Archive for December 13th, 2011

It was beginning to look as if the NAMA CEO, Kerryman Brendan McDonagh had some animus towards traditional inter-county rivals, Cork with the high number of Cork-based companies subjected to NAMA receiverships, but we see today that NAMA is an equal-opportunities enforcer of loans as it appoints receivers to two Kerry developers. According to Iris Oifigiul, NAMA last week appointed Barry Donoghue of KPMG to Banna Holiday Villas Limited and Cloonbeg Developers Limited, both on foot of loans from AIB.

Banna Holiday Villas Limited of Banna, Clonfert in Kerry was the developer behind a  self-catering holiday village, with 24 semi-detached houses,  though I see some of the property is presently for sale eg  here.

Cloonbeg Developers Limited of the Clash Industrial Estate controlled by Kerryman John Cahillane had been involved in a number of Kerry residential developments such as the Carragh Holiday Home development at Carragh Lake, Killorglin, Kerry

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

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The NAMA CEO, Brendan McDonagh, speaking in London on Friday last to a gathering of investors organised by Davy stockbrokers, said that the Agency had approved €6.2bn of asset sales to date. It is not clear how many have been realised in cash but NAMA’s bond redemptions, new cash advances to developers and the NAMA cash mountain  indicate that more than half have actually been rang up in the cash register.

Sources indicate that one of the most recent transactions has been the sale of a property in the City’s Finsbury Square(technically the building is in the London Borough of Islington but it is effectively part of London’s financial district). Royal London House at22-25 Finsbury Square, EC2 is understood to have gone “sale agreed” for GBP 25m (€29.5m). The building has 89,157 sq ft of partly-tenanted existing accommodation , but there had been plans to redevelop the site and double the accommodation.

The seller is a development company whose loans have been transferred to NAMA, Shieldpoint 22 Limited controlled by developers Eugene Larkin and John Flynn and the property has been on the market reportedly for more than a year. It is understood that NAMA paid just GBP 18m (€21.2m) for the AIB loan on the property, meaning that NAMA should be able to book a profit of some €8m on the transaction, which will be just over 1% of its projected operating profit – that is, profit before impairments – of €600m in 2011. The buyer is not known at this stage, nor is the face value of the loans but it is believed it is over GBP 25m, with the site being originally purchased for GBP 40m in the mid-2000s which indicates an eye-watering loss of nearly 40% for the developers.

NAMA’s 40% profit (GBP 7bn from an acquisition price of GBP 18m) in part demonstrates the strength of the central London commercial property market since mid-2009 when prices started to recover from a UK-wide collapse of more than 40% since the financial crisis broke in 2007.

Although the London market is buoyant in the sense prices continue to rise and there is funding available for purchases, it remains a concern that NAMA is selling its best assets now which might otherwise have appreciated more in coming years, compared with  declines in its own backyard.

NAMA was asked for a comment on the above transaction, but a response is unlikely as NAMA has a policy of generally not commenting on individual sales. In fact there is no external assessment of NAMA’s individual sales – not by the public accounts committee, not by external auditors who will not be interested in commercial values and apparently not by the Department of Finance. So NAMA might have racked up a success, but we may never officially know…

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