed some of the detail of the new household charge. And you might not be very pleased to learn that large country piles, and perhaps a few urban manors also, will not have to pay the tax on the value of so-called “amenity land” in excess of one acre.

Take the home on Shrewsbury Road in Dublin which was associated with the Dunnes, Sean and Gayle. “Walford” was bought for €58m at the height of the boom and was placed on the market with a guide price of €15m in 2011. It is understood that it still hasn’t sold. How much is it worth for property tax purposes? Difficult to say, but the property does have 1.5 acres of grounds. What we do know is the property tax will only apply to the first acre. As for the other 0.5 acre, that won’t be taxed at all.

Now take the country manor of embattled health minister James Reilly and his wife, Dot. Loughton House – pictured here – in Offaly is said to have 150 acres of amenity land, mostly woodland and gardens. How much will the man who has recently graced Stubbs Gazette have to pay in tax on the 13-bedroom mansion and surrounding land? Difficult to say, but what we do know, is that he will only have to value the sprawling estate as if it had one measly acre of amenity land.

In the Dail this week, the Minister for Finance Michael Noonan responded to questions from the Independent Kerry TD, Michael Healy-Rae and the Sinn Fein finance spokesperson Pearse Doherty. Minister Noonan did confirm that tennis courts are regarded as structures that need to be valued, and presumably outside swimming pools will be similarly treated. But if your home has private lakes, lawns, gardens, woodland only the first acre will be taken into account for valuing your property for the property tax.

Fair?

The full parliamentary questions and response are here.

Deputy Michael Healy-Rae: To ask the Minister for Finance the reason persons are now being told that private homes will now have to take into account the amount of grounds around them when valuing them for the profile of property tax; and if he will make a statement on the matter.

Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm that only the first acre of amenity land appurtenant to residential property, for example, private lakes, gardens, unproductive woodland and private tennis courts with an overall total area of in excess of one acre, will be subject to the new property tax to take effect from 1 July 2013 and that any excess over one acre will be disregarded for the purposes of calculating the value of the residential property for the purposes of levying the new property tax.

Minister for Finance, Michael Noonan: I propose to take Questions Nos. 202 and 218 together.  They both relate to the curtilage of a residential property and how this is to be taken into account for the purposes of valuing the property for Local Property Tax purposes.

A residential property is defined in the Local Property Tax legislation to include not just the dwelling house itself but also any other buildings or structures and any land that, in a broad sense, belongs with the dwelling house and that are enjoyed as an amenity rather than used for a commercial purpose.  These are regarded as an intrinsic part of the dwelling house. Such buildings or structures would include, for example, garages, sheds, outhouses, greenhouses and tennis courts.  Land would include driveways, yards, gardens, woodland and lakes.  Thus, in the case of a farmhouse, any land used for farming purposes will not be included in the chargeable value of the farmhouse.

There is no limit placed on the extent of the area that is occupied by buildings and structures, regardless of their distance from the dwelling house. However, the extent of any land that is to be included in the chargeable value of the residential property is limited to one acre.

UPDATE: 28th January, 2013. Another person who will be relieved to hear that amenity land will be restricted to one acre for valuations for the purpose of assessing the new property tax, will be scion of the country’s premier beef baron, Laurence Goodman junior. Laurence is son to 76-year old Larry Goodman and is reported by the Sunday Times to have obtained planning permission to extend his property at Castlebellingham in county Louth. The present property was bought for €355,000 but there are plans for a massive extension for garage, accommodation and machinery storage. There are eight acres of amenity land which will be planted with trees, and there will even be a new footbridge over a river to connect with the adjoining 700-acre estate of his father at Braganstown House.

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“This Saturday, January 26th, Charleville Park Hotel 8pm (sharp): Open meeting with Constantin Gurdgiev, Michael Taft, Declan Ganley, Luke Ming Flanagan, comedian Abie Philbin Bowman and others, including one major surprise speaker. Free admission, all welcome.

January 27th, week 100 march, Ballyhea at 11.30am, then Charleville at 12.30pm.” This weekend’s schedule for Week 100

On Monday last, we finally got to experience what a guest speaking uninterrupted for three minutes on the “Tonight with Vincent Browne” show, felt like. And, after Diarmuid O’Flynn, campaigner and an activist behind the Ballyhea/Charleville bank bailout protests, had finished explaining the reason why they protest, the often-grumpy Vincent could only sigh that there wasn’t anything that he could disagree with. [The show can be viewed online here, Diarmuid’s contribution starts from 19:30]

This weekend, the Ballyhea/Charleville protesters will be marking a milestone they never wanted to see – it’s been two years since they started a weekly protest, 15 minutes marching, dignified, a few banners, family friendly. They’re protesting at the colossal transfer of money from banks which we have bailed out to bondholders who had previously provided loans to those same banks.

Since the first march, the protesters – originally from the parish of Ballyhea 10 kms south of Charleville in Cork – have joined with like-minded protestors in Charleville to march week-in, week-out, in rain, hail or shine. But the marches themselves have only been part of the protest. There has been a massive online campaign to inform and educate. They have cycled, ran, walked, crawled from the hills of Ballyhea to Leinster House, and as they marched down O’Connell Street to Government Buildings, even the Gardai who were concerned at first saw who they were and what they were about, and gave them an escort to Leinster House.

They’ve fasted, wrote songs, produced videos, held sit-down protests (pictured below), flew to the ECB headquarters in Frankfurt where they held a protest (pictured above), inveigled their way onto the Vincent Browne show twice, marched across Leinster, Munster, Connacht and Ulster and spent a huge amount of time entertaining, informing and educating the media, domestic and overseas, about the utter scandal of a country in financial distress, in an IMF programme and dependent on borrowing to pay for services as we adjust from the banking crisis, that at this same time, we are remitting tens of billions out of the country to lenders to those failed and utterly bust banks.

sitdown

This weekend, there will be an evening and morning of events to mark the 100th week of their protests. On Saturday evening, you can meet well-known economists Constantin Gurdgiev and Michael Taft – some might say they represent two ends of an ideological spectrum but not when it comes to the bank bailout – inventor and Libertas chairman, Declan Ganley, Independent Roscommon TD, Luke “Ming” Flanagan, comedian Abie Philbin Bowman and others, including, say the organizers “one major surprise speaker” The event will be held at Charleville Park Hotel and will start at 8pm (sharp).

On Sunday, they’ll be doing what they have been doing for 100 weeks – as Red in the Shawshank Redemption might have said “100 weeks, Jesus, when you say it like that” – and they’ll be holding two marches, one in Ballyhea at 11.30am and then, one in Charleville at 12.30. International media has already confirmed it will be there covering the marches.

They’re not looking for your money, but they would be grateful for your support. They’re just ordinary people – employed, unemployed, employers – making a stand, and perhaps a difference.

I leave you with the words of lead-organiser Diarmuid O’Flynn

“A very simple question for our ‘negotiators’ in Europe; when everything is wrapped up, when they’ve succeeded in extending the debt payments so that the burden is shared with our kids and their kids, how much of the debt burden will have been shared with the banks, with the EU, with the ECB, by how much will the remaining €26bn of Promissory Notes and the €41bn owed to the ECB have been reduced? Answer: €0. If you want it to the nearest cent, 0c.

This is NOT our debt yet our government isn’t asking for a single cent of write-down. If you’re happy to burden-share with your kids, then don’t complain about the consequences we’re all now suffering; if you’re not, come march with us. Know this: if you’re not fighting this injustice you’re facilitating it.

I’m appealing especially to all those who have marched with us at some stage but who, for whatever reason, haven’t been with us every week, to make a special effort for this Saturday and – especially – for this Sunday.

Thank you, Diarmuid O’Flynn”

[Notes:

Details of Week 100 can be found on Facebook here.

You can follow one of the lead-organisers, Diarmuid O’Flynn on Twitter here.

There is a campaign blog here and details of all bonds payable in Irish banks here

If you’re looking for accommodation in Charleville for the Saturday night, it is hoped to post details here soon.]

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Yesterday’s issue of Iris Oifigiuil is still not online, but a copy has been kindly provided by the Office of Public Works and can be downloaded here. It reveals that NAMA has had receivers appointed to two new companies

1. O’Shea’s (Cork) Limited, directors Patrick O’Shea (76), Michael O’Shea (44) On 18th January, 2013, NAMA had Stephen Tennent and Gearoid Costelloe of Grant Thornton appointed as receiver to assets subject to a loan between AIB and O’Shea’s.

2. Oyster Developments (Cork) Limited, directors Sheila Crowe (57), David Crowe (56) and owned by Oyster Developments Limited (91%) and David Crowe (4.5%) and Sheila Crowe (4.5%) – Oyster Developments is owned by owned by David and Sheila Crowe. On 18th January, 2013, NAMA had Stephen Tennent and Gearoid Costelloe of Grant Thornton appointed as receiver to assets subject to a loan between AIB and Oyster. Last October 2012, NAMA obtained €24m judgments in Dublin’s High Court against David Crowe and Oyster.

Remember you can see the list of NAMA’s enforcement actions here and in this regularly updated spreadsheet.

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