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Is NAMA selling UK property below market value?

June 22, 2011 by namawinelake

A little while ago on here there was an entry here which examined the so-called “Paddy premium”, the suspicion that Irish property investors were overcharged in their foray into the British property market in the 2000s, and the “NAMA knock-down”, the suspicion that NAMA would take what it could for property and that buyers would expect and demand a discount to the market value. Two recent sales tend to show that this might be the case. It should be emphasized that with the first sale, 197-213 Oxford Street in London’s West End, the developer was the Cosgraves who are reportedly NAMA Top 10 developers but there has been no confirmation whatsoever that the property on Oxford Street was subject to a NAMA loan so the sale might not have had any NAMA involvement whatsoever. The second property 1 King William Street in the heart of the City of London was owned by Paddy Shovlin and the two Fitzpatrick brothers, Patrick and Tony and property receivers GVA Grimley was appointed by NAMA to sell that property last year. Here are the sale details as reported by Property Week for the Oxford Street property and the Irish Independent for the King William Street property.

The standard yield in London at present is 4% for the West End and there is evidence of pressure on yields to tighten, and the standard yield in the City of London is 5.25% and the evidence is that this is remaining stable. By the way, the yield approximates to the rent on a building divided by the value of the building. This is simplistic but I think adequate for here; so a building worth €1m generating annual rent of €50,000 would have a 5% yield. Low yields are indicative of prime property assets where prices are at worst expected to remain stable and at best likely to rise more than non-prime.

The two sales above indicate that the sellers have taken discounts to the market value by reference to market yields. Of course there may well have been special circumstances which might have naturally led to reductions to the standard market price, issues with leases or tenants, planning issues etc. That said, the UK is a transparent market, certainly in comparison with Ireland and although NAMA is a big fish in Dublin, in London it is a significant player but in a sea with a large number of significant players. So information on NAMA sales will eventually seep out and it will be interesting to see if NAMA sales are consistently below what might be regarded as market value, particularly for prime assets.

A spokesman for NAMA had no comment on either reported sale. And it should again be stressed that it is not confirmed that the Oxford Street sale involved NAMA at all.

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Posted in Developers, NAMA, Non-Irish property | 5 Comments

5 Responses

  1. on September 11, 2011 at 1:15 pm who_shot_the_tiger

    I can’t believe that I missed this posting. I think that the appropriate expression is “well spotted”, NWL.

    As many professional property investors who operate in the London market know there is a cosy cartel in existence there, whereby old public school and/or business “friends” of the receivers and agents receive preference and “off market” deals are marketed as transparent. This closed city club is more sophisticated than the mafia, only insofar that they have plummy accents rather than New Jersey dialects and unusually odd but very British initiation ceremonies rather than the more ruthless actions required by the Sopranos.

    When the “thick Paddies” are introduced into this environment, naive and virginal ( and I include our NAMA here); we are nothing less than fresh meat. Highly impressed by the agents smoothly delivered expertise, complete with prepared “research” that provides backup figures and forecasts, our banking background vendors (NAMA, Anglo, AIB and BoI) are totally inexperienced in coping with this arrogant and knowledgeable enunciation of what is basically a set up for an insider deal, effectively- a scam. But, charged with disposing of their borrowers assets, and assured by promises of total transparency and full market exposure, they fall for it every time

    I gave a quote yesterday on a link concerning David Drumm:

    “A good conspiracy is unprovable. I mean, if you can prove it, it means they screwed up somewhere along the line.”

    Nice one, NWL, you have spotted the “screw up” here. It is obvious in the enhanced cap rates on the sale – i wonder how they were explained away by the participants to our “thick Paddies’? I am sure that the vocabulary and delivery of the weasel words were flawless. But the truth shines like a beacon through the crack in the facade of deceit. As I said – well spotted.

    Now, to open up that crack and let the light really shine in, it would be VERY interesting to see who the other agent was that was involved in the second sale, and to investigate the sales that they BOTH made in London on behalf of Irish developers or investors that were associated with NAMA and the Irish banks, check with the borrowers (if they will talk) and mark the sales to the market at the time that they were made – as you so tellingly did above. Congratulations on your research and well done! You deserve the Pulitzer.


  2. on September 11, 2011 at 1:40 pm John GALLAHER

    @wstt Anglo did a rather ” strange ” deal on it’s us loan book
    The selling broker was Eastdil which is owned by Wells which bought a lot of the loans ……..
    http://www.eastdil.com/_businesslines/line/ibank.htm
    http://www.irishtimes.com/newspaper/finance/2011/0614/1224298863771.html
    http://www.reuters.com/article/2011/08/29/us-angloirish-idUSTRE77Q05020110829


  3. on September 11, 2011 at 9:47 pm Mark Felt

    Were GVA Grimley appointed to other Irish bank or NAMA receiverships? What was the result of those sales?


  4. on September 13, 2011 at 10:48 pm who_shot_the_tiger

    The London receivers, according to Ray Grehan:

    ‘‘The week they appointed the receiver, I had just done a deal for our Crowne Plaza hotel in London £83 million. I am told now that they may not get that amount for it, and that the deal has fallen through.

    ‘‘We had another deal in Canary Wharf. We were to achieve £45million for apartments. I am told now that they are on the market for between £34 and £38 million. I am not sure of the rationale where Nama is coming from.’’

    Grehan said his property portfolio had decreased in value by between £10 million and £150 million as a result of the receiver being appointed by Nama.

    Anecdotal, but I’d like to know who the receivers were.


    • on October 11, 2011 at 11:22 am namawinelake

      @WSTT, Ireland’s Sunday Business Post has the above reporting for the Grehan UK portfolio but claims the figures are euros, not pounds sterling.

      http://www.sbpost.ie/newsfeatures/life-in-nama-limbo-58508.html



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