Archive for May 9th, 2011

It seems that a loan underpinning the Opera shopping centre development in Limerickis now in NAMA. The Limerick Leader reports that the Limerick City Council has written to NAMA, apparently expressing concerns about the dereliction of the site (pictured here) and urging the agency to progress with the project. The developer is Regeneration Developments Limited, owned by Belfast estate agent Gary McDowell and Suneil Sharma, member of the Northern Ireland Policing Board.

Back in 2006, it was all so different and the plan was to develop a €350m mixed use complex which would feature the biggest shopping centre inMunster and was to have created 300 jobs during construction and 800 jobs once completed. The project suffered planning setbacks, which might explain the Limerick City Council frustration at what apparently has been a five year delay in starting construction.

The project is unusual in that apparently Anglo Irish Bank has a 50% share in the scheme – in other words, Anglo didn’t provide funding to the scheme in the form of a loan, it actually took equity in it.

What is amusing on here is the ignorance amongst politicians about how they can communicate with NAMA. Last summer, Limerick TD Willie O’Dea was getting exercised over whether he could approach NAMA with health and safety concerns at a different property in the city, he was fearful of running foul of NAMA’s anti-lobbying rules. NAMA chairman, Frank Daly told a Dail Oireachtas committee hearing that NAMA positively welcomes information on health and safety issues with its property. Limerick City Council has no such qualms with communicating with NAMA though it is interesting that one of its reasons for contacting NAMA was apparently to urge the commencement of the project.

UPDATE: 10th May, 2011. It seems that Suneil Sharma and Gary McDowell have divested themselves of their interest in Regeneration Developments Limited. According to the latest (auditor qualified) accounts for the year ending 31st December 2008 (available here) and the latest annual return for the period to 25th July 2009 (available here), the directors are NAMA Top 30 developers Jerry O’Reilly, David Courtney and Terence Sweeney . There are two issued shares in the company and both are owned by nominees, Pegasus Nominees Limited and Goodbody Trustees Limited.

UPDATE: 28th September, 2011. The Irish Times today reports that the 3.2 acre Opera site (there’s a nice aerial photograph of the site here)  is to be offered for sale by Savills with a guide price of €12.5m (a drop of 89% from the €110m which the property fetched in 2005 when sold by the Sharma-Morrison concern to Jerry O’Reilly, David Courtney and Terence Sweeney company, Regeneration Developments). There is interesting observation that Limerick is the only city in Ireland whose city-centre rents are lower than those for out-of-town sites.

UPDATE: 22nd November, 2011. The Limerick Post was the first newspaper to report that it is the Government that is buying the Opera site for an undisclosed sum. It has not been announced what the site will be used for but Minister Noonan whose constituency includes Limerick city and the Opera site says he is glad it hasn’t been bought by a developer who might simply sit on what would become a derelict site for 10 or 20 years.


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This is hardly groundbreaking news but last week, in addition to appointing receivers to companies associated with Ray and Danny Grehan, NAMA appointed receivers to some apparently smaller companies. Iris Oifigiuil reveals that NAMA appointed Frank Nowlan of WK Nowlan and Associates to the following companies

(1) Mondale Developments Limited and Panimine Limited, both associated with developer Jim Monahan

(2) Frederick J Sutton Limited, a grocery in Rathdrum

(3) Rathdrum Properties Limited, whose directors are Ailish and James (Jim) Monahan

(4) AS Delahunt Limited, an auctioneering business where Tony Delahunt is a principal

The appointment of a property professional as a receiver is a novel innovation pioneered by NAMA aimed at cutting down expenses associated with corporate receivers. And Frank Nowlan’s appointment would appear to be a continuation of that innovation.

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

UPDATE: 11th May, 2011. It seems that the directors of all five companies are James (Jim) Monaghan and Eilish Monaghan from Enniskerry in County Wicklow. The largest of the companies is Rathdrum Properties, which was incorporated in 2001, worked on developments in south Dublin and County Wicklow,  including properties in Dalkey,  Shankill , Monkstown, Firhouse and Greystones. The latest accounts for the companies up to April 2010 indicate that the auditors had concerns over difficulties in valuing property assets in the current market.

UPDATE: 14th May, 2011. The Irish Independent appeared to have reported this entry in their article on 10th May, 2011. The newspaper incorrectly referred to “Delahunt Limited” and not “AS Delahunt Limited” as correctly stated here. Today The Independent reports a correction to their story and states “IN our edition of May 10, 2011, we published an article headed ‘Developers sign up to repayment plan with bad bank’ which incorrectly stated that receivers had been appointed to an auctioneering business run by Tony Delahunt. Mr Delahunt continues in practice as a licensed auctioneer and is neither in receivership nor NAMA. We apologise to Mr Delahunt for the error and for any confusion caused.” The AS Delahunt Limited that NAMA placed into receivership on 3rd May, 2011 according to Iris Oifigiuil is shown in the notice with company number 77723 and the Company Registration Office confirms that this company number is indeed AS Delahunt Limited with a registered address of Rock Court,
40 Main Street, Blackrock, Co. Dublin. The company is a property company as indicated by its former IAVI status. The Irish Independent had previously reported on a sale by auctioneer Tony Delahunt of AS Delahunt.

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Quite a number of official sources have claimed in the past month that the stress test announcements on 31st March, 2011 have been greeted positively by the market. Minister of State at the Department of Finance, Brian Hayes told a conference on Friday last “these [stress test] exercises were characterised by a high degree of transparency and the input of highly respected international consultants, and as a result have been well received by the market”. Yesterday, governor at the Central Bank of Ireland, Patrick Honohan said on RTE radio (podcast available here) that “the reaction of the markets to the latest stress tests where we put our hands up and said we had not put in enough capital and we will need put in a lot more capital and we gave a lot more detail and a lot more precision about it I think the markets’ reaction which has been very favourable shows that our credibility with the markets is not been damaged in the way that you imply”. And on 6th April, 2011, speaking in the Dail, Minister for Finance, Michael Noonan delivered an upbeat assessment of the reaction of the bailout citing three examples which he claimed quantitatively showed that the market reaction had been positive. This entry examines those quantitative measures and concludes that we are really in no better a position today than we were in March.

The three metrics in Minister Noonan’s statement to the Dail which he claimed evidence the positive reaction of the market were

(1) The yield demanded by investors for our 10-year bond. On 31st March, 2011 just before the stress test announcements, the bond closed at a record 10.22% mid-point. And in the following days it steadily came down which indeed did indicate a positive market response. Indeed by 12th April, 2011 the yield had come down to 9.08%, which is still in unsustainable territory (the accepted wisdom is that rates over 6% are unsustainable). But since mid April, 2011 the yield has increased again and on 29th April, 2011 closed at a record 10.57% though in recent days it has come down slightly and this morning is trading at 10.3%. The graph below illustrates the mid-point closing prices in the last three months. Based on this metric, I don’t think you can conclude the market reaction is positive.

(2) The share prices of our banks which were subjected to stress tests. In fact the Minister in his presentation to the Dail only referred to the share price of AIB and Bank of Ireland which have been chosen as pillar banks. Irish Life and Permanent, the bancassurer’s future is not certain. On 31st March (actually 30th March because remember we suspended trading in the shares for a day), AIB’s share price closed at €0.19 and BoI’s at €0.22 – both record lows in 2011. Again in the week immediately following the stress test announcements, the prices increased, in AIB’s case to €0.33 and BoI’s to a high of €0.34. Since then the shares have drifted back down and closed on Friday at €0.22 and €0.25, certainly no different to the range of prices available in March 2011 as the table and graph below demonstrates.

(3) Deposit flight from the six State-guaranteed financial institutions (actually four now that Anglo and INBS have sold their deposit business, the four being AIB, Bank of Ireland, EBS and Irish Life and Permanent). Minister Noonan’s choice of wording was curious and equivocal which was in itself curious because he is one of the most articulate politicians you will find, and not just in Ireland. Minister Noonan said at the start of April “the total amount of deposits withdrawn from the pillar banks has been very significantly reduced.  Since Thursday’s announcements, the net deposit position of the Pillar Banks has improved significantly”

We are unable to confirm if this is still the position. That is because the stress test announcements were made after close of business on 31st March, 2011. It will not be until the end of this week (the second Friday in each month) that the Central Bank ofIrelandproduces financial information for March and even then it won’t show the deposit position in the State-guaranteed banks. We will need wait until 31st May for that information. What we can say is that if the deposit position had continued to improve, we might have expected some unscheduled comments from the CBI or Department of Finance. Unverified anecdotes suggest deposits do continue to decline.

So based on the above metrics, you might conclude that the market response to the stress test and bank restructuring announcements has not been positive. We seem to be in no better a position that in March. In truth though, it is arguable that the deterioration that followed the immediate aftermath of the announcements has less to do with Ireland and more to do with the fact that Portugal applied for a bailout on 8th April and Greece’s position has deteriorated with a negative revision to its finances and what now seems like a certainty that the country will restructure and/or default. So you could argue that we have been buffeted by the slipstream ofGreeceandPortugal’s woes. But equally, I think it is difficult to defend the statement that the market is now reacting positively to the stress test announcements.

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