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Archive for the ‘Irish Property’ Category

Table of the Week

EurostatGDP 

This week, the European statistics agency, Eurostat published the latest GDP data for the EU and selected non-EU countries. Nine of the 27 EU countries are clearly in recession with two successive quarters of negative GDP growth, but as we know on here, Ireland too is in recession because although its change in Q4,2012 was officially logged as 0.0% or -0.0%, it is actually -0.047% which confirms a second quarter of GDP contraction.

Salaries of the Week

HowMuchCompetitionAuthority

This was the week that we learned the last accounts for the Irish Film Classification Office were for 2009 and that subsequent accounts hadn’t been filed “due to an oversight”. We learned this week that the latest accounts filed for Ireland’s woeful Competition Authority were for 2010 and are available here. No word on subsequent years. We learned that the average salary for the 46 staff in the Competition Authority, comprising four board members, 38 staff and four secondments from other Government departments was an impressive €68,600 in 2010. Furthermore, the relatively small operation ran up unspecified – no, not building or travel or printing or advertising – administration costs of €139,000 and IT costs of €104,000. Overall, the operation cost us €4.4m in 2010. Its outputs are less impressive, it certainly deals with notifiable mergers but I cannot see evidence of robustly rejecting a merger, ever. There are a tiny number of prosecutions for competition infringements, and yet, we continue to live in a State where medicines are several times more expensive than in the neighbouring jurisdiction, our lawyers are still the second most expensive in Europe after Moscow, our recession-racked economy still tolerates €500-1,000 per hour payments to professions. And don’t even get me started on consumer goods, from groceries to mobile phones.

Quote of the Week

“It really does make me ashamed of my government when they can get wages in the hundreds of thousands annually, but when one of the most important children’s wards in Ireland, for some of the sickest kids in Ireland, has to rely on charitable donations to buy a bucket of paint and a brush. That is one of the sickest things I have ever come across in my short lifetime here” 16-year old Kerry man Donal Walsh who lost his fight with cancer last weekend – in his own words he wrote about dealing with cancer, they’re worth a read here and here.

Rubbish of the Week

A month ago, amid widespread illegal dumping in the Gardiner Street area of Dublin, Dublin City Council was threatening not to collect rubbish from certain areas of the city and let the residents resolve the problem of illegal dumping themselves; how, wasn’t clear but it had hints of a call for vigilantism but in the end, DCC abandoned that hare-brained scheme but have now introduced another – over a week ago, they confirmed they were writing to local authority tenants demanding proof that they had paid for a waste disposal provider. And it seems DCC is even proposing to extend this new scheme to allow its officials knock on anyone’s door to demand proof of having engaged a provider.

Curse of Dragons Den of the Week

DBImageTwitter

The “curse of Hello” where full colour splashes of celebrity lives in the pages of Hello magazine, only to be soon followed by banana skins, revelations of peccadillos and tragedy, seems to have spread to the Dragons Den, the Japanese TV format created which was picked up by the BBC and latterly by RTE. In Ireland, we have seen Dragons Bill Cullen’s motor dealership and hotel operation fall from grace, and more recently Niall O’Farrell’s chain of formal wear and suit hire shops fall victim to the ongoing recession. In the UK this week, the Daily Mail suggested that one of the stars of the UK version of the show, Duncan Bannatyne was facing money troubles, though the scrappy Scotsman was quick to tweet that the Daily Mail story was untrue.

Table of the Week

OpennessIndex

This week, the NTMA produced its monthly “Ireland has turned the corner” presentation to investors with its laughable spin on an economy still in recession, with 14% unemployment, with retail sales declining (fast), with commercial property rents and capital values declining, with residential property declining, the NTMA still manages to appear positive. Its openness proxy is a good one – this adds together exports (X) plus imports (M) and divides the sum by GDP. In Ireland’s case, we are amazing compared to the other PIIGS, but this ignores the massive in/out flows from multinationals which is a unique feature of the Irish FDI-focussed economy. Anyway, good to know residential property rose for the first time since 2007…..

Old Media swan song of the Week

“Sarah McInerney of The Sunday Times acknowledged that the online version of that newspaper’s Irish edition which she said was known within the company as the “regional edition”, was “not doing well”.” So reported the Irish Times this week

We also had UTV’s management statement for Q1,2013 which noted that its commercial radio operations in Ireland (north and south) were down 8% in Q1,2013 compared to a year previously. That’s a worrying decline for a company that is well regarded commercially but more worrying was the statement “We believe  that we continue to outperform the market” which doesn’t bode well for competitors here, particularly RTE and Communicorp (Newstalk and Talk amongst others) and Landmark Enterpises (the Crosbie vehicle that has taken on the operation of local radio interests previously managed by TCH).

We also had Johnston Press’s management statement for Q1,2013 – you might ask where are the statements for Irish-owned companies but apart from IN&M indicating revenues were down 10% this year on last, we haven’t heard a mig from our own. Johnston Press publishes 12 local titles in Ireland – Donegal Democrat, Donegal People’s Press, Dundalk Democrat, Leinster Leader, Leinster Express, Leitrim Observer, Longford Leader, Kilkenny People, Limerick Leader,  The Nationalist and Munster Advertiser, Tipperary Star and The Echo in Tallaght. Although total revenues were down 11.4% in Q1,2013 from a year previously, it seems the decline is concentrated on advertising and that circulation revenue had held up.

Resemblance of the Week

ItsUncanny

Colourful Independent TD for Roscommon, Luke “Ming” Flanagan turned up at the Dail this week, a-la-Paris Hilton, with a tiny dog in tow. Julie, which could be a Scottish Terrier but could be some lovable Roscommon-Leitrim mongrel. Perhaps one of these days, the old media might run a feature of politicians and their dogs to judge if owners indeed chose dogs in their own reflection.

Parliamentary insult of the Week

SamuelJacksonImpression

“In truth I have to say that I am fed up to the back teeth with the foot dragging, the whinging, the stalling; sometimes, you might even say the attempt to politically posture on critical issues such as this; the begrudging, the bellyaching that you hear, the conditioning before statements can go out from colleagues. And I’m depressed listening to a tribe of Jeremiahs that infest the political process  and whose first thought is to attack any genuine attempt that is made for positive proposals. And those people of course have nothing to contribute themselves. And I also have to say that I get glum at the whited sepulchers who pontificate to us about a shared society and talk to us about harmony and consensus politics and yet, unless they are taking the lead themselves and are taking everything they want, they strain and stretch every sinew to abstain and obstruct what is going on. And quite honestly Mr Speaker, I think we have reached the stage that if we wait for the last person to board the train, the train will never leave the station“ Peter Robinson, First Minister of Northern Ireland, in the Stormont Assembly responding to criticism of the joint Sinn Fein/DUP “Together: Building a United Community

Let’s hope Peter’s grasp of the political challenges facing Northern Ireland is better than his grasp of the Good Book. The prophet Jeremiah may well have forecast doom-and-gloom but as it turned out, his predictions were accurate. And a day or two later, the TUV picked up on this when they issued a statement

“Yesterday the co-First Minister branded his critics in the Assembly “a tribe of Jeremiahs”. The image struck me as an exceptionally odd form of insult, particularly as the warnings proffered by Jeremiah proved to be accurate. Given the traffic chaos which is developing at the Maze it is obvious that the warnings of some Jeremiahs have been well founded.”

Tax Home Truth of the Week

“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing” Jean-Baptiste Colbert, finance minister under Louis XIV in 17th century

Okay, it’s not new but the general absence of hissing over the property tax – yes, there have been a few marches, a handful of occupations but the indications from the Revenue Commissioners is that the tax has been accepted far more widely than its predecessor, the household charge. This time around, the Government has firmly passed responsibility for the tax to the still-generally-feared Revenue Commissioners, it has a 50% discount in place for 2013 and despite it being a deeply unfair tax in many respects, it seems as if it is on track to be accepted by a considerable majority by the filing deadline – 28th May 2013.

Act of Transparency of the Week

In Uganda, a country with a land area three times that of Ireland, and a country to which we provide foreign aid, this week, they achieved a fully computerized Land Registry showing who owns what.  Amazing. In Ireland, we haven’t quite registered all property yet, and there is a sizable amount, particularly in south county Dublin, apparently, that has yet to make it online. So, you just have to wander up to the dusty Public Records Office on Constitution Hill in Dublin and pay your €15 for a photocopy.

Whitewash of the Week

NotCorruptUntilBlueInTheFace

The vehement disdain towards the “anonymous author” that blew the whistle on Garda malpractice in quashing traffic penalty points, was not well disguised. Nor was the anonymous author whom we’ve all known for some time was John Wilson. The report itself is here and there is a lengthy additional report on what the Garda practices are. Heads are still being scratched at how seven separate notices being quashed for the same family didn’t rise to the level of corruption. But mostly we wanted to know why the Gardai were investigating themselves when we have a perfectly good Garda Ombudsman set up for such investigations. Three Gardai face disciplinary action, the report will now be examined by the Oireachtas justice committee but the Garda Commissioner and Minister for Justice Alan Shatter are desperate to draw a line under the whole affair and calls by Transparency International for better protection of whistleblowers seem to have fallen on (the) deaf ears in Officialdom.

Response to debt demand of the Week

VewyVewySorry

And finally, Clare Dooley whose Twitter profile says she assists people suffering in the economic downturn provides a novel approach to demand letters from the banks.

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This afternoon in Dublin’s High Court, Mr Justice Iarflaith O’Neill ruled in favour of the colourful Johnny Ronan’s landlord company in a case against the tenant, the Irish Medical Council. Johnny’s company, Tanat Limited, co-owned with Kildare developer Peter Conlan had claimed that a lease on a property,  Kingram House  off Fitzwilliam Square pre-dated February 2010 when Upward Only Rent Review clauses were outlawed. Although the lease was technically entered into after February 2010, the judge today ruled that a series of exchanges in 2008 were sufficient to establish the existence of a lease then.

So great news for Johnny who will see the rent maintained at €820,000 even though the evidence shows the current market rent for Kingram House today would be €374,100.

The judgment from today is not yet online.

Elsewhere the Court Service indicates that there has not yet been any appeal by Johnny’s company Ickendel against a High Court ruling which saw Bewleys Oriental Cafe win the right to a current market rent rather than the 2007 rent which had been imposed on it. NAMA might have been called on to fund the appeal, and it might be the Agency decides to let this litigation pass. Last year. Johnny lost control over many of his prized assets when NAMA had receivers appointed to Treasury Holdings companies and subsequent attempts by Johnny to have the receivership overturned were unsuccessful. And more recently the Treasury Opera CMBS is ending up in the hands of investors who bought underlying loan rights.

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It says something about how atrocious Irish property companies are in that they have all singularly failed to replicate anything like the success of Allsop Space property auctions, and it really makes you wonder if they’re so dumb that they can’t operate a large scale auction, then how dumb are they in their provision of other services? How competitive are their valuations? How efficient are they at marketing? How good is their research?

Today saw the 11th Allsop Space auction in Ireland, and it was another stunning success with 88% of the Lots on offer sold at or after the auction. Although there were 126 Lots originally, 10 were withdrawn prior to today, two were sold prior to today which is a new development, and three were sold after the hammer came down with the reserve not reached. The success rate calculated on here is 88%. The total realized was €12,620,500 excluding the “Sold Afters” which was an average of 34% above the maximum reserves of €9,400,000.

Here are the results, you will find the links the Lot details here.

AllsopSpace15May13

The auction was again packed and at 3pm this afternoon, there were a few seats available but not many, the view here is that about 2,000 attended. There was a protest outside the Shelbourne Hotel at the start of the auction and there appeared to be more security in evidence than previously.

Two Lots were sold prior to the auction which is a new development and a request for comment has been made to the Allsop Space director of auctions, Robert Hoban, as previously Allsop Space had stressed that it would not sell Lots before the auction.

The maximum reserves of the 126 Lots was €16.3m and given the Maximum Reserves of the Lots sold today was €9.4m, that confirms that some of the unsolds were big. The 60 apartment development in Cavan whose Maximum Reserve was reduced today from €1.5-1.7m to €1.3-1.5m still didn’t sell. Nor did the period house on 51 acres in Murroe in county Limerick which has a reserve range of €425-450,000 but only reached €405,000 today.

Our friend Carol Tallon at Buyers Broker Ltd wasn’t tweeting highest prices for unsold Lots today so the above results are a little less useful than usual.

Other than that, a polished performance from Allsop Space; Gary Murphy was the master of ceremonies as usual, and although there was a dispute on one Lot, there was no significant protest from the floor today. Further analysis later, but there were actual residential yields there today of well over 10%, which indicates that residential prices may still be in for a correction, that or rents are set to reduce in some areas.

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This afternoon saw the publication of the April 2013 IPD Monthly Property Index for the UK. The IPD (Investment Property Database) index is the only UK commercial index referenced by NAMA’s Long Term Economic Value Regulations (Schedule 2) and is used to help calculate the performance of NAMA’s “key markets data” shown at the top of this page.

IPDApr13Summary

The Index shows that capital values were flat in April 2013, which which follows declines averaging 0.3% per month since December 2011. Prices reached a peak in the UK in June 2007 and fell steadily until August 2009 when a rally started. Prices then increased by 15% in the year to August 2010 but have since been declining and are down by 3.5% in the last 12 months.

Overall since NAMA’s Valuation Date of 30th November, 2009 prices have increased by 6.3%. Commercial prices in the UK are now 37.1% off their peak in June 2007. The NWL index  remains at 777.1 which means that NAMA needs to see a blended increase of 28.7% in property prices across its portfolio to break even at a gross profit level (taking into account the fact that subordinated bonds will not need be honoured if NAMA makes a loss).

The table below shows the three subsectors in UK commercial property with an index for all three at NAMA’s valuation date of 30th November 2009 of 100. Retail has performed worst whilst offices have been relatively buoyant whereas industrial premises like factories and warehouses have been relatively flat.

IPDApr13Detail

It was September 2011 – 19 months ago – when the UK index last saw an increase and really since August 2010, has been flat and declining.  The prediction for 2013 is for flat prices, though there is an expectation of increases next year and beyond (see below)

The UK economy is suffering difficulties almost every bit as challenging as those in the EuroZone and Ireland. Sure, they have their own currency and they’ve printed GBP 300bn of it in an economy with a GDP of 1.5tn, to help inflate their problems away. And yet they appear poised for a triple dip recession.  On 20th March 2013, the UK’s independent Office for Budget Responsibility published its latest fiscal outlook which forecasts GDP for 2013-2017 at 0.6%, 1.8%, 2.3%, 2.7% and 2.8% (but as with all economic forecasts in the long term, all forecasters forecast a peachy outlook!). Deficit:GDP is forecast for 2013-2017 as 6.8%, 6.0%, 5.2%, 3.5% and 2.3%. Debt:GDP is forecast in 2013-2017 at 94.9%, 98.6%, 100.8%, 100.8% and 99.4%. Inflation is forecast for 2013-2017 at 2.8%, 2.4%, 2.1%, 2.0% and 2.0%. It expects residential prices to increase 0.9%, 1.9%. 3.6%, 4.0% and 4.0% in 2013-2017 and commercial property to change -0.1%, 2.6%, 3.6%, 3.8% and 3.4%.

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General  
The reserved judgment in the Paddy McKillen
appeal hearing in London is due any day now
IBF mortgage drawdowns for Q1,2013 due
Central Bank arrears/repossessions Q1,2013 due
   
Monday 13th May 2013
Eurogroup meeting Brussels
   
Tuesday 14th May 2013
EcoFin meeting Brussels
   
Wednesday 15th May 2013
Allsop Space auction in Shelbourne Hotel, Dublin
IPD UK commercial property indices April 2013
(CSO) Agricultural Price Indices March 2013
(CSO) Industrial Disputes Quarter 1 2013
Educn & Soc Protection Oireachtas comm: rent allowance
   
Thursday 16th May 2013
(CSO) Goods Exports and Imports March 2013
KBC Ireland Q1,2013 results
ECB Governing Council meeting
Good Friday Agreemt Oireachtas comm: Narrow Water Bridge
   
Friday 17th May 2013
(CSO) Trade Statistics February 2013
   
   
Saturday/Sunday

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It’s Sunday evening, and you’ll enjoy this.

On Friday last, NAMA proudly published on its website the latest Euromoney guide to Ireland in 2013 where the Department of Finance, the NTMA, NAMA and the IDA each hold forth on how good things are in Ireland and how the recovery is well under way. No mention of the R-word at all, despite the country slipping back into recession according to the most recent GDP figures.

NAMA gets a page all to itself, and it really is a load of twaddle.

The regular audience on here will love the little box on the NAMA page which sets out how NAMA thinks it interacts with parties interested in buying its property and loans, and this is reproduced fully here

“NAMA will always engage with parties who have an interest in purchasing either a property that secures a NAMA loan or loans themselves and will actively facilitate engagement with its debtors/receivers. Individuals interested in buying a property that secures a NAMA loan are encouraged first to contact the owner or, in the case of a property subject to enforcement, the appointed receiver or administrator (a full listing of properties subject to enforcement is available under ‘Properties Enforced’ on NAMA’s website, http://www.nama.ie). Interested parties can also contact NAMA directly atinfo@nama.ie. In the case of both asset and loan sales, NAMA maintains a register of interested parties. When appropriate disposals arise, these parties are contacted by the relevant agents and given an opportunity to bid.”

For those of you who have contacted NAMA with multi million euro offers for loans or for property where there has been no response from the receiver/estate agent, the above may crack you up.

It is said that NAMA’s cash inflow to date of €11bn comprises asset sales of €7bn and “effective management of its assets” generating €4bn.

It is said that loan portfolio sales of €1.1bn are currently underway. Now, we know that NAMA has agreed the sale of Project Aspen which had a nominal value of €810m and sold for €195m, but the future of the €300m nominal value Project Club sale appears to be in some doubt.

For the first time, it is stated that NAMA intends spending €3bn on its portfolio, comprising the €2bn announced last May 2012 and a further €1bn which preceded that announcement. NAMA is to lend “at least” €2bn for vendor financing its asset sales.

NAMA refers to “recovery in Ireland’s commercial property market is already being supported by a substantial increase in investment by overseas funds attracted by the good yields available”. There may well be a recovery in transactions, but commercial property prices continue to decline with Q1,2013 down between 0.6-1% on the previous quarter, and rents down a stonking 3% in those same three months.

With respect to the IBRC assets which NAMA is to take over when the Special Liquidator sells as much as they can at prices in excess of an independent valuation, NAMA says that “depending on the volume of loans sold by the special liquidators to third parties, this could increase NAMA’s balance sheet by 50%” At the end of 2012, NAMA had balance sheet assets of €27.3bn, liabilities of €26.9bn and equity of €0.4bn. At June 2012, the latest date for which we have accounts for IBRC, the loan assets were booked at €16bn after provisions.

The report concludes “Brighter prospects for the property sector, twinned with NAMA’s successful track record since 2009, leave NAMA chief executive Brendan McDonagh confident about the agency’s prospects” What is omitted is the fact that both residential and commercial property are down 27-32% since November 2009, NAMA’s valuation date, and that according to the latest indices for both, prices are still declining. NAMA racked up a loss of €1.1bn in 2010, its first year of operation and is still nursing a €0.7bn cumulative loss. As Brendan told his Spanish audience last week, “the Irish market is very difficult, the economy is taking longer to recover than anybody expected and the financial institutions not in Nama are deleveraging as well. It’s a very competitive marketplace”

Euromoney Research Guides are published by an independent company, but this one is “published in conjunction” with the Department of Finance, the NTMA, NAMA and the IDA.

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Where: Shelbourne Hotel, St Stephen’s Green, details here
When: Wednesday, 15th May, 2013 starting 10.00am (auctioneer announcements from 9.45am)
What: 125 Lots of residential, commercial and development property. The online catalogue is here. 38 commercial and investment Lots (with €10m max reserves) and 87 residential and land Lots – 55 houses, 21 apartments (Note as of this morning, four Lots have been withdrawn).
How much: Maximum reserves of €16.3m. Maximum reserves are an Allsop Space innovation and mean a price on a Lot which if met or exceeded at the auction, then the winning bidder is guaranteed to get the property. The actual reserve might be lower than the maximum reserve. It’s not that complicated! However for this auction on Wednesday, Allsop Space have introduced a  new concept for some of the Lots, a “reserve range” about which Allsop Space says the “reserve is guaranteed to be set within the two figures, giving the buyer a better indication of where the seller’s bottom line will be”

AllsopSpace15May13

Estate agents are generally reporting that the residential market has been quiet since the start of 2013, but that there is strong interest in commercial and development property which is being converted into actual sales. Note this is an assessment on activity, price changes depend on property type and location, and reporting is mixed on that front – prime commercial property with new tenancy leases seem to be increasing in value, Dublin houses appear to be stable, most commercial property is still declining, and prices nationally including houses in some parts of Dublin are still declining though at a slower rate than previously – that’s all based on anecdote, the latest residential indices from the CSO are here, the latest commercial indices are here, Ireland doesn’t have development property indices but anecdote indicates there have been declines of 90%-plus from peak.

This coming Wednesday, we’ll see the 11th Allsop Space mega auction, a series of auctions which have transformed the business in Ireland and against which no Irish operation has so far held a candle – BTW has being doing a decent job on a smaller scale on the other side of the Border. The Allsop Space auctions have the highest standards of transparency with online webcasting and live online prices, and the venue again is the Shelbourne Hotel which at the opening at 9.45am on Wednesday is again expected to be packed with standing room only.

The Lots are again a mix of residential, commercial and development and as in previous auctions are scattered across the country with just 33% in Dublin. Just over half of the property is income-producing. There is an increasing emphasis on commercial property and in this auction, Allsop Space have modified their reserves for some commercial property, it says to give a better guide price.

Highlights includes

(1) McDaniels pub complex in Brittas Bay, Dublin. The 9,000sqft pub, restaurant and 10 bedroom accommodation comes complete with a holiday village of 16 chalets and 18.75 acres with sweeping views over the Irish Sea.  The Reserve Range is €625,000- €675,000.

(2) Farnham Court, Farnham Road, Cavan Town (pictured above).An entire development of 60 apartments located opposite Cavan General Hospital; 2 x freehold blocks of apartments, comprising 30 apartments each.  25 are currently let producing €127,000 per annum.  Reserve Range: €1.5 million – €1.7 million.

(3) Shopping Centre, Cardiff Bridge Road, Finglas, Dublin 11.10 tenanted retail units, all fully let with a rental income of €251,993 p.a. Some tenants dating back to the 1970s and 1980s.ReserveRange: €1.2 million – €1.3 million.

You can follow entertaining and informative commentary on the auction from Carol Tallon of Buyers Broker who will be tweeting here.

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