Archive for June 23rd, 2010

Reportedly one of the NAMA Top 10 developers, Treasury Holdings which is owned by Richard Barrett and the colourful Johnny Ronan has seen the results published today of two of its main operational vehicles, the 67%-owned Real Estate Opportunites PLC, a public limited company incorporated in Jersey and REO Securities Limited,  100% owned by Real Estates Opportunities PLC and based in the Channel Islands. The accounts are for the 14 months ending 28 February, 2010 and set out an uptodate position of its dealings with NAMA.

The key points arising from the reports

  1. REO Securities Limited has had GBP 815m (EUR 991m at GBP 1 = EUR 1.2140) of loans transferred to NAMA in April and May 2010 – there is no indication of the NAMA haircut and indeed the company may not know what was paid by NAMA. It is not clear if additional loans in the Treasury Holdings group transferred to NAMA.
  2. The Directors of REO say that they have submitted the Group’s business plan to NAMA and  the “evaluation process is currently underway and the Directors believe that the plan will be approved following which NAMA will monitor the Group’s subsequent performance to ensure that we adhere to the targets contained in the business plan.  Whilst initial communications between NAMA and the Company support the Directors’ belief that NAMA will work alongside the Company’s other banks to provide support to the operations of the Group, no formal approval of the Group’s business plan has been received at this time”
  3. NAMA has waived loan covenants and has agreed a restructuring of the loans to REO “The Board is pleased to announce that the outstanding waiver relating to the NAV covenant breach on the Battersea Power Station bank facility of £226 million with Bank of Scotland and Bank of Ireland (now NAMA), has been approved subject to completion of legal documentation. New terms have also been negotiated (also subject to completion of legal documentation) whereby the facility is to be extended until August 2011”
  4. The Directors of REO make some assumptions with respect to its business plan “The renewal by NAMA of bank facilities in the amount of £815 million on broadly similar terms.  The agreement of NAMA to defer interest payments.       The provision by NAMA of working capital facilities.” These assumptions seem to be at odds with the statement by Brendan McDonagh, the NAMA CEO at the Oireachtas Joint Committee on Finance and the Public Service in April 2010 when he said “It is no secret for me to disclose that when the interest roll-up periods expire, my view – I believe it is also the view of the board of NAMA – is that we will not engage in further interest roll-up with borrowers”. Is cold reality taking hold at NAMA?
  5. Real Estate Opportunities incurred €4m of “management” fees payable to Treasury Holding in the 14 months to the end of February, 2010 and €14.9m of “development” and “project management” fees. All but €3.8m were paid. It is not known whether any of these fees were paid to Messrs Ronan and Barrett but there could be uproar if that was the case.
  6. Real Estate Opportunities wrote the value of its total property portfolio down by 42% for the latest reporting period from €1.9bn at December 2008 to €1.1bn at February 2010.
  7. Real Estate Opportunitues has disposed of its shareholding in CREO (its Chinese operation). However it is unclear whether Treasury Holdings have still shares in that company.

Unlike the directors of Becbay whose latest accounts were examined here a couple of weeks ago, the directors of REO do not begin the report with “The Directors have pleasure in submitting their annual report”, and even though the company has a net worth of minus €722m there appears to be a sense of confidence that the issues facing the company can be worked through.

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Okay the receiver for the 30-unit block is looking to sell all of them to the one buyer but as reported by the Independent today, for three 1-beds, three 3-beds and 24 2-beds, this appears to set a new low for apartments in Dublin – Martin Ferris is the receiver and HT O’Meagher Reilly are handling the sale here. A year ago this sale might have made headline national news but following on from the €70k apartments in Mullingar and the €130k homes in Carrickmines, it seems that the acknowledged vast oversupply is indeed coming to the market. Given the 50-100% increase in debt judgements in State courts in Q1, 2010 compared with Q4, 2009 as reported by the Irish Examiner yesterday, perhaps we will continue to see these “bargains” coming on to the market.

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