The Sunday Independent today claims to have seen documentation from the Durkan Group – prominent developers of social housing in both Ireland and the UK – which doesn’t portray NAMA in a positive light. Durkan, which owed NAMA a relatively measly €43m, is reported to have repaid its loans in full, rather than deal with the Agency. The documentation reportedly says that Durkan found its dealings with NAMA to be “cumbersome, costly and time-consuming”. I suppose this criticism is to be expected; after all, NAMA demanded business plans from all of its debtors, even those like Durkan whose loans are said to have been performing and “good”. The business plan process was indeed bureaucratic as evidenced by the templates published by NAMA which developers needed complete. It was also “costly” in the sense that accountants and consultants were generating good business selling their services to developers to help get the business plans over the NAMA line.
But “uneconomic” terms imposed by NAMA? It is not clear from today’s report what is meant by “uneconomic” and a request for further information has been sent to Durkan. It probably doesn’t mean changes to interest rates that NAMA wanted on loans if those loans were performing, but it might mean NAMA wanted personal guarantees or other security on loans that presently have limited recourse beyond the original property for which the loan was advanced; NAMA might have demanded such terms in return for additional advances or not calling in loans because of falls in Loan To Values (LTVs). But whatever terms NAMA was demanding, in the end it seems that Durkan said “sod this”, repaid its loans in full and is now free of the Agency.
Now NAMA might again say that Durkan is not an objective commentator. But surely the Agency would not level the same criticism at one ofIreland’s most prominent judges, Mr Justice Peter Kelly?
Last summer last year, Durkan was involved in a court case where it was suing Phil Hogan’s Department of the Environment, Community and Local Government. The case was heard by Judge Kelly who examined NAMA’s behaviour in its dealings with Durkan, which at that time was one of NAMA’s developers. The judge said that in a number of cases that came before him, he had noticed delays of what he called “an inordinate period” at NAMA in dealing with its developers.
Durkan is at least the second NAMA developer to pay its way out of the Agency. Last month David Daly reached a settlement with NAMA whereby his loans were apparently refinanced outside the Agency.
UPDATE: 7th July, 2012. Showing that newspaper reporting isn’t always 100% accurate, it is reported today that Durkan is handing over a €31m award in a court case involving the Department of Justice, Equality and Defence, to NAMA, which would seem to suggest that Durkan hadn’t 100% exited NAMA at the start of the year.
NAMA Wine Lake 
Durkans always tried to limit personal exposure and while they may not have personal exposure to NAMA, they do have some commercial exposure remaining. That said, they have only iterated what most developers feel, but are afraid to say because of retribution. NAMA is vindictive.
Durkan was lucky that his loans covered UK property where there are functioning banks available. It is not a coincidence that the developers who have refinanced their loans out of NAMA were all overseas.
Good to see the Durkans exit Nama without, I assume, the taxpayer losing out. Sounds as though they run a sensible business and deal with equally sensible banks. Pity that there was not more like them.
When judging Nama, it is worth bearing in mind that it is a really a debt collection agency, not a bank, and dealing with a huge volume of loans (18,000 I think) in thousands of companies where documentation can be poor and where borrowers may be less than 100% supportive, The onus is on Nama to maximise recovery for you and I as taxpayers even if this involves stepping on some well shod toes.
That’s why John Corrigan gets 500,000 a year,at NTMA to supervise NAMA,his old job was outsourced but he’s hanging around,attending Davy events in New York, on 500,000 a year until Ireland returns to the markets.
He feels he is entitled to fly over to a Davy event/conference in New York,usually there is an earlier piss up in Boston,not sure if he attended that too.Incidentially,Davy has NO offices in New York,prior years it was held at one most decadent hotels in the city St. Regis.
Unfortunately,NTMA does not release transcrips of its MOST senior executives address at theses “events”.Despite the 500,000 a year and the Irish Taxpayer paying the travel expenses,you have to be invited by Davy.Its not open to the public,students,academics nor is it webcast,more like Masonic Lodge meeting.
Appears the “good” developers are leaving or filing BK,who is left behind the stupid incompetent ones.
@BF, Oh Brian, sometimes I despair of your thinking – especially if it is representative of the thinking of the majority of the Irish people!
Debt collection agencies do not maximise returns. They do not add value. They just collect what they can. Shoes are irrelevant (except in terms of listing them on the bankruptcy declaration). None of the borrowers are 100% supportive – None. You cannot be supportive of your executioner.
As I said the Durkans are not fully out of NAMA, the Group may be, but they have other interests. Those borrowers who have companies abroad can, if they are profitable, fund them through foreign banks. The same opportunity does not exist for Irish borrowers. We have no banks that are now lending, or will in the future lend, to existing borrowers to extract assets from NAMA. These are the same banks who went cap in hand to the government to be bailed out. Note that it was the banks that asked for the bailout – not the borrowers. The credit bubble was caused by excessive lending by the banks and by farcical regulation. Money was pushed at the public, who are not without blame – but as they say “It takes two to tango.”
The borrowers have an exit – it’s through the UK – and they will take it. But where does that get the taxpayer? They get left with the receivers, who do not have a clue what to do with the asset, except plan to stroke NAMA (and the taxpayers) by organising a sweetheart deal with some close mate/associate/themselves at a knockdown price. And this has happened already. Believe me!
NAMA will not allow those borrowers to manage, purchase or partner in relation to the future of their assets. The borrowers are vilified and treated as criminals.
As you say, NAMA does not act as a bank. Michael Geoghegan noted that fact and said that it would fail to recoup its purchase costs if it continued with its present culture and role as debt collector. What I personally dislike most about the NAMA personnel is their deviousness and lack of moral compass. They are not straight in their dealings with the borrowers. They hide their intentions; their only focus is on collecting personal financial information for use against the borrowers later. But borrowers have limited means and assets. They will not remain under those conditions and to be treated with such contempt for the next ten years. Life is too short. Bill Durkan, who is an honourable man, is right. It is impossible to work with them. This year more and more of their debtors will realise this fact and vote with their feet.
@WSTT
You are certainly working hard to enlighten me . Agree with about 50% of the above but you must guess which 50%. I have to leave you with the last word as I’m out for rest of day. Sorry.
@BF, Come back! It’s no fun without you… Do you not realise that if NAMA just collects debts in a market where there is no liquidity, it just pushes prices lower, thereby causing further losses to the taxpayer. As Michael Geoghegan noted – it is about adding value. If it is to succeed it has to stop acting like the CAB and start acting like a bank, in a commercial manner, by injecting liquidity into the economy – not by paying back the scrapings from the bottom of the barrel – that it gets from the receivers or finds in the WAGs’ knickers – to the ECB. They need to get some serious commercial talent in there.
They have Corrigan on half a million he spent a wet weekend back in the 1980’s or was it the 1970’s at AIB,entrenched at NTMA since its conception,commercial experience,ahh stop it,who needs that.They always go on about it’s different at NTMA,more “commercial”,completly agree,fire Corrigan,save 500,000 a year.When,Ireland returns to markets hire someone with commercial experience.
“John Corrigan was appointed Chief Executive of the National Treasury Management Agency (NTMA) in December 2009. He joined the NTMA in 1991 shortly after its establishment and was initially responsible for managing the domestic component of Ireland’s National Debt. In 2001, Mr. Corrigan was involved in the establishment of the National Pensions Reserve Fund (NPRF) and was the Fund’s Investment Director until his appointment as NTMA Chief Executive. Before joining the NTMA, Mr. Corrigan was Chief Investment Officer of AIB Investment Managers, having previously worked in the Department of Finance.”
NAMA site.
@NWL ok ok my rant against Corrigan over,will give it a break,but Davy just got fined and repraminded by Central Bank,Corrigan flying over to NY to attend their “event” was this a message to the Central Bank,Brendan at Davys London office just before Xmas too.Was Davy not one biggest property syndicators in Ireland,they are actively preparing borrowers business plans.
Nothing to worry about no conflicts of interest here,completly normal !
@JG, There’s a very incestuous relationship between Davy’s and NAMA. You don’t need 20/20 vision to see that!
Davy holds an Irish Equity ‘event’ in NY and Boston,every January.Why would the head of NTMA and NAMA,even consider flying all the way to NY to attend,assume he was back of the bus,but his travel plans,arrangements,costs are commercially sensitive.Can you imagine if he soaked the Irish Taxpayer for first class tickets,where did he stay in NY ?
The Irish Taxpayer who MAY have funded this nice little break for Corrigan in NY,but you are NOT allowed know how much it cost,transparency yeah right.
“Cumbersome, costly and time consuming” . How very well put. And the NAMA spokesman can’t turn around with the Mandy Rice-Davies rejoinder as he did in the case of the Grehans.
Bill told it as it is. But on top of that there is no joined-up thinking in the agency. No-one will make a decision. No-one takes responsibility. It’s like an enormous black hole.
The only decision that has been made was to sell the UK assets and as Ray Grehan says that decision has cost the Irish taxpayer a 20% loss on achievable market prices, because, in London there is the “market” price and there is the “NAMA” price. The Paddies are being stitched up by the wide boys and the old boy network in the city, In the property business and speaking with an Irish accent, you might as well have a big “V” for victim carved on your forehead. It’s just a question of how low a price can they purchase for.
We are selling out to the rings, cabals and the carpetbaggers for peanuts. But what else do monkeys get? Reminds me of the old Punch cartoons and their depiction of the Irish. They were very prescient. Just a century to early. Right on the button for the perception today.
@WSTT steady on there with the V,some of us have large capital W written,all over us.We just don’t have west Brit accents,still can do a auld deal every now and again.
NAMA’s job is to recover loans, right? Durkan has repaid his loans to NAMA, Where’s the problem here? Surely it’s Job Well Done by NAMA?
@Gerard, that’s a fair point indeed. NAMA has scored another bullseye (Paddy McKillen’s €800m Maybourne loans and David Daly and family’s €474m loans being two other examples of bullseyes). The thrust of the blogpost however was dealing with how Durkans apparently view NAMA. Very little light escapes from the NAMA black hole so it is noteworthy to get an apparently accredited viewpoint.
And whilst the redemption is a success for NAMA, it is also the case that NAMA has stopped receiving an estimated 3-4% on €42m that was redeemed on which the Agency was paying only 1.5% approximately to the holders of NAMA bonds. So these loans were a source of ongoing profit for NAMA.
PRE-Tax PROFITS at LISNEY UP 30%
JAMES NUGENT, the newly appointed managing director of property firm Lisney, has said he is satisfied with the company’s performance last year.
The firm’s pretax profit increased by 30 per cent from €427,793 to €560,132.
Operating profits jumped 81 per cent from €466,114 to €846,149 in the 12 months to the end of March last year, according to accounts just filed.
The lower increase in pre-tax profit compared to operating profit is attributable to the company taking a property writedown of €269,738. It increased its operating profits despite of the firm’s gross profit decreasing by 4 per cent from €8.9 million to €8.5 million last year.
The abridged accounts do not provide a turnover figure. Mr Nugent said revenues declined by less than 5 per cent while operating expenses declined by 7 per cent, from €8.5 million to €7.8 million.
Mr Nugent, who took up his new role this week, said that given what the industry was going through, he was satisfied with how the company performed last year.
He said the firm would record a profit in the current financial year.
“We have clawed back some market share and revenues will be much the same. It is a difficult industry to be in at the moment, but our performance is down to a very good team of staff that are able to produce the results.”
He added: “We have very good fiscal management. We continue to be in profit, have increased cash and paid down debt and they are all very positive.”
In their report accompanying the accounts, the directors said as a result of the continuing stress in the property market, the firm had focused on providing “recovery services”.
They said managing property and active asset management dealing with distressed situations were likely to become more of a focus for their clients.
“The directors expect existing market conditions to remain for the foreseeable future, but are confident that they have sufficient resources in place, namely our talented and creative people, to deal with them.”
The company’s cash last year increased from €190,127 to €355,362 while its shareholder funds at the end of last year stood at €1.94 million.
The numbers employed at the firm declined from 103 to 96, with employment costs fell from €5.6 million to €4.9 million. Remuneration for directors reduced from €1.3 million to €1 million.
4
Enlighten me…..? Who has taken the hit for the initial “haircut” on Durkan’s original loans transferred to Nama ?
@missymoo1962 there has been no suggestion anywhere that NAMA sold any loans below ‘par’,or allowed any borrower to ‘exit’ for any haircuts or discounts,all indications are that Durkan paid back the full amount borrowed.
NAMA’s stated policy is to purse borrowers for original amount owed,not NAMA number and they simply, absolutely,will never ever sell below NAMA number.
But that will change,in summary no indication or reporting of any ‘hit’ on Durkan’s original loans.