We haven’t heard a great deal of late about the fate of the 25-acre Irish Glass Bottle site in Ringsend, Dublin which is curious, as it is one of the most expensive assets under NAMA’s control by reference to its value in 2006 when it was bought for €412m by a consortium which essentially comprised Bernard McNamara, Derek Quinlan and the state-owned Dublin Docklands Development Authority (DDDA). It is estimated that the site today is worth €50m; there are three feature blogposts on the history and current status of the site on here – here and here and here. Yesterday NAMA announced a deal which appears to wipe out any legacy liability on the part of the DDDA for what has turned out to be one of the dumbest property development gambles in Irish history.
The summary of the relevant history is that the consortium which bought the site in 2006 funded the acquisition in the main through €288m of Anglo loans. And each of the participants, including the DDDA, provided guarantees on the loans. The site has been a disaster for all involved – in addition to the acquisition cost there has been interest payable on the loans and, in addition, at least €45m forked out to decontaminate the site. There is also legacy litigation between the participants – a complete car-wreck of a project. The loans which were originally advanced by Anglo to the Becbay consortium were transferred to NAMA.
The DDDA has new management and its chairwoman, Professor Niamh Brennan, has been keen to draw a line under the disastrous foray by the DDDA into property development, so yesterday’s announcement by NAMA of a deal with the DDDA, to absolve the DDDA from the guarantees given by the DDDA on the loans acquired to fund the purchase, will be warmly welcomed by Professor Niamh.
So what was the deal announced yesterday? The loans owed by the consortium, Becbay Limited, to NAMA remain payable in full. However NAMA has bought out the guarantees previously provided by the DDDA on the loans by Anglo to Becbay Limited.
How much were the guarantees worth? We don’t know but NAMA indicates that there may have been uncertainty and cost in expensive litigation to enforce the DDDA guarantee.
What did NAMA get in return for waiving the DDDA guarantees? A selection of land and retail/office units at the following locations:
(1) Former BJ Marine premises, 81A and 81B, Sir John Rogerson’s Quay, Dublin 2
(2) A retail unit at 15 Irishtown Road, Ringsend, Dublin 4
(3) A retail unit at Unit 2, Longboat Quay, Dublin 2
(4) Former U2 Tower, Britain Quay, Dublin 2
(5) Former Artbrook/Dublin Waste site, Upper Sheriff Street, Dublin 1
(6) Former Readymix site, 5-23 East Wall Road, Dublin 3
(7) Former Jones Oil site, Sheriff Street Upper and Mayor Street Upper, Dublin 1
(8) Lot 2, Riverside IV, Grand Canal Harbour, Dublin 2
(9) Plot 8, Sir John Rogerson’s Quay, Dublin 2
There was no indication in the NAMA statement of the value of the above properties
Was this a wholly commercial transaction? NAMA is not exactly confirming this, but do say that the agreement came after “mediated settlement negotiations” and the Agency also says that it “approached this matter with the DDDA in exactly the same manner and with the same objectives as .. would apply to any other debtor”; but given that the DDDA is state-owned and, as a result, would have its liabilities ultimately met in full by the State, then NAMA may have allowed its primary objective be corrupted if it accepted anything less than 100% of the value of the guarantees. There hasn’t apparently been a Direction issued to NAMA in this matter by the Minister for Finance, Michael Noonan.
We own both NAMA and the DDDA, so why worry if this wasn’t a good deal for NAMA? Whilst it is true that we own the DDDA and effectively own NAMA, so robbing Peter to pay Paul might mean it doesn’t matter to the finances of the State if the deal was a good commercial deal for NAMA, or not. The reason it would matter is that any deviation by NAMA from its primary objective should be carefully considered, otherwise we get a muddying of the waters and NAMA gets an excuse for losses, and may use that excuse to hide losses resulting from poor performance by the Agency in other areas. There is a mechanism in place through the NAMA Act if the Government wants NAMA to deviate from its primary objective – a Direction is issued. That protocol should not be dumped for political expediency by this Government or financial cute-hoorism by NAMA.
Does yesterday’s deal affect the future of the Irish Glass Bottle site? Not directly, it just affects DDDA’s liability on its guarantees given for the loans used by the Becbay consortium to buy the site.
NAMA Wine Lake 
Quick question may be answered on other links.But if the DDDA issues or has a balance sheet,would the removal of this guarantee not reduce it and the states contingent libalities.
Given the financial condition,of the other partners it could be argued that DDDA would have to ‘account’for all liabilities associated here.
Not an expert on Irish AC by any stretch,but the guarantee was a liability,theoretically,would removing it not enhance the DDDA’s balance sheet,reducing the states debt.
Assuming the guarantee was joint and several,and not limited,in other words each partner FULLY responsible,in event others can not longer perform.
In other words NAMA/DDDA just pulled a 3 card monte,removing the red card.
‘ There are only two moves you need to learn in order to perform three card monte: The throw, and the bent corner move.
‘The basic premise behind the “game” of three card monte is that you have three cards, for example, two black fours and a red ace. You shuffle the cards around on the table, and the “mark” or “sucker” tries to pick the odd card, in this case, the red ace. The sucker bets money on whatever card they think is the money card, they lose, and you take their money. Of course, being a magician, you take great pains to neither take their money nor make them feel stupid for failing to follow the red card.’
http://www.goodtricks.net/three-card-monte.html
The site, once it is decontaminated will make a lovely public park or coastal nature reserve
I can’t really see anyone ever building on it because of the cost of sea defences. It is very low lying and the wind would cut you in two on most days.
Unless of course it is one of the sites the Dublin County Board wants from NAMA gratis. Clanna Gael Fontenoys already border the site.
This seems to be a little bit like the governments car scrappage scheme where you get a discount on a new car by trading in a pile of old junk.
The property value on the portfolio transferred here bears little correlation to the value of the DDDA guarantee and accruing interest.
Will all the property developers get such a sweet deal? I think not.
Unus pro omnibus, omnes pro uno
The traditional Swiss motto,familiar by now to one of the above!
http://pgeist.blogs.ocala.com/10023/unus-pro-omnibus-omnes-pro-uno/
@Simon, NAMA says in its statement on the DDDA deal that it represents a “mediated settlement”. Mediated by who, we don’t know and NAMA is not saying. Are you saying developers generally have not been offered mediation?
There will be a few judicial review challenges when others do not as sweet a deal or have such a fair hearing.
Is it just a coincidence that Mr Connolly left at the same time and that the two stories are linked in the newspapers? He got a very frosty parting eulogy from Frank. No warmth there.
Actually, NAMA is already heading down a dark cul-de-sac in terms of its honesty of intention. At portfolio management level it is showing naiveté at its private meetings with its advisors, plotting to keep borrowers on board for limited periods of time by offering them €5,000 to €6,000 per month on short-term agreements, knowing and even discussing amongst themselves how they will “dispose” of them when they (the portfolio managers) have drained them of as much information as possible. Not much good faith there. As I said there will be a few challenges to the bone fides of their decision making process before this is all over.
It makes me curious as to whether Mr. Connolly, as an honourable man, might have aspired to a higher level of morality.
And so the toxic dump finally has its home in the larger toxic dump.
NAMA, as a joke, is obviously the corollary of the “How to become a millionaire…”*
Q – How do you become a millionaire in real estate in Ireland?
A – Start as a bankrupt and go into mediation with NAMA!
*”When Richard Branson, the wealthy owner of Virgin Atlantic Airways, was asked how to become a millionaire, he had a quick answer: There’s really nothing to it. Start as a billionaire and then buy an airline.”
@WGU,
This is the only sweetheart deal to date. One semi-state to another. The future is, as yet, still to be told.
@wstt
This was the big one.
When the SEC gave up trying to indict “Tangelo” Mozilo in the States, that’s when you knew no one was going to jail for the sub-prime/derivatives pillage, and worse, they would all get to keep the ill-gotten gains of their crimes.
Transferring all this shite into NAMA means DDDA will not be pursuing any criminal charges against the “entrepreneurs”/politicians/bankers involved in the original debacle.
This was the trough where all the piggies engorged themselves in plain view.
As a vehicle for bringing the main players to book it was ideal.
For NAMA to be used as the cupboard in which to stick this particular skeleton should bring joy to the hearts of all those bankrupts about to be made millionaires.
The punchline has been delivered.
The joke just isn’t very funny.
Now land has been transferred from a state-owned planning agency to a state-owned non-planning agency. This is somehow supposed to be better.
Which is best positioned to develop the lands over the long term, NAMA or DDDA? Before DDDA exceeded its brief by dabbling in murky property deals and treating its own planning codes and requirements under the DDDA Act with disdain, it was building a record as a serious regeneration agency in an area with massive social and economic opportunities. It is long since those days. But how will we rebuild our areas with credibility and humanity if everything is passed over to a liquidation agency.
The docklands are still a strategic area of great importance to Dublin city.
NWL,
the links in your emails to me don’t work – they are truncated to “http://../2010/06/10/the-irish-glass-bottle-site-becbay-and-the-mystery-of-nama/” i.e. I lose the “namawinelake.wordpress.com”.
Can you solve, as I prefer to read and open links from email than website.
thanks
Conor
@Conor, well I’ll be! You’re right, the links in the emailed version of new posts don’t seem to be working. I think this is a new problem, and will bring to the attention of WordPress, the people who host the NWL blog, right now, and will let you know with an update comment here when it has been fixed.
The links from the blogposts themselves seem to be working fine.
@WGU, I think that you credit them with too much intelligence – but as David O’Connor writes, it does nothing for the regeneration of the city. So, other than it simply being a mad bureaucratic shuffling of paper between departments, it is hard to see a logical reason other than the political one you describe.