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Archive for April 14th, 2011

News this afternoon reported by the Irish Times that NAMA has appointed a statutory receiver, Paul McDowell of Knight Frank, to certain properties owned by top 10 developer, Derek Quinlan. This comes just days after it was reported that Derek Quinlan and partner Glenn Maud had put the Citibank building in London’s Canary Wharf on the market, it having been one of the UK’s most expensive property deals when it was bought for GBP £1bn in 2007. There have been rumours about the level of co-operation provided by Derek Quinlan to NAMA – on one hand, a car park in Mayfair belonging to a Quinlan company was being sold at NAMA’s behest but it seems that sale has stalled, and his 35% share in the Maybourne group of luxury London hotels was being sold to the Barclay brothers and on the other hand there were rumours of non-cooperation with NAMA. Who knows the true story but it seems that NAMA has terminated its overtures with the appointment of a statutory receiver.

NAMA is building quite a portfolio of receiverships, most notably the recent appointment of receivers to companies in Paddy Kelly’s sphere of control. But other recent receiverships seem to have slipped below the mainstream media radar including

(1) Adelphi Way Developments and International Airport Hotel, both associated with the McCormack family

(2) Deerbay Properties associated with the Kilmurrays including William (Bill) Kilmurray

(3) Steamboat Developments Limited associated with former rugby player/manager, Pat Whelan

NAMA has appointed receiverships in numerous other cases including to companies associated with Bernard McNamara, Liam Carroll, Ger O’Rourke, Paddy Doyle, Paddy Burke and John Fleming, to name a few. And in the UK, it has appointed administrators to companies, possibly the most high-profile being the Beetham Organisation.

Remember, there is a regularly updated spreadsheet showing all of NAMA’s reported receiverships and court actions under the Developers Tab above. Any statement from NAMA or Knight Frank in respect of Derek Quinlan’s receivership will be posted here.

UPDATE: 14th April, 2011. This is the statement from NAMA

NAMA appoints Statutory Receiver to recover debts from Derek Quinlan and family members

Thursday 14th April 2011. The National Asset Management Agency [NAMA] has appointed Statutory Receivers to take charge of a number of properties owned personally by Derek Quinlan and members of his immediate family on foot of the debtors’ failure to present and agree an appropriate Business Plan for the repayment of loans owed to the Agency.  Mr. Paul McDowell of Knight Frank Ireland has been appointed by NAMA as the Statutory Receiver.

A spokesman for NAMA warned that other debtors of the Agency could face similar action; “If debtors are unrealistic or uncooperative in their dealings with NAMA, we won’t hesitate to appoint Receivers to protect the taxpayer’s interests.””

UPDATE: 17th April, 2011. There are nine properties controlled by NAMA as a result of last Thursday’s action by NAMA – the properties are said to have been owned by Derek Quinlan, his wife Siobhan, his daughter (Caroline Brooks, nee Caroline Quinlan) and his daughter’s husband (Matthew Brooks). The following would appear to be eight (UPDATE: 21st April, 2011. Possibly nine) of the nine:

(1) No 8 Raglan Road , Ballsbridge D4 (UPDATE: 14th September, 2011. Now on the market at 5m with Knight Frank, the 10,000 sq ft offices in a Victorian building are said to be in immaculate condition)

(2) 43, Ailesbury Road bought for €8.5m in 2007 along with a mews house 18, Ailesbury Road for which he reportedly paid an additional €3m currently on the market for €2.95m through Lisney (pictured here). (UPDATE: 3rd October 2011. The Sunday Business Post reports that the two properties have been sold for a combined total of €2.5m. The Irish Independent reports the SBP story a day later)

(3) 29 and 30 Fitzwilliam Square

(4) an apartment in the 5-star Merrion Hotel, worth a reported €1m today (UPDATE: 21st September, 2011 sold for €2m according to the Irish Independent today)

(5) “Derrymore” (pictured here), at6 Shrewsbury Road. a 5,000 sq ft semi-detached purchased in the mid-1990s for IR £1.5m (€1.9m)

(6) 1 & 3 Shrewsbury Road(pictured here) are adjoining semi-detached houses for which he paid €27m in 2006

(7) UPDATE: 21st April, 2011. It is not clear if No 1 Elgin  Road (see picture here) which is presently on the market with Lisneys is one of the properties subject to control of the NAMA receiver, but the property is said to be from Derek Quinlan’s “portfolio”. The property is 4,000 sq ft, refurbished to a high standard and it looks like it has kept its original garden and hasn’t ceded it for development. The asking price is €2.95m (UPDATE: 15th September, 2011. It is reported in today’s Irish Times that a sale of this property may be imminent with the government of Belgium mentioned as the buyer with the aim of making the property its embassy to Ireland. The newspaper claims that the sale price may be “somewhat less” than the €2.95m asking price.)

Not subject to the NAMA receivership is the 8-bedroom villa in Saint-Jean-Cap-Ferrat (or plainly Cap Ferrat) in the south of France, reportedly bought for €75-100m (the British Times newspaper says it was bought for €40m with a further €20m spent refurbishing it) and subject to a €64m loan from Barclays Bank and said to be for sale today – prices of €39m and €73m have been bandied about. Or commercial properties, for example the Citi Tower in Canary Wharf in London’s docklands which was put on the market earlier this week apparently at NAMA’s behest. Or the more valuable Banco Santander office building inMadrid which may not be subject to a NAMA loan at all. Derek Quinlan is understood to be presently living in a rented property at Epalinges near Lausanne in Switzerland.

UPDATE: 30th April, 2011. It seems that one of the two properties that Derek Quinlan owns on Manhattan’s East 64th Street is close to being sold having been on the market for two years. No 20 (picture here), it is reported, has been sold though the buyer and the purchase price remain a mystery for now. It had an asking price of USD $29.5m, having been bought by Derek in 2005 for USD $26.2m – it initially had a price tag of USD $37m when first put on the market in 2009.  The 13,000 sq ft townhouse is reportedly subject to a Citigroup mortgage and is not subject to the NAMA receivership action reported above. Derek still owns 54 East 64th Street (pictured here) which was up to recently on the market with a price tag of USD $25m.

UPDATE: 18th August, 2011. No 20 on East 64th Street has sold for USD $23m, according to the New York Post.

UPDATE: 25th August, 2011. It is reported in the Irish Independent that the property receiver for the eight Quinlan properties has agreed prices for five of them.  Paul McDowell, managing director of Knight Frank in Ireland refused to identify the properties until sales are completed.

UPDATE: 14th October, 2011. The Irish Independent claims, citing an unidentified report, that Derek Quinlan has sold a second “Upper East Side townhouse”, presumably no 54 East 64th Street, for USD 25m. This sale, like the other one at no 20, is not directly connected to NAMA loans.

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It seems that NAMA is making progress with its declared aim to dispose of up to €5bn of UK loans/assets in 2011 with reports of sales of the Houndshill shopping centre in Blackpool and 157-183 Waterloo Road in London and now we hear of a significant property being offered for sale in London – the Citibank building in London’s Canary Wharf owned by Derek Quinlan and Glenn Maud, the Sheffield lawyer turned investor. NAMA’s Head of Portfolio Management, John Mulcahy’s former employer, Jones Lang LaSalle (JLL) is handling the sale. In common with recent reported sales or receiverships in the UK I cannot find the building on the selling agent’s website, in this case JLL’s website; yes, a property bought for GBP 1bn in 2007 and probably worth not far off that today, will have a limited pool of buyers but why are these properties not being publicly marketed? And given that the world knows that the building is for sale and is in NAMA, why doesn’t NAMA at least link to the selling agent’s on its website? This is really beginning to stink of clandestine sales which may bilk NAMA and by extension, the Irish state. NAMA may feel that association with NAMA may depress the price because there is the suggestion that NAMA is only there for distressed assets. My experience is that mentioning NAMA pricks the interest of potential buyers who will study any sale proposition, and the feeling on here is that the benefits of maximising marketing exposure outweigh the possibility of low bids, particularly on marketable properties. (UPDATE:6th May, 2011. JLL has announced the sale of 25, Canada Square otherwise known as the Citigroup Tower)

Today sees the publication of the UK March 2011 IPD Monthly Property Index – the index covering UK commercial property up to the end of March 2011. 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.

The Index shows that capital values are still increasing but at a modest rate compared with the end of 2009/start of 2010. The Index rose by 0.3% in March 2011 compared with February 2011. Overall since NAMA’s Valuation Date of 30th November, 2009 prices have increased by 10.8%. Commercial prices in the UK are now 34.7% off their peak in June 2007. On an annual basis prices are up by 3.5%. The NWL index is now at 895 which means that NAMA needs to see a blended increase of 11.7% 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).


In terms of outlook for the UK’s commercial real estate (CRE) you could do worse than review the recent stress test documentation (page 74 on is particularly helpful) published by the Financial Services Authority for UK banks which are still mightily exposed to CRE lending. The document notes that prime CRE has more or less recovered to its peak in 2007 whereas secondary assets are still considerably off-peak (35% plus). British CRE companies are just as highly leveraged as their Irish counter-parts and NAMA may not be the only driver of property liquidations in the UK. Unlike the Irish stress tests there is no projection of commercial property prices but the outlook I deduce from the document is that there will be pressure on prices, particularly secondary assets. The UK as an economy faces its own challenges with massive debt (60% of GDP in 2011) and an annual deficit that was 11% of GDP last year. You would have to say the outlook for commercial property in general was anaemic at best though prime well-located assets may still deliver double digit growth.

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The Allsop-Space auction of 84 properties in Dublin’s Shelbourne Hotel today, 15th April, 2011 has now concluded and you can see the results here. The next Allsop-Space auction date has not yet been announced but there are likely to be another six “increasingly large” auctions in the next 18 months. The entry below examines the background to the auction.

This blog has no formal or informal connection with the organisers of the Allsop-Space auction of some 80 properties in the Shelbourne Hotel, Dublinat 12-midday, today Friday 15th April, 2011. However because it is a major property auction and may indicate the present state of the market, it is being watched closely and there will be analysis here later. The auction is being broadcast LIVE and indeed there is presently a LIVE video stream from the auction room – this is the link to the video (click on “Live video” on the right hand side of the screen, it seems there is a 30 second delay with the broadcast and audio will only be fully available from 11.45am). I have had difficulty viewing the video stream using the Mozilla Firefox web-browser but it seems to work fine with the Internet Explorer browser. There are live pictures now at 10.45am so if you can’t view it, you might have a problem with your browser or plug-ins. There is also a bidding notepad here which should show the bids live. All in all this looks like a slickly-run auction.

Bastardizing Churchill’s words of gratitude to the RAF for its role in the Battle of Britain seems somehow appropriate to the much-vaunted inaugural Irish auction by British auction powerhouse, Allsop tomorrow at the Shelbourne Hotel in Dublin. It is being jointly organised with Dublin property company, Space. It seems that there will be 80 some properties for sale, mostly at the behest of Bank of Scotland (Ireland). A further six “increasingly large” auctions are expected over the next two years.

I must say that I have been amazed at the interest this auction has generated. But it should be remembered that in an Irish context, the sale of 80 properties is a major event – the sale of just 20 properties in Kilkenny last year was hailed as a “Mega Auction”. Space reports that its online auction catalogue has been accessed 75,000 times by prospective punters all over the globe, though interest has been predictably strongest in Ireland and the UK. I see that Space were charging some €5 for a printed auction catalogue, though you can access it online. All indications are that the Aviva Stadium might have been a more appropriate venue for the auction which kicks off at 12-midday tomorrow. From previous experience of Allsop auctions, I’d guess it will be concluded well before 3pm.

My own feeling is that there are a number of reasons for the elevated interest. There is the size of the auction and the understanding that most, if not all, properties in the auction are being sold at the behest of Bank of Scotland (Ireland) which exited the Irish market last year, leaving its residual loan book in the hands of asset management company, Certus to “run-off”. There is the general notion that Ireland is economically crippled, has a huge oversupply of vacant housing, high emigration and unemployment with our banks and NAMA desperate to offload property at whatever price can be achieved – there is some truth in this. And the feeling is that bargains can be picked up – that remains to be seen. Lastly, I think the auction tomorrow will be studied to see what it tells us about price discovery in the Irish market, a market where there is a dearth of reliable sales price information.

NAMA should take note of the interest generated by this auction and no doubt it will study the results to see if there is evidence of a floor being reached. But NAMA should also consider the value of its brand. The auction tomorrow is being held at the Shelbourne Hotel, the loan for which is understood to be in NAMA. The hotel is owned by a consortium of developers – reportedly Messrs Sweeney, O’Reilly, Courtney, McNamara and others. The Shelbourne is operated by the Marriott group which presumably has a long lease on the property. To the best of my knowledge the Marriott International group is in sound financial health even if the freeholders of several of its buildings now find themselves in NAMA. That said, I wonder if the Shelbourne would increase its bookings if it marketed itself as a NAMA hotel because the perception is that there will be fantastic value to be had at NAMA hotels. NAMA = distressed = great value for money is an equation in many consumers’ eyes and a savvy hotel operator might consider the value of being associated with NAMA.

I expect to have available the settled prices here later tomorrow.

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Bank of Ireland has this morning published it report and accounts for 2010 and given we own 36.5% of that bank, we might be grateful that its losses have come in at less than €1bn. The bank reported a net loss after tax credit of €609m for 2010, down from €1,469m in 2009. Losses on loans totalled €4.5bn, up from €4.1bn the previous year and comprised NAMA losses of €2.5bn and non-NAMA loan losses of €2bn. The concern on here has been for some time that BoI is not adequately assessing losses on non-NAMA loans – this is because of a limited number of public foreclosures which showed 80%+ losses, that smaller property loans seem more impaired than the bigger ones absorbed by NAMA and because of credible claims about BoI’s credit and lending practices being every bit as bad as AIB’s and Anglo’s in some instances. Overall though, BoI will be pleased with its loss being contained below €1bn.

Elsewhere it appears to have a loan to deposit ratio (LPR) of 175% and will need to dispose of €35bn of loans if it is achieve a 122.5% IMF/EU bailout target for deleveraging by 2013 though these calculations will get muddied if it takes over Irish Life deposits. The bank does not indicate how it will raise the €5.2bn capital identified in the stress tests two weeks ago. I would say it was 50-50 that it can be raised privately in a way which allows BoI to remain outside Government control. On the face of it, the bank is the healthiest of the domestic banks and Ireland is still a relatively rich country by reference to both per capita GDP and GNP. The bank has an established presence with large network of branches and good corporate and international units. Its net interest income for 2010 was €2.2bn, up €0.1bn from 2009.

The report is nearly 400 pages long & there should be further analysis on here later this week.

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