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Archive for January 3rd, 2011

Recent months have taught us to examine carefully the language NAMA uses in describing its operations – some examples:

(a) approving business plans – you might be forgiven for thinking that eight months after NAMA had taken over the first tranche of loans that there were agreed business plans. Statements like those of the NAMA Chairman, Frank Daly before Christmas “the Agency has now concluded its review of business plans from the top 30 developers which account for approximately €27 billion of the loans which have been acquired” or at the last NAMA appearance before an Oireachtas committee in November “we have received 30 business plans to date. We will have reviewed all 30 of those plans by the middle of December. The NAMA board is meeting this afternoon and 12 of those plans will have been reviewed by the board this evening and 16 plans have already been dealt with by the credit committee en route to the board. We are making good progress. The board is sitting for extra board meetings to deal with these business plans. We are determined to deal with all of them by mid-December”. As I understand it, not one business plan has been agreed, that is, signed by both NAMA and the developer. And I hope that next time NAMA talk to the mainstream media about “approved business plans”, the MSM delve a bit deeper than is their habit and find out precisely what “approval” means.

(b) taking action against developers – back in September, 2010 the media had a bit of a frenzy with reports (eg here and here) that NAMA was going to be pursuing 12 developers through the courts for €300m, I wrote on here “whilst many papers yesterday led on NAMA’s pursuit of €300m from 12 individuals (averaging €25m per person), I regard that as shaking a stick at the smaller developers whose loans will be transferred in later tranches” and indeed that now seems to be the case if yesterday’s report in Ireland’s Sunday Tribune is correct when it claims “the majority of the borrowers have returned to the negotiation table and legal proceedings have not now moved to the court stage”. To be clear NAMA itself has taken action against four development groups (Paddy Shovlin and the Fitzpatrick brothers and just before Christmas Paddy Doyle and Paddy Burke and Bernard McNamara companies). Of course action might also be taken by the NAMA banks directly (though at this stage, NAMA has taken over some €71bn+ of the €90bn target loans). So the next time NAMA make a claim about dragging developers through the courts, I hope the MSM delve into the detail and don’t allow themselves to be used as organs to threaten developers.

(c) claims that banks misled NAMA – this one promises to develop legs in the coming weeks amidst claims by the Committee of Public Accounts (CPA) that it feels it was “misled” by the NAMA CEO when he responded to questions about the information provided to NAMA by banks in 2009. Demonising the banks has been a great NAMA staple in 2010, starting at the NAMA appearance before the Finance and Public Service Committee at the Oireachtas in April 2010 when the NAMA CEO delivered the withering “however, our own detailed due diligence on a loan by loan examination has revealed a troubling picture of poor loan documentation, of assets not properly legally secured and of inadequate stress-testing of borrowers and loans — all born of a mindless scramble to funnel lending into one sector at considerable pace and of a reckless abandonment of basic principles of credit risk and prudent lending” but it was only after NAMA published its second business plan in July 2010 that the agency got stuck into the infernal banks with Frank Daly attacking the quality of the information provided by the banks. But the whole demonisation of the banks was elevated to a new step in November 2010 when NAMA was questioned before the CPA and for the first time allegations of criminal fraud arose and it seems that NAMA was not for disabusing anyone of the notion that there may well have been criminal aspects to the information provided by the banks to the agency. Reports before Christmas suggested NAMA was retreating from its allegations (or non-disagreement with allegations). Perhaps we might get clarity on NAMA’s position if, as seems likely, the NAMA CEO is hauled back before the CPA to explain his comments.

And then there are the claims about disposals of assets – the latest claim just before Christmas from the NAMA Chairman, Frank Daly being that “since March of this year [2010], NAMA has approved the sale of an estimated €1.6 billion in property assets held by NAMA borrowers” The confusion was probably kicked off by the NAMA CEO speaking at the Cantillon School of Economics in September 2010 when it was claimed that NAMA was at an advanced stage in the disposal of €500m of assets. There was then confusion about (a) whether NAMA was about to foreclose on assets or if the assets were being sold under NAMA’s auspices and (b) were the assets actual property or loans – remember that NAMA can sell loans to another party that is then entitled to collect on the loans. So what do we know?

(1) NAMA Top 10 developer, the Cosgrave Property Group is reported to have just sold one of their sites on London’s Oxford Street for GBP £95m (€110m). The site at 301-307 Oxford Street (pictured below) houses River Island and a number of smaller retailers/offices. The group has also had a one acre block on the north side of Oxford Street for sale for a reported GBP £220m (€255m). Details of borrowings behind these properties have not been made available and indeed the group is known to have been a major Ulster Bank (not a NAMA Participating Institution) so the properties may not be tied to NAMA (or indeed any lender).

(2) Another NAMA Top 10 developer, Swiss resident Derek Quinlan, has had a car park in London’s Mayfair on the market for some time. It seems that a sale which was in prospect a couple of months ago might have fallen through but that there are other bidders in the frame and the betting is that the site will be sold in 2011. It was on the market for GBP 180m (€210m).

(3) Although his loans have not yet been absorbed by NAMA, Paddy McKillen was reported to have sold a property on Old Bond Street for €18m.

(4) In the US, Anglo Irish Bank was reported to have sold a loan in respect of 225 West Washington Street in Chicago. Quinlan Private was one of the original borrowers and you would have expected this loan to have transferred to NAMA. Was it sold under NAMA’s auspices and the proceeds passed on to NAMA?

(5) Gerry Gannon’s share of the K Club and a 74-acre holding opposite the K Club in Straffan are apparently for sale under NAMA’s auspices.

So the next time the MSM is talking to NAMA about its disposals it might uselfully clarify (a) if the disposals are of loans or real property (b) a few details of the property in question.

UPDATE: January 13th, 2011. NAMA is reported to have stated that it expects 2-3 major commercial property  transactions before the end of March 2010 worth some €200m.

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