Archive for April, 2011

Figures released by the Central Bank of Ireland (CBI) this morning for the month of March 2011 show that the flight of deposits from Irish banks shows no sign of slowing down. From an Irish perspective, possibly the most significant figure to watch is the total of private sector deposits in the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS). The total which represents businesses and households fell to €106.3bn in March 2011 from €108.6bn in February 2011 and is now down €23bn from a year ago, €11bn since the IMF/EU bailout in November 2010 and €2.3bn down over the course of just one month. The CBI and ECB continue to provide substitute funding for Irish banks which replaces this flight of deposits and Irish banks continue to provide extensive State-backed guarantees on deposits. It remains to be seen if the pace of decline in deposits slowed after the bank restructuring announcements made after close of business on 31st March, 2011 – Minister Noonan indicated the early signs were encouraging but since then our sovereign bond yields have sky-rocketed again.

So, looking at the deposit figures produced by the CBI. First up is the consolidated picture for all banks operating in Ireland including those based in the IFSC which do not service the domestic economy.

Next up are the 20 banks which do service the domestic economy and include local subsidiaries of foreign banks like Danske, KBC and Rabobank. There is a list of all banks operating in Ireland here together with a note of the 20 that service the domestic economy.

And lastly the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS)

(1) Monetary Financial Institutions (MFIs) refers to credit institutions, as defined in Community Law, money market funds, and other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs, and, for their own account (at least in economic terms), to grant credits and/or to make investments in securities. Since January 2009, credit institutions include Credit Unions as regulated by the Registrar of Credit Unions. Under ESA 95, the Eurosystem (including the Central Bank ofIreland) and other non-euro area national central banks are included in the MFI institutional sector. In the tables presented here, however, central banks are not included in the loans and deposits series with respect to MFI counterparties.

(2) NR Euro are Non-Resident European depositors

(3) NR Row are Non-Resident Rest of World depositors (ie outsideEurope)


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Take a look at the recent history of the financial performance of the Discretionary Fund in our National Pension Reserve Fund (NPRF), taken from the 2009 Annual Report

The Discretionary Fund is to be distinguished from Directed Investments which are investments the NPRF is directed to make by the Minister for Finance and have particularly applied to recent investments in the banks.

Add in the 11.1% return in 2010 on the Discretionary Fund and we have a simple total return of 45.9% over 10 years or a simple average of 4.59%. Hardly spectacular but we are assured by the NPRF that it has outperformed the average of private Irish pension funds during that period.

So a simple average return of 4.59% per annum. Yet this morning, the return on our 3-year sovereign bond is 12.4%. Sovereign bonds are one means by whichIreland borrows money so that it can fund the annual budget deficit (the difference between what the government takes in tax less what it spends, mostly on the public sector and social security). There has never been a suggestion, not even by Sinn Fein who possibly take the most contrarian view on bonds, that we should default in any way on our sovereign debt. That being the case, you might have thought that whatever funds we have left in the NPRF might be more productively used in buying our 3-year bonds (I have chosen three years because it is medium term debt – longer and shorter term funding is generally yielding returns in the same ballpark). After all, we would see a guaranteed return which was some 200% more than the simple average return achieved by the NPRF in the past 10 years.

The Irish Independent today reports thatGreece has been doing exactly as suggested above – buying back its own bonds, to the tune of €2.3bn since the start of this year. The Independent goes on to report “last night, National Treasury Management Agency sources said thatIreland had not made any such purchases this year.” It is unclear, to an extent, how much cash the National Treasury Management Agency (NTMA, responsible for managingIreland’s debt and associated functions, including the oversight of the NPRF) has to play with at present. Our Minister for Finance, Michael Noonan seems to be performing the dance of the seven veils with recapitalizing the banks, which our stress tests last month showed would require €24bn. Possibly the Minister sees delaying the injection of the €24bn as one of the few remaining aces in Ireland’s hand as the country seeks to renegotiate the interest rate and terms of the bailout funding. However it would seem that we have a few billion euros available, at the very least.

So at the current rates, should the NTMA be buying Irish bonds? If not, at what rate does the purchase of Irish bonds become irresistible? 15%? 20%?

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The rationale for the decision by NAMA to appoint accountancy firm Grant Thornton as receivers to companies controlled by NAMA Top 20 developers, Ray and Danny Grehan, is slowly becoming apparent. Yesterday the Irish Independent claimed that NAMA had tried to install a non-executive chairman to Glenkerrin as a condition for the continued co-operation from the agency. And today the Irish Times reveals the identity of NAMA’s man – Harry Slowey (pictured here). The reporting suggests the Grehans were not happy with the appointment though it seems the matter did not get as far as to be discussed by the Glenkerrin board, Glenkerrin being the flagship company owned by the twoGalway developers.

Harry is a fellow of the Instituteof Chartered Accountants in Ireland. He is currently the chairman of Barnados charity in Ireland. He was a director of Bank of  Scotland (Ireland) for 13 years until he stepped down in 2006. He has held “senior positions” in the Guinness Peat group and KPMG. He is currently a director of Dublin-based financial services company, FinanceOne. He is a non-executive director of the Thornsett Group, the Irish owned property development group, which in 2006 had schemes in development valued at €400m inIreland, theUK and Belgium.

The NAMA tactic of forcing developers to employ a NAMA-selected individual slipped below the radar on here. In January 2011, the Irish Times reported that NAMA might seek a role in approving the appointment of staff at developers’ companies, but that seems to be weaker than its present position of apparently forcing the appointment of a specific individual.

Presumably at the root of the NAMA tactic is the desire to ensure that NAMA’s financial interests are protected. In the Grehan case, it seems that in addition to the reported €650m currently owing by the brothers, there was a request for additional funding by the Grehans from NAMA to complete an extension to the Crowne Plaza Hotel in Shoreditch in east London. So NAMA has a very clear interest in ensuring the Grehans delivered on whatever plan was agreed.

NAMA’s reported choice of the role of “non-executive chairman” for their appointment seems puzzling as chairmen are typically removed from all but the most significant decisions of the company. Why didn’t NAMA seek appointment to the Finance Department or an executive directorship? Also puzzling is how NAMA justifies the appointment of any individual unless there has been some competition for the role.  And as there was no advertisement for the role on the NAMA website, how can NAMA ensure it has secured the best person for the role?

UPDATE: 29th April, 2011. A NAMA spokesperson has stated that the appointment of Harry Slowey as chairman was in fact agreed by the Glenkerrin group, which is at odds with the reporting in this morning’s Irish Times. It is also worth pointing out that FinanceOne where Harry is presently a director has an existing relationship with NAMA. According to NAMA’s tenders, the agency appointed Finance One (sic) Limited to provide services in connection with the review of developers’ business plans. This is confirmed on the FinanceOne website which says “FinanceOne Ltd has been appointed to a panel for the provision of Advisory Services in connection with the review and evaluation of Borrowers’ Business Plans to the National Asset Management Agency (NAMA).”

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The Jones Lang LaSalle (JLL) report published yesterday showed that both capital values and rents were still declining in Ireland, though based on the experience of one quarter, the declines were moderating. There is a competing commercial property series for Ireland produced by Investment Property Databank (IPD) and the Society of Chartered Surveyors in Ireland (SCSI, the newly merged unit which brought together the old Society of Chartered Surveyors and the Irish Auctioneers and Valuers Institute) and it has been published this afternoon and is available here. This blog uses the JLL reporting to produce the NWL Index at the top of this page because it is usually published before the SCSI/IPD’s. Both series are referred to in NAMA’s Long Term Economic Value Regulations (Schedule 2).

The SCSI/IPD index confirms prices are still dropping, at 2.3% overall for the quarter which ended on 31st March, 2011. This compares with JLL’s own reporting yesterday which suggested prices were down 1.5% in the quarter. I haven’t tracked the SCSI/IPD index historically but I believe it would show we are now down by ~62% from peak, compared with 61% with JLL’s index. So over time, both indices show a strong correlation with each other.

The SCSI last week published its Quarterly Commercial Property Review which reflected the views of its members on aspects of the commercial property market. The Review is a private publication for SCSI members and has been monitoring the market for the past five quarters. It showed that overall transactions volumes are dropping, as are enquiries. Vacancy levels continue to rise. Lease lengths are falling which might be considered good news for commercial tenants but inducements are also coming down. Of the three basic commercial segments (office, retail and industrial) it is the office segment which looks the most positive in the sense of transaction volumes increasing. Overall it paints a sector still facing challenges. And with an anaemic economic environment and uncertainty over Upward Only Rent Review legislation, it seems that the sector will remain challenging for the next quarter or two at least.

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Although the advertisement is not currently showing on the NAMA website under its recruitment section, the Irish Independent today reports that NAMA is, in fact, recruiting an unspecified number of “forensic managers and analysts” whose role will be to “verify and substantiate the credit standing of NAMA debtors”. The role will also involve liaising with unspecified third parties.

The roles will be based in Dublin and the principal duties are understood to include undertaking and overseeing “forensic and investigative searches to verify debtor credit positions”. The person specification for the role says that candidates are “likely to have a minimum of 3-4 years’ investigative/forensic experience”. Any prospective candidate must comply with section 42 of the NAMA Act which says:

“(2) Before employing or otherwise engaging a person to be assigned to NAMA under subsection (1), the NTMA shall ascertain to its satisfaction that the person—
(a) is of good character and has not been convicted of any offence likely to render him or her unfit or unsuitable to perform the duties that the person is required to undertake or is likely to be required to undertake,
(b) has not been disqualified or restricted from acting as a director under the Companies Acts, and (c) has no material conflict of interest, whether actual or potential

(3) Before the NTMA assigns a member of its staff to NAMA under subsection (1), the NTMA shall ensure that he or she provides a statement of his or her interests, assets and liabilities to the Chief Executive Officer of NAMA and the Chief Executive of the NTMA in a form that the NTMA specifies”

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News today that the Central Statistics Office (CSO) in Ireland is to start producing a new monthly house price series, will be welcome in a country where there is a dearth of real information on actual sales prices. The new series will be unveiled on 13th May, 2011 and will reportedly reveal data stretching as far back as 2005.

Details of the new house price series

(1) It will use data on mortgage draw-downs reported by eight financial lenders under Section 13 of the Housing (Miscellaneous Provisions) Act of 2002

(2) It will exclude cash transactions, though the CSO plans to include in the monthly release detail on the overall size of the residential property market based on Stamp Duty data supplied by the Revenue Commissioners

(3) The index will be hedonic, that is, it will take account of changes in price on a like-for-like property basis. The opposite of hedonic in an Irish house price series is the information published by the Department of Environment Heritage and Local Government which simply takes the sales prices of all property sold and divides that by the number of transactions to give you an average house price!

(4) There will be a monthly national index as well as three sub-indices (a) Dublin Houses (b) Dublin Apartments and (c) Rest ofIrelandHouses and Apartments

There is indeed a dearth of price information in Irelandwhich is preventing price discovery in what has been the collapse of an almighty residential property bubble. It is encouraging that NAMA is calling for the rapid implementation of a house price register , the legislation for which is wending its way through the Oireachtas at present but at a very slow pace.

The following are the current sources of house price information in Ireland at present

(1) Permanent TSB/ESRI quarterly mortgage-derived average prices. It’s hedonic, produced within a month of the quarter end but only applies to less than 4% of the mortgage market and excludes cash transactions.

(2) Department of Environment Heritage and Local Government series which is produced six months after the period end, isn’t hedonic but is apparently based on all mortgage transactions.

(3) DAFT.ie and Myhome.ie produce quarterly series based on asking prices from their property marketing websites.

(4) Sherry FitzGerald produces a quarterly series based on its valuation of a portfolio of properties.

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Britain’s Property Week today reports that NAMA has appointed property receivers to a major property in London’s Leicester Square. The property is the present site of the Odeon cinema and the adjoining Leicester Square Theatre which occupies a substantial part of the south western corner of Leicester Square. The site is owned by Steamboat Developments Limited, the Irish company to which NAMA appointed Kieran Wallace of KPMG as receiver on 25th March, 2011. Steamboat is most associated with rugby legend, Pat Whelan, his business partner Pat Chesser and solicitor Paul Hanby.

The site was assembled at a reported cost of GBP £58m and Property Week estimates that it might be worth GBP 200m (€225m) in its developed state. According to Property Week the site has planning permission for the development of a 245-bedroom hotel, 33 flats, four restaurants and a two-screen cinema. The planning application does not appear to be available online from Westminster City Council but an application in respect of an Environment Impact Study is available here.

The property receivers appointed are our new friends, Allsop, who ran a spectacularly successful auction inDublin’s Shelbourne Hotel two weeks ago. In the British context, Allsop are termed fixed-charge property receivers and the two gentlemen at Allsop handling the property are Jon Gershinson and Simon Davidson.

There is a little sting in the tail of this story. Property Week say that another company called Real Estate Resolutions bought part of the site in November 2010 and that the redevelopment cannot take place without the input of that company. Curiously Real Estate Resolutions which was founded by former Ballymore planning director, Tim Farrow, does not list the Leicester Square site as one of its developments on its website. Ballymore is Sean Mulryan’s company and the last I heard of Tim Farrow in connection with Ballymore was that he was suing the company for €4.5m after his dismissal.

UPDATE: 30th January, 2012. The property in Leicester Square has reportedly been sold to the Edwardian hotel group, no price has yet been disclosed. There is a press release by the NAMA receiver, Allsop, here. The Financial Times is reporting the site sold for “what is thought to be close to £100m”, which if confirmed,  would be considerably more than the GBP 58m thought to have been the cost of Steamboat assembling the site. The site is presently undeveloped and it has been estimated it might be worth GBP 200m in its developed state.

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Breaking news that NAMA has appointed a receiver to the personal and corporate assets of Ray and Danny Grehan, reportedly one of NAMA’s Top 20 developers. Although not yet confirmed by NAMA, this would bring NAMA’s tally to seven of the Top 20 (Liam Carroll, Bernard McNamara, Derek Quinlan, Paddy Kelly, Paddy Shovlin and David Courtney/Jerry O’Reilly (Radora) and now the Grehan brothers) against which NAMA has taken recovery action. Sean Dunne was reported by Ireland’s Sunday Times a month ago (not online) in the context of a NAMA receivership but it seems that Sean has denied this and certainly there is no evidence of a NAMA receivership in Iris Oifigiuil.

Ray and his brother Danny are, or have been associated with The Grange apartment complex (Stillorgan/Blackrock, Dublin), the UCD Veterinary College, Ballsbridge One, Ballintyre Hall, St Edmunds (Palmerstown), Palma de Mallorca (apartment and yacht), The Forge (Canary Wharf), City Pride (Canary Wharf), The Arcadia (Ealing), Island Point (Isle of Dogs, London), Crowne Plaza (Shoreditch, London), Maynooth Business Campus, The Glenroyal Centre, The Glenroyal Hotel, Coach House Square, a development in Howth (Co Dublin next to Dart station) and Windsor House (Bedford Street, Belfast). Their principal company was Glenkerrin Homes. They are involved in the Windsor House development in Belfastwith the P Elliot Group which seems to be struggling with its own difficulties at present.

Remember that there is a regularly updated spreadsheet showing all of NAMA’s receiverships maintained under the Developers TAB, or directly accessible here.

UPDATE: 27th April, 2011. For once RTE seems to have the best immediate reporting of the Grehan story. The broadcaster claims that Michael McAteer and Paul McCann of Grant Thornton have been appointed joint-receivers in Ireland, and separately there will be an application on 10th May, 2011 in the UK to have Grant Thornton appointed as administrators to UK assets.  It is not clear whether the UK assets will include an apartment, apparently bought by Ray Grehan,  in the UK’s most expensive block, One Hyde Park.

UPDATE: 28th April, 2011. There is widespread reporting of the Grehan receivership in today’s Irish media. First up, the Irish Independent which mistakenly reports “Ray Grehan, the man who bought the most expensive site  in Ireland” – there would seem to have been at least foursite purchases that were more expensive, at least on a per-acre basis. The Independent does provide more details though – Ray is reported to have signed a Memorandum of Understanding with NAMA in December 2010, his company is understood to owe €650m to the agency and this is claimed to be the first time NAMA has taken enforcement action against a developer who has signed a Memorandum of Understanding. There is a plaintive reaction from one “property source” – “what it means is that nobody is necessarily over the line yet”. The newspaper claims that Ray Grehan has expressed “bafflement”, “surprise” and “shock” at NAMA’s actions but doesn’t provide any detail. In a separate article in the Independent today, there is a claim that NAMA tried to install a non-executive chairman in Glenkerrin, the main Grehan company – “the move had not worked as far as Grehan was concerned”. Elsewhere the Irish Times reports that the Grehans “failed to meet some of the terms of a plan agreed with the agency [NAMA]”  We get an actual quote from Ray Grehan “We were surprised by the aggressive move by Nama because we were finishing out an extension on a hotel in the UK [Crowne Plaza in Shoreditch in east London] and we had a buyer for the hotel” In another Irish Times article, it is claimed NAMA’s action in respect of the Grehans is a first – “NAMA’s bid to appoint an administrator to Ray and Danny Grehan’s London properties will be the first application made by the State’s assets agency to the British courts” – hmmm, I understood NAMA to be behind the administration application in respect of Beetham Organization back in February 2011. There are claims that the Grehans may be able to pay back their €650m NAMA debt through sales of assets in the UK, particularly London. The Irish Examiner doesn’t add much to the mix but does give a little on the personal background of the Grehans “Ray Grehan is the eldest of nine children who grew up on a dairy farm in Galway. He trained as a welder in Limerick before moving to Dublin in the mid-1980s to take responsibility for small building jobs.”

UPDATE: 28th April, 2011. There was a brief contribution by business journalist Ian Guider to a Newstalk radio programme this morning (clip and reporting are available here) – the transcript of which is “He said there is no reason why they [NAMA] should be doing this, he’s been working with them, he’s brought proposals to them that would see them recover some of his debts.  He is consulting with his lawyers this morning to see if there is a possibility of challenging NAMA here in the courts in Dublin and also in the UK – NAMA wants to appoint administrators in the UK, that’s the equivalent of a receiver here – he may challenge that, that is going to happen in a couple of weeks time in May”

UPDATE: 29th April, 2011. Further details on the Grehan receivership are seeping out. Simon Carswell in today’s Irish Times reports that last week, NAMA presented the Grehans with 35 (thirty five) legal documents for signature which would have improved the security NAMA holds on Grehan loans. NAMA is also reported to have sought the appointment of Harry Slowey to the Glenkerrin board as non-executive chairman – the Irish Times reported that the Grehans were opposed to the appointment though apparently the matter had not yet been put to the Glenkerrin board. NAMA’s reported position on the appointment of Harry Slowey seems to be an expansion of a previous position which was that NAMA would vet proposals by the developer to make board appointments. The previous position, reported by Simon Carswell in January 2011 implied that it would be the developer who would select an appointee and then seek NAMA’s approval – it now seems to be the case that NAMA will nominate its own favoured candidates and potentially take foreclosure action if the nomination is not accepted; at least that seems to be the implication of the reporting of the Grehan case.

UPDATE (1): 30th April, 2011. Breaking news that NAMA will refrain from proceeding with its receivership of Grehan companies until Tuesday next week, 3rd May, 2011. The news has just been reported on RTE Radio 1 news and will be discussed on RTE  Saturday View shortly.

UPDATE (2): 30th April, 2011. It seems to be the case that NAMA is “standing down” the receivership to give the Grehans until close of business Tuesday to repay a reported €650m in debt. There were unsubstantiated suggestions that there might have been procedural deficiencies in the way in which NAMA made the receivership application on Wednesday – Ray Grehan may not even have been served with a repayment demand. This has not been substantiated but the latest development in this receivership may not have anything to do with a change of heart on NAMA’s part.

UPDATE (3): 30th April, 2011. The Irish Times is now reporting the apparent U-turn and claims control of the Grehan’s companies was returned to the brothers at midnight last night.

UPDATE (1): 3rd May, 2011. It seems the Grehans have just 10 hours to come up with €650-660m for NAMA, otherwise the receivers “stand up”. The Irish Times today reports that on Saturday last, NAMA issued a new demand which gives the Grehans until 5pm today (yesterday was a holiday in most of Europe) to come up with the readies; otherwise Michael McAteer and Paul McCann of Grant Thornton get reappointed as receivers. The newspaper claims that the Grehans are seeking more time to deal with the demand and there are additional claims that the Grehans are in talks with Dublin-based Incisive Capital Management (previous known as “HVB Credit Advisors, a wholly owned subsidiary of UniCredit Group’s Markets and Investment Banking division”; Aogan Foley is one of the Grehan’s contacts at Incisive) to work out a solution. The newspaper claims that NAMA acted last week to appoint receivers after the Grehans allegedly failed to meet the terms of the Memorandum of Understanding which was signed with NAMA in December 2010.  The agency also wanted to improve the quality of security it held over the Grehan loans – it is not clear if this means remedying defects in the existing security or obtaining additional security or both – but the Grehans sought legal advice instead of acquiescing to NAMA’s demands.

UPDATE (2): 3rd May, 2011. RTE seems to be on point on this story this evening and reports that it “understands” that the Grehans didn’t manage to come up with the €660m in readies by 5pm this evening. Further, RTE report that NAMA is consulting with its advisers this evening. Although there may be a slim chance of the Grehans reaching a revised agreement with NAMA or correct whatever breach of the memorandum of understanding which reportedly led to the original appointment of a receiver last Wednesday, the more likely outcome would appear to be the re-appointment of Grant Thornton as receivers.

UPDATE (3): 3rd May, 2011. There are reports, not yet on the main stream media, that receivers Grant Thornton have been re-appointed (not even NAMA would try the term “stood up”!). This was the likely outcome of the drama over the past six days though there may well be some twists and turns in the Grehan story in the coming weeks.

UPDATE (4): 3rd May, 2011. The Irish Examiner is the first mainstream media outlet to claim that receivers have been re-appointed to the Grehan companies and assets. Still no confirmation from NAMA.

UPDATE (1): 4th May, 2011. The Irish Times today reports that at 9pm yesterday, Michael McAteer and Paul McCann of Grant Thornton were re-appointed as receivers to the Grehan and Glenkerrin companies and assets. The rent roll on the UK assets is said to be €11m per annum and next Tuesday 10th May, 2011 an application by NAMA to have administrators, understood to be Grant Thornton,  appointed to the UK assets will be heard by UK courts. The Irish Times also attributes last week’s move to the Grehans failing to comply with the memorandum of understanding, and nothing else. It remains unclear whether the Grehans will take legal action and they are said to have sought an extension of time for the repayment of the loan from NAMA in order to arrange the sale of the loan to an investment fund – Dublin-based Incisive Capital Management is mentioned again in this regard.

UPDATE (2): 4th May, 2011. RTE reports this morning that “the Grehans say that their legal team is working on a response”. Somehow I don’t see the Grehans going “gentle into that good night” on this one.

UPDATE (3): 4th May, 2011. The Irish Independent reports that (a) legal action is “likely to result” from NAMA’s decision to re-appoint receivers (b) the Grehans had three bidders for their debt with NAMA and (c) NAMA became “worried” last week that it had not given the Grehans enough time to repay the debt and (d) the appointment of Harry Slowey as chairman to the group “appears” to have caused tension between NAMA and the Grehans though a NAMA spokesperson has said the appointment was agreed (the two sources may both be correct).

UPDATE (1): 6th May, 2011. Watch out for Emmet Oliver at the Independent today that he doesn’t fall over from the dizziness from all the spinning he’s doing on NAMA’s treatment of the Grehans. In today’s edition, he portrays the appointment, standing down and re-appointment of receivers to the Grehans as a victory for NAMA. The details of NAMA’s machinations over the past week have not been revealed and the case may yet be the subject of legal action, but one interpretation of the week’s events is that NAMA cocked-up the procedural aspects of the receivership, were challenged by the astute Grehans and having considered their legal position, concluded it was better to dot the “i”s and cross the “t”s and give the Grehans another couple of days to consider the repayment demand than to proceed with a receivership, the basis of which was shaky – to stress, that is but one of many possible scenarios.  Another is that NAMA was displaying brinkmanship in making the receivership application to show clearly to the Grehans that the agency was serious, but if that is the case then wouldn’t the re-appointment of receivers show that the brinkmanship was unsuccessful? Emmet Oliver does refer to the Paddy McKillen case in today’s article and that was indeed a display of legal incompetence on NAMA’s part – the failure to ratify a decision after the agency had legally come into being, and we will shortly learn how much that cock-up will cost as there is to be a costs hearing in the courts in May 2011.  NAMA is apparently close to reaching a decision in respect of five developers which might result in foreclosure action or agreeement to loan workout terms; media should be careful not to become an organ of the agency, or indeed developers, when reporting news.

UPDATE (2): 6th May, 2011. In what seems like a bizarre twist, there are reports this evening, including this one from the Irish Times that NAMA has taken control of the Grehan-owned Crowne Plaza Hotel in Shoreditch, east London. There is still apparently a court hearing scheduled for next Tuesday, 10th May, 2011 in which NAMA will seek to have Grant Thornton appointed as administrators over the Grehan’s UK assets. This pre-emptive action is curious. “NAMA felt it was necessary to take direct action to protect its security,” said a spokesman for the agency” is as much detail as is presently available from the mainstream media. It is not entirely clear how NAMA has legally taken control of the hotel, but this unscheduled action would seem to indicate continuing strain between NAMA and the Grehans.

UPDATE: 8th May, 2011. The Sunday Independent reports today that although the Grehans will be meeting their legal advisers tomorrow in advance of the application on Tuesday to have administrators appointed to their UK assets, it is “unlikely” that they will seek to try to block the application. The reporting also carries the implication that the Grehans will accept the Irish receivership also “They’re looking for a ‘quick death’ now. Hopefully the receivership process will be done within the next four or five months, and after that, they’ll be ready to start again” according to a “source” cited by the newspaper.

UPDATE (1): 10th May, 2011. In the end it was just a 15-minute formality at the High Court in London this morning. As reported by RTE, Grant Thornton has been appointed as administrators to “an apartment block and an undeveloped site near Canary Wharf in east London and a shopping centre in west London”. Although it hasn’t been clearly reported, it seems that administrators were appointed on an emergency basis to the Crowne Plaza hotel in Shoreditch, east London last Friday.

UPDATE (2): 10th May, 2011. The Irish Times adds a little detail to the appointment of administrators this morning. The specific properties subject to the application today are “City Pride and Island Point sites in London docklands, The Forge residential apartment block  in docklands, and the Arcadia Centre and Villiers House, a shopping centre in Ealing (pictured here) which has 40 to 50 shops and an annual rental income of £4.5 million (€5 million)”  and “Malcolm Brian Shierson and Martin Gilbert Ellis of accountants Grant Thornton UK” were appointed as administrators

UPDATE: 17th May, 2011. News from RTE that two companies in the Grehan group, Glenkerrin Properties Ltd and Glenroyal Leisure Ltd have gone to the High Court today where they are seeking to have the receivers, Grant Thornton, stood down in respect of the Glenroyal Hotel. It looks like there’s little love lost with claims that Ray Grehan is persona non grata on certain property and that the receivers are contemplating selling the hotel without consulting the directors (presumably the Grehan brothers). NAMA was represented by the former Attorney General, Paul Gallagher who also represented NAMA at the Paddy McKillen High Court case last October 2011. There are other aspects to the claim. The case has been adjourned to next Tuesday, 24th May 2011 when it is expected that a date will be sought for an injunction hearing.

UPDATE: 20th May, 2011. The Grehans have spoken with the UK’s Property Week in which they give their side of the story. They claim they were “low lying plums” with a strong portfolio in which buyers were interested. They express shock at then decision of NAMA to appoint receivers and for the first time on record, make it clear they were not happy with the proposed appointment of Harry Slowey as chairman. However the brothers express hope that they will yet be a part of the Glenkerrin portfolio as it is claimed there have been several approaches to NAMA to buy out their €660m debt and the brothers hope that they will yet work with any new buyers of the debt. There is no mention of the ongoing High Court battle to stop NAMA in its tracks in relation to the appointment of receivers to the Glenroyal Hotel. Interestingly, the brothers claim that NAMA has not explained to them why it took the enforcement action.

UPDATE: 1st June, 2011. The Grehan High Court application to have the receivership reversed at the Glenroyal Hotel and Leisure Centre wends its way through the system. The Irish Times reports that there was a mention of the case at the High Court last week when it was said that both NAMA and the Grehans wanted to see if the issues could be resolved without the assistance of the court. Yesterday both sides agreed that those talks had not concluded satisfactorily and that the application by the Grehans for an injunction, claiming their loans did not entitle the lender to appoint a receiver, will proceed tomorrow for directions and next week for a substantive hearing.

UPDATE: 3rd June, 2011. It seems that the case is proceeding to examine the substantive issues without any delay. Yesterday, lawyers for the Grehans argued that because AIB, the bank from whom a loan for Glenroyal was obtained, hadn’t a floating charge on company assets, then it was illegal for a receiver to be appointed on foot of that loan. The absence of a floating charged is conceded by NAMA but the agency argues, it seems from reporting in the Independent, that it is nonetheless entitled to appoint receivers. The Grehans argue they should have been consulted as directors and now compensated, they are seeking an injunction preventing NAMA’s appointed receivers exercising control over “the business or its undertakings, custom, goodwill, fixtures, fittings, stock, bank accounts and book debts”, according to the Irish Times. The case is continuing.

UPDATE: 9th June, 2011. The media reporting of the Grehan High Court case has been lamentable. The Irish Times today reports that  “Glenkerrin’s legal action challenging the legality of Nama’s appointment of Grant Thornton as receivers to the Glenroyal Hotel and Leisure Centre in Maynooth, Co Kildare will continue later this year”. The same newspaper article seems to peg the price of two UK assets: the Crowne Plaza apparently was subject to negotiations where there was reportedly an offer of GBP £83m and the 188-apartment Forge development on the Isle of Dogs in London’s Docklands is selling for GBP £34-38m as one lot, though it is estimated it would sell for GBP£42m on an individual apartment basis.

UPDATE: 14th, June 2011. It seems the Grehans have comprehensively lost their fight in the High Court to stop the appointment of receivers. The Irish Times reports that in Dublin’s High Court yesterday, the judge dismissed the application after the Grehans had reportedly failed to establish the solvency of their companies, sources of funding, and having failed to disclose information. A bitter blow to the Grehans no doubt. Was NAMA refraining from appointing receivers to other developers pending the outcome of this case? Certainly new receivership activity by NAMA has collapsed in the past month.

UPDATE: 30th June, 2011. In what is looking like a jamboree for the consultants, the Irish Independent today reports that Grant Thornton, the receivers appointed to the Grehan’s Irish assets last month have prepared and submitted a fresh business plan to NAMA, which apparently proposes a “sit and hold” stance on the Grehan’s assets, that is rent where possible, otherwise effectively mothball for the time being.

UPDATE: 29th August, 2011. On Saturday last, Emmet Oliver reported in the Independent that the administrator’s report for the Grehan’s showed that their UK assets were worth 59c in the euro and that consequently a loss of GBP 70m is in prospect on the book value of the loans (it is not clear how much NAMA paid for the loans, but it is likely that NAMA’s loss, if any, will be far less than GBP 70m). A copy of the report was requested from NAMA on Saturday but there has not been any response so far.

UPDATE: 4th October, 2011. Exactly a month ago, RTE broadcast a Prime Time special on NAMA entitled “NAMAland” in which Ray made some remarks about NAMA and his future plans. Iris Oifigiuil today confirms that NAMA sought winding up orders at Dublin’s High Cout on 19th September, 2011, for two Grehan companies, Glenroyal Leisure Limited and Glenkerrin Properties Limited. The petitions are set to be heard on 17th October 2011. NAMA had already appointed receivers to these companies on 5th May, 2011.

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Although this story was reported in the Sunday Business Post last weekend, what was omitted from that newspaper’s article was the involvement of NAMA in the appointment of the receiver. The Killerig Resort and Golf Resort Hotel in Carlow is now subject to a NAMA receivership with Aiden Murphy of Howarth Bastow Charleton performing the role of NAMA statutory receiver. The hotel resort continues to trade as usual and like many hotels inIreland at present, both NAMA and non-NAMA, offers what looks like some very good value deals.

According to the Sunday Tribune, the 42-bedroom, four-star hotel set on 130 acres is now being run day-to-day by Westpro Management Solutions. The owner of Killerig is Killerig Hotel Limited, most associated with Paul Browne who also owns theKilkeaCastleresort in Kildare.

This would appear to be only the second time that Howarth Bastow Charleton has been appointed as a receiver by NAMA. NAMA board member, Brian McEnery is a senior partner at the firm of insolvency specialists. Brian was also Michael Noonan’s director of elections forLimerickin the recent general election.

Remember that there is a regularly updated spreadsheet showing all of NAMA’s receiverships maintained under the Developers TAB, or directly accessible here.

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I have a lot of sympathy for NAMA when it comes to its role in fostering the protection of our built heritage. Such a social role was never set out in the NAMA Act which gives NAMA an over-riding objective of managing loans and underlying assets in an optimal way so as to deliver the maximum commercial return to the nation. Social objectives get short shrift in the NAMA Act although section 2 (b) (viii) does provide some minor confusion (“NAMA will contribute to the social and economic development of the State”). One of NAMA’s most expensive board members is Steven Seelig, formerly of the IMF who co-authored a 2004 paper on asset management companies (AMCs) in which he made it clear that for an AMC like NAMA is to be successful, its objectives should be clear and not confused with social responsibility duties – “experience has shown that AMCs with clearly defined, focused, and consistent goals are more likely to be effective. In some instances, such as the United States, social objectives were added to the asset management objectives of the AMC. The RTC [Resolution Trust Corporation] was required to promote social goals in the areas of affordable housing and historic preservation by developing programs and giving preference to buyers who would meet program goals. The practice of mixing goals, and especially establishing conflicting objectives, is not recommended”

That said, NAMA is nominally in charge of buildings which are considered architecturally significant and deserving protection. TheRoyalHibernianAcademyhas made a statement (available here) in which it strongly criticises NAMA for what it believes are NAMA’s failings in protecting our built heritage. As NAMA itself might say, the agency generally doesn’t have direct control over  buildings at this stage, merely control over loans; it is still the developer that generally has direct control over the building – so blame the developer for vandalism and failing to protect buildings. Nonetheless, given the fact that many developers are financially distressed and NAMA has limited funds, it is not surprising that many buildings seem to be deteriorating rapidly, which is troubling those who take an interest in the preservation of our built heritage.

It was only last year that the Gardai were practising their riot control techniques at the Belcamp College site, the 208-acre former college in Balgriffin, north Dublin which was bought by NAMA Top 10 developer, Gerry Gannon for €105m in 2004.  The college had a century-long history as a religious and educational establishment but was gutted by fire on 14th April 2011 (recent photographs here show the extent of the fire damage). Although certain stained glass windows considered culturally important had previously been removed and remitted to the National Museum of Ireland for safekeeping, the fact that only the shell of the building remains standing today is worrying to those who care about the country’s built heritage. With development land in the State having lost 75-90% of its peak value and the population of Dublin falling, by reference to the CSO’s population estimates for April 2010, it is unclear today what value the land now has and how NAMA can manage the asset. The time for preserving the asset seems to have elapsed as the building is now a burnt shell.

The former hospital on Hume Streetjust off St Stephen’s Green has also been the focus of a campaign initially aimed at stopping vandalism in the building and the removal of material, such as copper piping. The building is understood to be owned by a NAMA developer, Michael Kelly. The Irish Times today reports a claim that Dublin City Council has served an enforcement notice on Michael Kelly and NAMA.

And there is 16 Moore Street which has significance to the 1916 Easter Rising and which is also the subject to an intense preservation campaign. NAMA has a degree of control over the property through acquiring the loans of its direct owner, Joe O’Reilly.

I have sympathy for NAMA in respect of this issue. NAMA is not primarily set up to protect our built heritage though it does take on some minimal responsibilities to prevent structures becoming dangerous or causing a nuisance. However, beyond those minimal responsibilities, I think it doubtful that NAMA could even deduct from its income, any costs incurred in protecting these buildings unless it could be shown that such expenditure was incurred wholly and exclusively in pursuit of NAMA’s goals. NAMA could potentially claim the expenditure against income if it were to apply to have its buildings included under the Department of Finance historical buildings scheme but that would seem to involve all sorts of conditions and could see NAMA sidetracked into a whole different business sideline.

It seems though that NAMA will need develop a protocol for dealing with preservation issues for properties directly or indirectly under its control. And it would seem desirable that responsibility for built heritage protection be unequivocally removed from NAMA’s remit, in that the function is a distraction from NAMA’s principal objective of maximising the recovery of our outlay on land and development loans. But if NAMA is not to be responsible for these buildings then it would seem to be a government responsibility to deal with the issue in a way which respects NAMA’s commercial remit.

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