Archive for April 26th, 2011

Last year there was an entry on here which exhorted NAMA to look well beyondIreland for potential buyers for distressed loans and the underlying property; to borrow a line from Christy Moore’s Lisdoonvarna, it was time to engage with the “Arab sheikhs, Hindu Sikhs, Jesus freaks”

This morning former Sunday Tribune business editor, Neil Callanan eked just a little more from the interview with the NAMA CEO and chairman last week and reveals in today’s Financial Times that NAMA has had contact from Middle Eastern investors expressing interest in Irish hotels with an aim to converting them into private homes and converting surrounding land into stud farms. Neil claims that “Sheikh Mohammed bin Rashid al-Maktoum [of Dubai], owns seven stud farms in the country. Sheikh Mohammed’s brother, Hamdan, has one and Saudi Arabia’s Prince Khalid Abdullah has two”  NAMA exercises control over more than 80 hotels in Ireland and the hotel sector is generally seen to be suffering from overcapacity, so some of these hotels may indeed find themselves converted to stud farms in the future.

But it may be NAMA’s more valuable assets that attract significant Middle Eastern funding. In today’s London Evening Standard, Mira Bar-Hillel claims that the Qatari royal family’s investment vehicle, Qatari Diar is in talks with Treasury Holdings over taking an interest in the Battersea Power Station development. It is in fact a Treasury vehicle, Real Estates Opportunities PLC that owns the 38-acre site which finally received planning approval in February, 2011.

The Qataris have been active in theLondonmarket in recent years and now control Harrods, the former Chelsea Barracks (just across the river from Battersea) and One Hyde Park (just across the road from Harrods)  where 20,000 sq ft apartments were on offer at GBP £100m. Of course the fact that oil has hovered over the USD $100 per barrel price since the start of this year will no doubt have swelled the coffers of Middle Eastern sovereign wealth funds and European property investment might be seen as an attractive proposition at present.

So that’s the Arab sheikhs. As for the Hindu Sikhs (Christy Moore seemed to mix together two major Indian religions) I wonder how our new Minister for Transport, Tourism and Sport, Leo Varadker got on, during his St Patrick’s Day junket to India, home of his father. Might we see some hitherto absent investment from the world’s biggest democracy?

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The Irish Examiner today reports that an asset from developer, John Fleming’s empire has been sold for a price which allows the underlying loan to be redeemed in full. The development site at 5 Olympic Way near Wembley Stadium in north west London (pictured here) had previously secured planning permission for the building of a 20-storey development which includes a 225-bedroom hotel plus 12 serviced flats, 158 flats and commercial units. The news is that the site has recently been sold by administrators, Baker Tilly, to an unnamed buyer for more than €33m apparently; and €33m was the amount recorded as owing to Anglo Irish Bank in respect of a loan for the site. Completion of the sale is according to the Irish Examiner, quoting the administrators, “due shortly”.

Given the size of the loan, the fact that it was with Anglo, apparently related to land and development and the reporting that John Fleming is in NAMA, it might be deduced that NAMA has benefited from the sale. The Irish Examiner goes on to report that last July 2010, the site was valued at €19m in John Fleming’s statement of affairs so you might infer that NAMA bought the loan at around that level which might mean that NAMA has profited to the tune of some €14m from the recent sale.

NAMA is certainly advertising the fact that it will be disposing of property in the short term in the UKwhere it has an estimated portfolio of nearly €20bn of loans. Last week, the Financial Times reported that NAMA expects to sell €2.5bn of commercial property in theUK over the next three years. There are likely to be additional disposals of residential and development property.

John Fleming himself filed for bankruptcy in the UK just before Christmas 2010. The company involved in the above sale, Fleming Developments UK Limited is under administration. The Irish Examiner today reports that “at least one other developer has moved there [the UK] since, with the aim of using the same [bankruptcy] process, and a number of developers in NAMA are considering doing so.” The newspaper doesn’t identify the “one other developer” or the number of developers considering the move but it does say that NAMA may bankrupt developers in Ireland “anyway” which I interpret to mean NAMA will seek to bankrupt developers even if they have filed for bankruptcy elsewhere. That didn’t work out too well for Anglo in the David Drumm case where former Anglo CEO David Drumm filed for bankruptcy in Massachusetts, apparently depriving Anglo of the right to seek bankruptcy in Irish courts. So NAMA’s threat, if indeed it is a threat, might face challenges if NAMA seeks to deliver on it. John Fleming’s bankruptcy period might expire in four months time (nine months seems to be the minimum length of time a bankruptcy lasts in the UK) which might make his peers seriously consider a bankruptcy in theUK.

There is an entry on here about bankruptcy inIreland and the UK.

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