Archive for November, 2011

(The new properties added in October 2011, click to enlarge)

NAMA has today published its now regular monthly list of properties subjected to foreclosure action. The full list is here, the list of new properties added is here, and you will find previous editions of the monthly list which was first launched in July 2011, here.

You should read the full list of NAMA’s terms for accessing the lists here. But in summary, this is what you’re looking at:

(1) Real estate property subject to loans in NAMA to which receivers have been appointed. The receiver’s website is shown against each property.

(2) This is all the real estate foreclosed sorted by country, and then region.

(3) Not all of the property may be for sale.

(4) Contact the receiver with enquiries or expressions of interest in the first instance. Only pester NAMA if you’re not getting any response from the receiver and make allowances that receivers will be busy with queries, particularly after a new release of foreclosed property.

(5) If you think there are mistakes on the list, contact NAMA.

What’s new? The properties to which receivers were appointed during October includes residential, development, retail, office, agricultural and industrial assets, in addition to a number of public houses in Dublin and Belfast. The list contains a substantial number of properties in Northern Ireland and Britain, including an office building in the Gasworks in Belfast and the Vantage Business Park site near London. The list includes 105 properties which have just been added. These include 57 to which receivers were appointed during October. In another 48 cases, receivers had already been appointed prior to acquisition of the loans by NAMA in October. The total number of properties now listed is 1,040 (some of which are multiple properties such as apartment blocks)

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The fourth Allsop Space auction is being held in the Shelbourne Hotel in Dublin today. A total of 109 properties will be available on the day, three having been withdrawn beforehand from the original 112-lot catalogue (available here). The auction is understood to be the biggest property auction ever in Ireland by reference to the number of lots coming up for sale. The maximum reserves for the 109 properties total €9.98m which is lower than previous Allsop Space auctions reflecting the nature of the lots, and possibly more aggressive valuations following the surprise at the number of unsold properties at the last Allsop Space auction in September 2011 (results and analysis here).

This is an interim blogpost at 1pm after 37 lots were offered. There will be a final blogpost once the auction has ended later today – I’d guess the auction will finish at around 5pm.

The auction room at the Shelbourne Hotel on St Stephen’s Green was packed again with punters and gawkers overflowing onto the stairs and ante-rooms. The mood was business-like, the novelty and mania that accompanied the first Allsop Space auction in April 2011 (results and analysis here) have long disappeared and it as if we have been used to the spectacle of Allsop Space auctions for years. The pre-marketing, transparency and conduct of proceedings on the day with live video streaming, results and online bidding have certainly shaken up the Irish property auctioning business.

So in overall terms at this interim stage, 37 lots were offered for sale, with two lots that appeared in the original catalogue withdrawn. Four lots out of the 37 were unsold with the maximum bid not reaching the reserve, in some cases by just €1,000. Of the 33 lots that did sell, the maximum reserves totalled €3,085,500 and the sale prices totalled €3,943,000 which was 27.8% above the maximum reserves. Here’s the interim detail

(Click to Enlarge)

The concluding results and analysis will appear here later.

UPDATE: 30th November 2011. The auction concluded just before 5pm. All in all, the Allsop Space team delivered another well-run auction. Of the 112 properties in the original catalogue, four were withdrawn and weren’t offered for sale. 12 went unsold after bidding had finished, but two lots – numbers 44 and 88 – subsequently sold. Based on the 12 lots that went unsold after bidding had finished, Allsop Space achieved an 89% success rate, which is very impressive indeed considering the number of lots involved in what is understood to be Ireland’s biggest ever property auction. The 96 lots that sold achieved prices which in were in total 28.3% higher than the advertised maximum reserves. The success rate is better than the September 2011 auction. The prices achieved overall – there were exceptions – seemed to me to point to a further weakening in what were fire sale prices and pointed to declines from peak asking prices of around 65-70%.. There will be more analysis tomorrow.

(Click to enlarge)

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Breaking news this evening that the 5-star Ashford Hotel in Cong, Mayo (the website appears to be down this evening) has been placed into receivership; both RTE and TV3 report that Luke Charleton and David Hughes of Ernst and Young have been appointed as receivers.

The hotel is understood to be still controlled by NAMA Top 10 developer, Gerry Barrett. Accounts for the hotel’s holding company, Ashford Castle Estate Limited, for 2008 and 2009 showed a loss of €39m for the two years, of which €35m related to a writedown in assets, mainly the hotel itself. The company was controlled by Gerry Barrett and his wife Catherine.

The receivers are keen to emphasise that the hotel is trading as normal, an important consideration ahead of the traditionally lucrative Christmas season. Deposits already paid will be fully honoured according to the receivers, there will be no job losses – it is understood the hotel employs nearly 150 people – and “suppliers will be retained”; no word on what happens with unsecured debts owing to suppliers however.

It is not clear if the receivership is at the behest of NAMA, and NAMA has not yet commented on the reports. Gerry Barrett is associated with a slew of hotels in Ireland including the “D Hotel” in Drogheda, the Meyrick and “G Hotel” in Galway, the Grand Canal Dock hotel in Dublin and Jury’s Hotel in Limerick. Last month, the Irish Times reported that NAMA was set to agree the sale of Dublin’s Hatch Hall development, the sale was being handled by agents Douglas Newman Good Commercial on behalf of Gerry Barrett and his main vehicle Edward Holdings.

UPDATE: 29th November, 2011. NAMA has responded to say that this receivership is not at its behest. There are some 80 hotels out of over 900 in the State which are subject to NAMA loans, and NAMA has taken foreclosure action on only a fraction of these 80. It is understood that Bank of Scotland (Ireland) was the biggest lender to the Irish hotel sector, but that doesn’t stop the routine confusion over any Irish hotel in receivership being assumed to be in NAMA, for example the Parknasilla Hotel in Kerry associated with NAMA Top 10 developer Bernard McNamara is also NOT in NAMA, though that seems to be routinely ignored by the media.

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The Northern Ireland Statistics and Research Agency, which is part of Sammy Wilson’s Northern Ireland Department of Finance and Personnel, released its 2010 population estimates for the six counties this morning. Socially, both parts of Ireland behave similarly, especially when compared with the wider European Union. But having said that our birth rate in the Republic is 17% higher than in Northern Ireland which you might expect, with our more Catholic profile; but our mortality rate is 26% lower mostly as a result of our age profile – not to be ageist about it, but the Republic has a far more attractive age profile for its population with only 8% in the 64 years-plus group, almost half the 15% in Northern Ireland. Emigration has returned to the Republic and we now have net outward migration whereas in Northern Ireland there is precise parity between immigration and emigration. Here’s an extract of the numbers and a comparison with our own Census 2011 Preliminary Results and the CSO Population Estimate for April 2011. There is also some comparison with EU averages, mostly sourced from Eurostat.

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The Nationwide Building Society has this morning published its UK House Price data for November 2011. The Nationwide tends to be the first of the two UK building societies (the other being the Halifax) to produce house price data each month, it is one of the information sources referenced by NAMA’s Long Term Economic Value Regulation and is the source for the UK Residential key market data at the top of this page.

The Nationwide says that the average price of a UK home is now GBP £165,798 (compared with GBP £165,650 in October 2011 and GBP £162,764 at the end of November 2009 – 30th November, 2009 is the Valuation date chosen by NAMA by reference to which it values the Current Market Values of assets underpinning NAMA loans). Prices in the UK are now 10.9% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of November 2011 being GBP £165,798 (or €192,883 at GBP 1 = EUR 1.1669) is 13% above the €171,315 implied by applying the CSO October 2011 index to the PTSB/ESRI peak prices in Ireland. The average property in Northern Ireland in Q3, 2011 was worth €163,438.

With the latest release from Nationwide, UK house prices have risen by 1.9% since 30th November, 2009, the date chosen by NAMA pursuant to the section 73 of the NAMA Act by reference to which Current Market Values of assets are valued. The NWL Index is now at 831 (because only an estimated 20% of NAMA property in the UK is residential and only 29% of NAMA’s property overall is in the UK, small changes in UK residential have a negligible impact on the index) meaning that average prices of NAMA property must increase by a weighted average of 20.4% for NAMA to breakeven on a gross basis.

The outlook for property in the UK remains uncertain, and has become more uncertain in the past month with the downgrading in economic outlook forecasts. Although the Chancellor of the Exchequer, Tipperary and Waterford man, George Osborne is scheduled to deliver his Autumn Statement just after midday today and the UK’s Office for Budget Responsibility will deliver their own economic and fiscal outlook for November 2011 just after the Chancellor’s statement, we really don’t need these statements to know that the UK economy has become less positive in outlook in the past month. In part that’s our fault or at least the fault of the wider EuroZone for not putting a lid on the EU debt and banking crisis, and that tampers down the UK growth outlook. But the UK itself has not been as engaged as some feel it should have been in dealing with its deficit which at 10% in 2011 is similar to so-called economic basketcase Ireland which is forecast to finish this year at 10.3%.

What we do know is that for 200 years, the UK has inflated itself out of recession and debt, and inflation is set to end 2011 at 4%+. The UK has engaged in a GBP 295bn Quantitative Easing programme to get more money into the economy since the financial crisis broke in 2007. That is 20% of the UK’s annual GDP of GBP 1.5tn. And it shows – inflation from October 2007 to October 2011 in the UK was 14.9%, in Ireland it was  just 0.8%. Of course the UK has an enviable unemployment rate of just 8.3%, nearly half our 14.4%.

So there’s unlikely to be any great spurt in house prices, though supply constraints in some areas, notably London, may act to stabilise prices. Elsewhere there is an ongoing debate about new planning regulations in the UK and the supply of housing over the medium term, but what seems likely is that economic growth will be subdued over the next two years at around 1% per annum. With current levels of unemployment, and the austerity needed to close the deficit and the prospect of 3%+ inflation for the next couple of years, you wouldn’t have thought the prospects for the residential property market as a whole to be great in the UK.

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As we have seen in the past four years, all good things come to an end with the Celtic Tiger de-clawed and passed out on the floor, property values collapsed despite the enormous distortions still in place and the banking sector still in retreat. Developers have seen their wealth wiped out on paper, and oftentimes in the wallet also.

But just as night turns to day, so also do bad things come to an end. Two weeks ago, €1bn-indebted NAMAed developer, John Fleming emerged from bankruptcy in the UK. No word yet on plans for the 61-year old Cork man but with his experience in property development, energy and other sectors, he is likely to be a man in demand.

The Grehans, Ray and Danny, have been associated with companies which are now bidding for former Grehan assets foreclosed by NAMA.

But it is the UK’s Property Week (subscription required, but adequately re-reported with appropriate accreditation for once by the Irish Independent today ) which confirms that developer, Donal Mulryan, is now “set to be” employed by Morgan Stanley which has a huge property portfolio under management including, reportedly, some of Donal’s properties, the loans on which were recently, again reportedly, acquired from NAMA.

It was 8th October 2011 when Bridget O’Connell at the UK’s Estates Gazette (not available online without subscription) reported that Donal Mulryan’s UK GBP 220m (€257m) portfolio of property was to be put on the market by Donal under NAMA’s auspices. Savills was named as the company appointed by Donal to sell the portfolio of mostly residential developments in the North West of England (Manchester is where Donal’s main vehicle, West Properties, is centred) but also a site close to London. It now seems that NAMA is to sell the underlying loans to Morgan Stanley for GBP 65m (€76m) according to Property Week. And Donal is said to be “set to be” engaged by Morgan Stanley in a management role for which he will, reportedly, be paid a fee. What sort of fee could Donal expect for managing GBP 65m of assets (worth GBP 220m originally)? Difficult to say but with performance bonuses, I would have said the mid to high hundreds of thousand pounds per annum.

NAMA, Donal and Morgan Stanley are not commenting on the reports. Donal is the brother of Sean Mulryan of Ballymore fame which the Independent today claims is “the largest debtor in NAMA” Donal at one time was involved in Ballymore but for the last decade has been developing property on his own account, and was said to have been worth €1bn at the height of the boom.

So there may be life for developers after NAMA. I’d guess that in the short term, there will be consultancy roles aplenty as cash-laden investors chase after loan and property portfolios, and who better to guide their efforts than the former owners or at least developers who would be familiar with the portfolios. For most developers it will perhaps take longer to build independent wealth based on their core skills in property development, most are broke and sources of finance are like hens teeth. There will be exceptions, Treasury China seems to be doing roaring business and Ballymore itself is continuing to develop London’s Docklands, but for most developers, consultancy and fee income looks like the best they can achieve in the short term.

Of course they need extricate themselves from NAMA first which is not straightforward.

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Last week, according to Iris Oifigiuil, NAMA appointed Statutory receivers within the meaning of the NAMA Act to two companies . The first, St James’ Developments Limited, might be described as a Capel group company – remember NAMA appointed receivers to a Capel group companies in April 2011 and has also commenced proceedings to obtain judgments against Capel directors personally, the directors being Edward Keegan, John O’Connor and Liam Kelly . What is a little odd about this latest receivership is that NAMA had already appointed Simon Coyle of Mazars as receiver in April 2011 to the same company, but on foot of different loan securities. I have noticed this of late – NAMA appointing receivers more than once to companies on foot of different securities. One interpretation might be that a security was imperfected or missing when the first appointment was made.

The second company to which NAMA appointed receivers was Colca Developments Limited, a company associated with Derek Quinlan, Bernard McNamara, Patrick Mooney – the so-called “Scott Partnership”. The company was associated with the development of a site on Sir John Rogerson’s Quay in the south Dublin Docklands. NAMA appointed Con Cronin of GVA Donal O’Buachalla to assets of the company.

Remember you can see a comprehensive list of Irish foreclosure action by NAMA here and in this regularly updated spreadsheet.

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