Archive for February 18th, 2010

NAMA has become a valuation altering “event” which must keep NAMA valuers awake at night. Today, top 10 developer Bernand McNamara says that the “unknown impact” of NAMA makes it impossible to establish what property assets are currently worth in the Irish market.

Add to that, general worldwide economic uncertainty and the lack of transactions have made it “impossible to establish any meaningful or appropriate valuations for property-related assets” according to Mr McNamara’s companies.  And given the prominence of Mr McNamara’s loans in the first tranche of loans being transferred to NAMA this must be causing not inconsiderable stress at NAMA.

Speaking as a former valuer, I would be delighted to see the methodology used in the first tranche of loans. In fact I would like to see the first tranche of loans reduced to under €1bn and then see the process openly reviewed to ensure oversight and best practice in what is rapidly becoming a very secretive organisation.

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No firesales here!

Finance Minister, Brian Lenihan (a man known to have a deep affinity to the politics of Northern Ireland) met yesterday with Stomornt Assembly Finance Minister, Sammy Wilson of the DUP and today sees the announcement of a NAMA working group to oversee issues affecting the 6 counties. Of note after yesterday’s meeting was Mr Wilson’s statement that there would be no fire sales of NAMA assets in the 6 counties. Indeed we know that residential property prices have been slowly picking up in Northern Ireland in recent months and the market there is certainly healthier than in the State.

What is a fire sale by the way? A fire sale is the sale of goods at extremely discounted prices, typically when the seller faces bankruptcy or other impending distress. The term may originally have been based on the sale of goods at a heavy discount due to fire damage. A fire sale may or may not be a closeout, the final sale of goods to zero inventory [from wiki].

And if there are to be no fire sales in Northern Ireland, is that a statement of policy in the State as well. So NAMA will not act to disturb existing property prices? Is that the implication? If so, that must surely signal competition “fixing”.

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The Irish Times has “established” (where is the public transparency in this project) the top 10 developers whose loans will first be transferred to NAMA, and has also established that loans from Anglo may get a haircut of 50% (again why are detailed valuations being secretly communicated by NAMA to some media and not the public?).

The report confirms that the first transfers will occur in “coming weeks” but notes that the EU has not yet granted approval or indeed responded to Sr Eugene Regan’s complaints. The first gross loans are estimated to be about €16bn of the €80bn total (that was an estimated €68bn plus €9bn rolled up interest last September).

The top 10 developers are reported as Liam Carroll; Bernard McNamara; Sean Mulryan of Ballymore; financier Derek Quinlan; Paddy McKillen, owner of the Jervis Street Shopping Centre; Treasury Holdings, which is owned by Johnny Ronan and Richard Barrett; Cork developer Michael O’Flynn; Joe O’Reilly, the developer behind the Dundrum Shopping Centre in Dublin; Dublin builder Gerry Gannon, co-owner of the K Club golf resort in Co Kildare; and Galway businessman Gerry Barrett, owner of Ashford Castle in Co Mayo and G Hotel in Galway.

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