British auction giant, Allsop and its Irish partner, Space has today published its catalogue for the 30th November, 2011 auction, its fourth and biggest so far with 110 lots presently set to come under the hammer. The catalogue can be viewed online here. There will be analysis here tomorrow, but a quick shifty through the lots gives the impression that the maximum reserves – the price above which the property will definitely be sold, which may be reduced between now and the day of the auction – are keener than previously. This may be a reaction to the surprising number of unsold lots at the last auction in September 201 1 – Allsop Space has established itself as Ireland’s most successful property auctioneers and there is evidence that they want to hold onto that number 1 position.
UPDATE: 9th November, 2011. The 110-lot auction on 30th November 2011 is understood to be the largest ever in the Irish Republic. Allsop Space attribute the high number of lots to an increasing appreciation by sellers of true market prices. The lots are a mixture of foreclosed and “free-range” sales. Robert Hoban, Director of Auctions at Allsop Space LLP said “the vendor profile is again a broad mix of private and receivership clients, as the auction process evolves and normalises into an efficient and straight forward alternative, available to anybody wishing to sell their property, once priced sensibly”
So what about the properties themselves. In general the yields, that is the annual rent divided by the value of the property represented by the maximum reserve, are what investors might term “tasty” ranging from to 8% – 26% (actually the top yield is 60% on a commercial premises in Waterford but the catalogue notes the tenant is presently pay a rent which would give a yield of 26%) – I would advise caution on residential and indeed commercial yields at present. It is not clear where the €700m social protection cuts that are set to be announced in Budget 2012 on 6th December will come from, but rental allowance has previously been mentioned by Minister Burton as a candidate for reduction. And whilst some might argue there is a division between rent allowance and private rents, I would observe that it is odd that private rents seem to have stayed flat since the start of 2010 and are at the same level as rent allowance. Also we are expecting any day now, according to previous statements by Minister Shatter, the legislation to address upward only rent review terms in legacy commercial leases and this legislation is likely to depress commercial rents.
They’re still flogging Liam Carroll’s apartments at Castleforbes Square. There a Paddy Shovlin/Fitzpatrick brothers’ apartment in the Beacon South Quarter. The most expensive property has a maximum reserve of €485k and is on Pembroke Road in Ballsbridge and accommodates a restaurant and apartment which together generate current rents to give you a 19% yield. The second most expensive property at €420k is an end-of- terrace period house in Rathgar, presently divided into bed-sits. The third most expensive property by reference to maximum reserve is a 1.6 acre site in Rathfarnham with planning permission for 32 homes, with the site presently having a nursing home. At the other end of the scale, there’s a €32,000 four-bed detached house in Donegal and a €25,000 apartment, also in Donegal. There’s a restaurant premises on Haddington Road in Ballsbridge formerly home to “Mangetu”. There are a few lots here which remained unsold at previous auctions – I see 8 Finglas Road in Glasnevin is back with a reserve of €125k compared with over €200k before.
When: 30th November, 2011 with pre-auction announcements from 10.45am and the first lot auctioned “precisely” at 11am. With 110 lots (plus/minus any changes on the day), I’d expect the auction to finish at about 5pm
Where: Shelbourne Hotel, St Stephen’s Green, Dublin 2
What: 112 properties, mix of foreclosed and owner-sales, vacant and tenanted, residential and commercial, Dublin and provincial but all in the Republic of Ireland (in fact it seems that the only county out of the 26 without any lot under the hammer is Monaghan)
Catalogue: Available online from Allsop Space here, or as a PDF here or can be ordered here if you want a paper copy.
NAMA Wine Lake 
When you look at BOSI’s proactive stance, you begin to realise that NAMA has a big problem. It is taking the scenic laid-back route and time is running out.
Not only has it lost the initiative when compared with the disposal activity of the other local banks, it does not seem to realise that it is competing with the European banks against a 2013 deadline.
Across the European banking system, in excess of €1 trillion of bank assets have been earmarked for sale either through agreement with the European Commission on Competition or by government mandate by the end of 2013. At least €30bn of European bank assets need to be placed every month for the next two years,,,,,, and the clock is ticking.
The euro banks are not selling those assets at present with any degree of urgency, so it is inevitable that there will be an avalanche of sales as we get closer to the deadline.
The capital markets know that European banks have to de-gear. Lone Star knows it. Like a true vulture, it is waiting in the wings with its €8 billion war chest, Blackstone has signaled that it is waiting for the blood in the euro streets and every large vulture fund is anticipating and awaiting its prey.
Hopefully NAMA has also anticipated this background, but just in case – some commercial advice for the people who so far have had their heads in the WAGs’ knickers while others address the market:
Provide liquidity to the market and start selling the Irish loan book in earnest:
By far the biggest problem in the market is lack of capital. Liquidity builds liquidity and it creates a positive reputation for the NAMA among willing buyers in the marketplace. There are strong arguments for conducting sales as quickly as possible. It fosters the development of internal processes that can accelerate asset disposition in an orderly fashion. The time for getting ready to get ready is over.
Keep the process transparent and don’t limit your market:
Transparency demands a level playing field open to all investors – and that includes the current debtors and their associates. They are the obvious buyers and the people most likely to pay the highest price. Processes that appear to arbitrarily limit the universe of potential buyers means that the commercial objective of price maximization is not the primary objective. Rather, it will be seen that the Irish penchant for demonizing the debtors will have taken precedent over commerciality to the detriment of the sales process and ultimately the taxpayer.
Don’t waste investors’ time:
The sales process for any particular asset should only be initiated when and if NAMA is committed to closing at the present-day market price. The market sale price should not be confused with NAMA’s purchase price, never mind the original par value. If the numbers are dramatically different from NAMA’s expectations and are unpalatable, NAMA should not go to market. Poorly conducted sales negotiations and processes damage a seller’s reputation in the markets and discourage the potential purchasers leading to reduced interest in later transactions.
Massive, single-ticket transactions should be a last resort:
The number of buyers that have the appetite and financial resources to purchase deals in Ireland with a €500m price tag are very limited. More critically, their ability to move quickly with large amounts of capital comes at a price, which will be reflected in the discount that they will demand to complete the transaction. If a sale can be structured so smaller investors can compete with the larger funds, both NAMA and the taxpayer will win.
Keep it simple, stupid… and don’t get complex:
Heavily structured transactions lend themselves to high deal costs and a lack of transparency. If the goal is to exit the loan portfolio in keeping within the published timetable, the cleanest method is in having as simple a sale of the asset as possible.
BOSI is making you look like amateurs. Time to get the finger out…… tick, tock….
@WSTT, thanks for that, seems logical enough, though NAMA of course have a legal obstacle in selling assets back to defaulting debtors or their associates, though Judge Kelly seemed to imply last month in the Mansfield case that this restriction might not stand up to scrutiny. NAMA is very much aware of the restriction and it has been cited several times by chairman Frank Daly and CEO Brendan McDonagh whenever suggestions of shenanigans have arisen. It will be interesting to see if any disappointed buyer who is an associate of a defaulting debtor takes the matter to court. It is a very contentious issue because the public will see phoenix developers buying their assets at a discount whilst the State through the banks nurses a loss.
@nwl lot 109 very confusing appears to be no passing rent and ground floor is % of sales.Tried to get ‘leagal’ docs related but have to email request not available immediate online.
Click to access shed109.pdf
great post wstt
@ NWL There is likely to be a double whammy on the Social Protection rent support side. 1) A larger personal contribution will be demanded from the tenant, & 2) the level of rent support will also be reduced. There is a group looking at this for JB at present, but it will report in time for the Budget cuts to be announced. Savings i.e. reduced subsidies to landlords and their financial institutions should reduced the bill to the State by about 15%
There is a also far greater scrutiny of claims being made at a local level to ensure that the accommodation is of suitable size. Three or four bed houses for one or two child families are being refused and claimants are being advised to find more suitable, i.e. cheaper housing.
@Niall, if it weren’t affecting peoples’ lives and was just an academic matter, it would be interesting to sit back and see how the rental market adjusts to a lowering in allowance and pressure from tenants who have to contribute some of their own welfare payments. You’d expect landlords to initially resist lowering rents and seeking alternative tenants. This might result in short-term displacement of people receiving rent allowance whilst landlords get used to the fact that the demand side of the rental market has reduced.
But you can’t have “short-term displacement” when you’re talking about people who need a roof over their heads.
I wonder how Minister Burton proposes dealing with that reality…
@ NWL As noted in previous posts, maximum rent allowance exceeds market rents in many parts of the country. While market rents appear to be increasing in some areas, Dublin & Galway for example, where I gather there is steady demand, this is not true in many other areas.
There is clearly a need to set the levels of assistance closer to market levels. The current limits set under An tUas Ó Cúiv and the reductions at the time seem to take the plight of landlords more into account than that of taxpayers. Because of the increased number of claims, cuts are required just to stay at current expenditure levels.
I take your point in relation to displacement, which I think is a very clear danger in Dublin and a small number of other local markets. However in many areas, tenants with rent allowance are the only customers in the market. I would presume the results of the review will take this into account. The involvement of local authorities in future should reduce the risk of such displacement.
However there is a wider issue, Irish SW payments are in competition with salaries abroad, in particular Eastern Europe. Up to 30% of new claimants of various SW schemes have a nationality other than Irish.
The value of Irish SW payments, including rent allowance, considerably exceed the value of an average gross salary in Poland Average gross monthly earnings for 1st half 2011 were Zloty 3,415 or €775. A couple with two children in Ireland would receive far more than even a private sector worker in ICT averaging just €1,505 or Zloty 6,635.
Such a couple would receive €1,423 per month assistance here plus €280 per Child Benefit together with Rent Allowance of say €500. A monthly income of €2,203. The Polish figures are of course before income tax, net figures would be considerably less. Polish figures are from Table 5, http://www.stat.gov.pl/cps/rde/xbcr/gus/PUBL_ls_employment_wages_salaries_Ipol_2011.pdf
Once assurances were given that basic rates were not going to be touched, housing rates were always going to be hit disproportionately.
Caveat emptor on lot 109,Allsop in the ‘flyer’ overstates the ‘actual’ rent,they utilized a ‘contract’ figure.The upstairs tenant is NOT paying rent currently as per receiver.
I would be significantly below the above illustrative number for yield.
Link above ‘poetic license’ or misleading !
http://www.auction.co.uk/irish/LotDetails.asp?A=750&MP=24&ID=750000109&S=L&O=A
@nwl maybe sharpen the pencil on Pembroke its the 109 listing as it will trade,you are quoting going in at 19%,no income from upstairs.
The catalogue for the next Osborne King auction in Belfast on 8th December has been published : http://www.osborneking.com/auction.asp
24 lots (down from 27 last time), a mix of development opportunities, commercial and a small number of residential. Total reserve £1.6m.
Ranges from a site in Co Antrim with 3 partially built apartments with a maximum reserve of £5000 to a site of 6.9 acres in Co Fermanagh with planning permission for 58 houses with a maximum reserve of £175,000.
@David, thanks. We’re expecting the University of Ulster Quarterly House Price index tomorrow and there should be a blogpost and a preview of the Osborne King auction.