Up to the middle of last year, the word on the street was that Treasury Holdings, the Dublin-based property giant, was close to the top of the NAMA class – not quite the teacher’s pet that Sean Mulryan and his company, Ballymore, are understood to be, but close. Then there came the annual report from a company called Real Estates Opportunities (REO) which is controlled by Treasury and which was noticeably cool, even blasé, about its dealings with NAMA. Then there was speculation that Treasury/REO was trying to sell a stake or perhaps even 100% of its interest in the Battersea Power Station in London and then just before Christmas, NAMA and another lender, Lloyds Bank, had several REO group companies placed in administration as NAMA and Lloyds took more direct control over the 38-acre Battersea site. Subsequently Knight Frank has been reportedly appointed to market the site (worth about €500m) and one conclusion is that NAMA and Lloyds think Knight Frank will do a better job of selling the site than the former REO owners. And this seemed to indicate a deterioration in relations between NAMA and Treasury.
And so today, the Irish Times, citing “informed sources” says that NAMA has issued a demand for repayment by Treasury of loans that amount to hundreds of millions of euro. Repayment is due “this month” but no further information on timing is given – in the past NAMA has issued 24-hour demands for repayment of about €600m from the Grehans, about €500m from the Dalys and undisclosed but colossal sums from Bernard McNamara and Paddy Kelly. NAMA had to “stand down” receivers appointed to the Grehans’ assets in April 2011 after it emerged there were potential irregularities in the procedure NAMA had used to foreclose on the Galway brothers’ assets. So NAMA’s reported demand for repayment of loans by Treasury might give that company more than 24 hours but it’s unlikely they’ll have weeks.
The Irish Times doesn’t know what assets might be affected by any foreclosure of Treasury assets. Treasury Holdings is owned by the colourful Johnny Ronan (understood to be the cousin of Jack who is having some bother with Vita Cortex at present) and the more understated Richard Barrett. The company controls a vast property empire in Ireland and to an extent, the UK. Despite sunnier claims in Irish media last year that Treasury buildings were performing well in the rental market, I notice that, according to a Jones Lang LaSalle report published in recent days, there is 147,218 sq ft available for rent at Number One Central Park in Leopardstown which is a Treasury Holdings/REO property.
NAMA operates as a tenant from a building in south Dublin Docklands which is called “Treasury Building”, pictured above. It was developed by a partnership between Johnny Ronan and another prominent Irish property developer (or “investor” as he and his spokeswoman often insist) Paddy McKillen. The building might be called “Treasury Building” but it is not a Treasury Holdings asset, and is now understood to be solely controlled by Johnny Ronan.
Treasury has built what seems like a thriving property development business in China, which is understood to be completly fire-walled from problems with Treasury Holdings back in Dublin. Perhaps Messrs Barrett and Ronan have offended NAMA by concentrating their skills on Shanghai rather than Leopardstown. Perhaps neither is as exposed to personal guarantees as some other developers, or perhaps they have protected their personal wealth in better ways – no intimation of illegality here, there are perfectly lawful means of sharing wealth with spouses and family. Perhaps they are holding out for better terms in their dealings with NAMA. Who knows, we don’t even know for a fact that NAMA has issued a demand for repayment of the loans. Perhaps the front page story of the Irish Times is inaccurate, and the paper is unwittingly doing the bidding of those who might want Treasury to better engage with NAMA.
Here’s a reminder of what press reporting has suggested are the NAMA Top 20 developers and what we know about their relationship with NAMA.
UPDATE: 13th January, 2012. As expected, there is some evidence of a reaction from Treasury to what is seems now almost certainly to be a game of chicken. Treasury is reported by the Irish Independent to be “desperately” seeking US and UK property funds to refinance itself out of NAMA. Emmet Oliver claims that Ernst and Young is “on stand-by” if NAMA seeks to appoint receivers in the “next fortnight”. Emmet concludes his piece by saying “ironically, the MOU, agreed with NAMA in 2010, provided fresh working capital for Treasury, but it appears NAMA has now started to question the company’s long-term strategy.”
UPDATE: 21st January, 2012. Reporting in today’s Irish Times, Ciaran Hancock claims that the deadline given to Treasury by NAMA expires next Wednesday 25th January, though there is some suggestion this may be extended if progress is evident in Treasury’s bid to attract a new investor to its vast portfolio of €900m of loans at NAMA. Australian financier Macquarie is apparently in the frame as well as another unnamed investor.
UPDATE: 25th January, 2012. RTE seems to be the only media outlet reporting a Treasury receivership. It says that tomorrow, in Dublin’s High Court Treasury will challenge the appointment by NAMA of receivers to its property. It goes on to say that Ernst and Young and PwC may be confirmed as receives if Treasury fails in its bid to have their appointment blocked. There is no official statement from NAMA, Treasury or REO.
NAMA Wine Lake 
Ronan et al didn’t deliver on the Battersea deal. The power plant went down and took the whole grid with it. After this sort of thing, the whole base tends to get overrun fairly quickly.
I had suggested the Same scenario around the time they Lost the Power Station but was told that this had not affected the Relationship between the Parties,today’s reports would suggest a major Breakdown in relations which should be regarded as Another Major set Back for the Agency
Word on the street is that the relationship is not looking good between Treasury and NAMA. It is also claimed that NAMA are gearing up to take down a few developers over the next month.
Checked the REO and Treasury websites,REO is public has OPERA out there.
If the “demand” notice was in writing or in fact a strong verbal,they would have to issue a statement.This would be a material and adverse change,failure to disclose it would have all sorts of nasty implications for Directors.The bondholders,other lenders,shareholdersin ANY of the myriad entities,would expect some clarification regarding front page of IT.
Agree with NWL,more posturing and posing by Treasury,what’s next Rusian Billionares,Arabian Princes,they have played every joker in the pack.
Sorry boys,party is over who’s paying the bill.
@John, that’s a very good point. REO is publicly traded and it is REO that controls a lot of property here in Ireland. Sligo Today reports that NAMA had a meeting with Treasury on Monday last ” to issue their ultimatum”
The good people of Sligo have a particular interest in developments as Treasury is involved in a landmark development in Sligo town centre.
http://www.sligotoday.ie/details.php?id=18183&PHPSESSID=2b67d772bef8035a6fff7fa141debf2c
I get the impression that both might be playing chicken, and that the IT might unwittingly have publicised what may have been only a conversation between NAMA and Treasury and which hasn’t yet given rise to a formal demand for payment which would impact upon REO’s shareholders (presumably).
Nama bought in to the “Battersea Bullshit” for long enough…Who knows what s going on there…Treasury are a ilitigious lot..I notice the story disappeared prettly smarly from the online version of the IT…Not sure if the Nama lads have the balls/smarts to cope with Treasury/Reo/Creo?…
@MP the strangest most bizzare or GUBU,moment to date is the 64,000,000 increase in the acquisition loan at BPS.
But as NWL pointed out REO values it at 500mil. so the 324 from 260 million should be easily achievable.
Acting on behalf of Irish Taxpayer,NAMA must have secured additional collateral .
It would be actually all quite amusing if the Tapayer was not exposed so badly here,more “news” of “new” investors…….linked a CoStar piece.
Of course there are aliens from outer space landing shortly to recaptalise REO.
http://www.costar.co.uk//en/assets/news/2012/January/NAMA-close-to-enforcing-on-Treasury-Holdings-Irish-portfolio/?dm_i=UQT,NW91,4KQZWH,1XHRZ,1
Given the highly evelvated status politically and in the business community that the founders here enjoy,one would expect them to behave honorably.
If they have additional resources or any non-encumbered assets,simply add them to the existing collateral,if they are unwilling to do that cut of the cash and close the whole dog and pony show down.
@John, if you believe the latest report from the Evening Herald, all that appears to have happened is that an ultimatum was slapped upon Treasury by NAMA and said-ultimatum may expire “as early as next month”. This really has all the hallmarks of a game of chicken with NAMA benefitting from the Irish Times reporting based on information from “informed sources”.
http://www.herald.ie/news/tycoons-empire-on-brink-as-nama-eyes-raft-of-his-properties-2987382.html
@NWL thanks for that, said chicken is about to get chocked,REO is insolvent.
Unless,they significantly expand the collateral which we all know they won’t, and without significant additional funding via NAMA it’s over.
@JG The Mountie always get his man! Well done. I would not rely on anyone to behave honorably. Dealing with some developers/landlords – not the ones the subject of this blog of course – is like dealing with the mafia, they just barely stop short of the horses head in the bed and you are always glad when you look down and see that your knee caps are intact!
It’s a big bad world out there,horses for courses.NAMA needs to make them a offer they can’t refuse.
The mounti did get his man by the way.
Enjoyed it too.
Treasury is finished.
The knives were out for the company and Ronan on Today’s RTE drive time. The company was consistently referred to in the past tense, and Ronan’s gossip column scandals were rolled out on display for the public, as were his families connections to Fianna Fail.
Funny how the media behaves when it scents blood in the water. Pity they didn’t bother to break some skin themselves before now.
@OMF, didn’t hear Drivetime but I get the impression the Treasury situation is more complex than is being suggested. Remember that in general NAMA working together with a compliant developer is preferable to appointing a receiver – it should be cheaper and as long as the developer is competent, is more likely to lead to a better financial result. And by the way, looking at Treasury in China which is reportedly fire-walled from the problems in Ireland/UK, Treasury is a competent developer, and more.
I have not seen this “ultimatum” practice, where NAMA has a meeting and gives a developer a month to come to their senses, being referred to before. And there is something uneasy about the Irish Times front page report. If there is indeed a game of chicken ongoing, might we see a report over coming days from “informed sources” suggesting NAMA is being unreasonably demanding, that certain developers are being stomped into the ground with NAMA’s demands?
Apologies as this is slightly off-thread. But I’ve just seen in the ‘Twitter Updates’ that NAMA has recruited Martin Whelan as a political lobbyist. I presume it is the same Mr Whelan who was an integral part of the FF publicity machine at the height of the Celtic Tiger. My mind is boggling and I can’t digest all of this right now except to say it stinks to High Heaven on so many levels.
@Bunbury, yes indeed there was a press release from NAMA this evening, available from the NTMA’s PR people here
http://www.gordonmrm.ie/statement-nama-appoints-relationship-manager/
which confirmed that Martin Whelan, the current CIF communications director has been appointed by NAMA to the role of “Relationship Manager” which is viewed here as a political lobbying role. See here.
https://namawinelake.wordpress.com/2011/07/01/nama-recruiting-political-lobbyist-even-though-it-might-be-illegal-for-the-agency-to-lobby/
You know what PR people are like when it comes to PR developments, they’ll issue a press release if they acquire a new pencil, so the appointment didn’t get its own blogpost.
In recent times, CIF and NAMA haven’t always seen eye-to-eye
https://namawinelake.wordpress.com/2010/12/01/nama-angrily-reacts-to-cif-report-–-“factually-incorrect”-“not-objective”-“naive”-“blithe”-“conceit”/
NAMA says that this new recruit brings its staff complement to just under 200. Pity, it might have deserved its own blogpost if it was exactly 200, just to have the title “NAMA’s 200th recruit is a political lobbyist”
Lastly here’s a piccy of NAMA’s new Relationship Manager
they really should have hired a poet, and I say that quite ruefully. What a crackin’ job for any fiction writer.
Will be interesting to see if a new contributor pops up on NWL and continually defends Nama. If so, guess who?
@NWL component it was shooting fish in a barrel,what metric are you utilizing to define competent,a bubble market.
They can’t navigate one full cycle,where are the cash reserves.
Sell a few properties,ah go on,de-leverage,stop it,we have the Irish Taxpayer.
Yes,they prospered expanded grew got enormous in ONE phase of the RE cycle,Can’t even cover their debt service.
The CIF are, and always were, a complete waste of space. I think that he’ll fit in nicely….
Johnny says “Don’t believe everything that you read in the papers!”
Perhaps Johnny will enlighten us then as to how his dealings with the Agency is Progressing then so. But would have no reason to Doubt the Report in the Times was correct and that this represents a serious Issue for Mr Ronan and Treasury
NAMA will be in need of their spin merchant. If I was the government, I’d want a comprehensive explanation as to why NAMA are selling all its prime assets and retaining the rubbish.
It needs to explain why the risk of the portfolio is not being measured and risk objectives established. For example, the original portfolio mix should be set as the benchmark (plus or minus a few percentage points) and NAMA should have the goal of ensuring that the portfolio mix stays close to this benchmark over the course of its lifetime.
To explain it’s portfolio mix, NAMA purchased €18 billion of assets in the UK and the USA (these are liquid assets), approximately €22 billion of assets on the island of Ireland that could be considered fairly liquid assets and a massive €37 billion of land and development assets in Northern and Southern Ireland that are anything but liquid.
NAMA only has a limited pool of liquid assets from which to draw in its pursuit of an annual profit. So some of Johnny’s must be on that list!
The problem with this approach is that a long-term objective would seem to have been translated into a short-term goal, without fully appreciating the inherent risk.
What will ultimately remain after 2013 will inevitably be illiquid – especially after factoring in the stagnancy of the Irish property (land and development) market. The risk profile of NAMA’s portfolio will therefore reach toxic proportions. The hidden losses will spew from the place. Forget about being the government, if I was John Mulcahy, I’d plan to be gone long before then.
‘who shot the tiger’ what is your solution? I’m certainly not a NAMA fan but are you suggesting they hold bubble London assets to the bitter end and repeat history? Illiquid assets are illiquid for a reason, no purchasers at any price, NAMA was set up to be a bucket for rubbish and its balance sheet ended up better than it could have been when the ECB put task to long term economic value as it was originally concevied. In the end of the day its only shuffling cards, the banks weren’t saved from public as was ultimately the original goal and it has continued as it started – a pointless organisation with no direction and no business plan.
@rickylambert, I am not advocating that NAMA hold assets to the bitter end. Far from it. I would like to see it speed up the disposal of assets to the extent that the target should be more like €12 billion in total disposals by the end of 2013, rather than €7.5 billion.
My concern is related to the mix of assets that will be left in NAMA from the end of 2013 and the risk profile of those assets in terms of their income producing ability to cover costs for the balance of the run off term.
Section 11 (1) (d) of the NAMA Act says that one of NAMA’s functions is to “take all steps necessary or expedient to protect, enhance or realise the value of acquired bank assets, including the disposal of loans or portfolios of loans in the market for the best achievable price”. It does not indicate that NAMA should hold its assets hoping to make a speculative profit in the future.
NAMA has changed its remit as defined in the Act and now seems to believe that it should be interpreted as recovering what it paid the banks for its loans plus costs and some hoped for profit. Those objectives are different from the mandate in the Act. The term “best achievable price” in the Act is not the same as “earning more than it paid the banks”?
Some of the underlying assets are highly unlikely to recover above agricultural land values. Some development land offers potential for recovery, but this can only occur where an active market exists.
Land and development loans do not generate any income, while being warehoused. The costs to maintain these loans are high, as the State is liable for the interest costs on ECB funding related to NAMA, and the administration costs of the loans. These mount up if there is no income to cover them.
With no income producing assets to cover its costs, the continued warehousing of these loans is building up an enormous contingent liability for the agency.
You asked for a solution ….. Under pressure right now, but I’ll answer that later.
Has Treasury been asked by this Blog for any comment?In the Independent it is suggested that working capital has been advanced to company,Any idea how much? Change of Management required at the Top of Treasury,Leadership out of Ideas and looks like they may be out of time as well
@Patrick, REO (which is just over 50% owned by Treasury) yesterday issued an “interim management statement” to the London Stock Exchange. It’s not on the REO website
http://www.realestateopportunities.biz/News.htm
But it is here
http://www.ukwire.co.uk/Article.aspx?id=201201131731095768V
It says ” By notices dated January 10 and 11, 2012, the National Asset Management Agency (NAMA) sought repayment of loans which had been advanced to certain Group subsidiaries. Following subsequent negotiations, agreement was reached between the Group and NAMA on a relatively short standstill period during which no action will be taken in relation to the repayment demands, and which will allow negotiations which have been taking place for some time between the Group and potential investors to continue.”
That’s for REO which is listed. Treasury Holdings isn’t listed, and there is no comment forthcoming save to say that negotiations with NAMA are “ongoing”
Has the Agency Appointed Any Independent external Directors(As in the Grehan Case) to any of the Debtor Companies?Do we need to see More Property Professional Appointed at both The Agency and indeed the removal of Present Directors from Debtor Companies in order that agency Plans can be implemented without the Emotional Attachment that some of the present Debtors bring with them
Word is that Macquarie has had enough and is walking away from the Treasury negotiations…… end of the road?
Seems like the word is indeed out. This from todays Irish Times online:
CIARÁN HANCOCK, Business Affairs Correspondent
THE NATIONAL Asset Management Agency is believed to have lined up a receiver to take control of assets at Treasury Holdings today if an agreement is not reached on the repayment of the developer’s loans by this afternoon.
Nama has set a 4pm deadline today for Treasury to repay its near €900 million loans to the state agency.
It is understood that accounting firm Ernst Young has been lined up by Nama to take charge of the assets involved if no arrangement has been reached with Treasury by the deadline.
Ernst Young was last month appointed by Lloyds Bank in the UK and Nama as administrator to Battersea Power Station in London, one of Treasury’s most prized assets.
Battersea will shortly be put up for sale.
Detailed talks between Nama and at least two groups – Australian investment bank Macquarie and global real estate specialist Hines – in relation to Treasury’s loans have been ongoing for some time.
Nama is not expected to extend the deadline for the standstill agreement with Treasury.
In the event that no agreement is reached today, Nama would appoint a receiver to the various assets involved.
Even if the negotiations with Macquarie or Hines were to prove successful, it is not clear what role Treasury would play in relation to the assets in the future.
Treasury, which is jointly controlled by Irish businessmen Richard Barrett and Johnny Ronan, has argued to Nama that it was best placed to extract value from the properties by continuing to manage the assets.
It recently agreed a new lease deal with Silicon Valley company LinkedIn to rent extra space at its Wilton Plaza building in Dublin. This deal is believed to be worth €1.5 million.
Treasury is one of Nama’s 10 largest borrowers and this would represent the biggest move by the state agency against a client.
On January 12th, The Irish Times revealed that Nama had issued Treasury with a demand for its loans to be repaid this month.
The debt relates to Treasury and Real Estate Opportunities (REO), a UK-listed company in which the Dublin-based developer owns a majority stake.
A spokesman for Nama last night said the agency was “evaluating a number of proposals” in relation to Treasury’s loans.
There was no comment from Treasury.
@wstt late nite NY should not be posting here is the dream team…
Richard David
Managing Director of Treasury Holdings China
Richard David has worked in the real estate industry since 1981 and brings a wealth of experience to his role as Managing Director of Treasury Holdings China. Richard has been working in China since 1999 and his most recent role of over 7 years was the Head of China Real Estate for Macquarie Bank Limited of Australia.
http://www.treasuryholdings.com/about_us/people/board_
Awesome good on u mate….
I heard from good source the plug was pulled Treasury Holding’s by NAMA today E&Y being put in as Receivers. Letter received from NAMA this afternnon.
Spencer Dock & Central Park together with the development land: Cabinteely/Glendruid, Kinsealy, M1 Business Park, Clonburris leixlip etc.
Letter gone to TH suppliers this afternoon to say it was business as usual.
Can anyone confirm this?
@Cathal, there is no official statement from NAMA or Treasury, but RTE is reporting “lawyers for Treasury Holdings will seek the permission of the High Court tomorrow to challenge the appointment of receivers to certain assets.” and that “PWC and Ernst and Young” will be appointed receivers unless the courts block the appointment.
http://www.rte.ie/news/2012/0125/treasury-business.html
Think this was coming for A while,Treasury thought they where untouchable and that Agency wouldn’t move on them.Bad Management at top has caused this Outcome(Living in the Past).Who’s Next???
Hope NWL will keep us updated on events in Court Today,Will make for Interesting reading
@Patrick, yes there will be coverage, by way of updates to the above blogpost, of the injunction hearing from this morning at 11am.
EDIT: Because this is likely to be drawn out, and legal cases -particularly those in NAMA’s formative stage – are noteworthy, there is a separate blogpost here to track today’s legal moves, and their aftermath.
https://namawinelake.wordpress.com/2012/01/26/nama-versus-treasury-the-legal-battle-is-joined/
Third one down as forecast. It will be interesting to hear Treasury’s arguments at the injunction.
According to RTE, Treasury is expected to contend in court that the offer it had made to NAMA would have seen the agency receive more than it had paid for the loans….. I don’t think that’s going to fly, but barristers love a brief.. plus a large retainer of course.
Assets in Dublin which would be included in the receivership are PWC headquarters in the Docklands. Seeing that PWC is one of the appointed receivers, might the short planks working there not examine their consciences and consider whether they might have a conflict of interest? The lack of a moral compass within the professional community is one of the things that has amazed me so far. No solicitor that I am aware of has turned to NAMA and said “Sorry, we can’t act for you as many of our clients are your debtors” See no evil…. just keep taking the money.
What,no conflicts,does not exist,15 million to Cox,what was the advice?
“In the autumn the firm’s managing partner Padraig O’Riordan advised the then minister for finance Brian Lenihan on his negotiations on plans to recapitalise the banks and worked closely with department officials throughout that year.
The firm has been criticised for representing the State while at the same time providing legal services to Bank of Ireland, which has received €4.2 billion from the Government and in which the State has a 15 per cent shareholding.”
http://www.irishtimes.com/newspaper/finance/2012/0125/1224310709636.html
I’ve been thinking about the IT report, and while it suggests that Treasury will contend that its offer is above NAMA’s purchase price, it is not a sufficient argument to win an injunction. To do that Treasury needs to find NAMA’s Achilles’ heel. Observing NAMA’s performance since inception, that lies in instigating judicial review proceedings on the basis that NAMA has not followed fair procedures nor complied with its obligations under the NAMA Act. It’s the road I would choose and it will be interesting to see if McCanns, who are Treasury’s lawyers and are probably the best in town, see it the same way. It is definitely the area where NAMA’s vulnerability lies.