Archive for January 26th, 2012

“NAMA, as promoter, is seeking proposals for the provision of investment management services for a Qualified Investment Fund” Tender posted by NAMA on 25th January 2012

NAMA is apparently about to set up one or more Qualifying Investment Funds. According to the tender document “NAMA intends to establish a Qualifying Investor Fund (QIF) as an investment company in accordance with Part XIII of the Companies Act 1990. The QIF will be established as an umbrella scheme with segregated liability between sub-funds which will invest in property and property related assets inIreland, theUK andEurope.”

The services are required for upto seven years.The Irish Funds Industry Association defines a QIF thusly : “The Qualifying Investor Fund (QIF) is a regulated, specialist investment fund targeted at sophisticated and institutional investors, who must meet minimum subscription and financial resources requirements. The main advantage of the QIF is the removal of the Financial Regulator’s general conditions relating to investment policies and borrowing, thereby enabling sophisticated investors to use this structure for a wide range of investment purposes. The QIF is the preferred structure used in the regulated alternative investment sphere.”

It is understood the minimum investment in a QIF is €100,000. NAMA has not commented on the tender, but it is known that NAMA wanted to see Real Estate Investment Trusts (REITs) adopted in Ireland to allow investors invest in property and loan funds in a tax efficient manner. Perhaps NAMA got fed with waiting for the Government to deliver on another one of its manifesto pledges.

UPDATE: 27th January, 2012. The Irish Times claims that the minimum investment will be €250,000 and that individuals will need demonstrate a net worth of €1.25m or in the case of companies, the company will need have a net worth of €25m. The article referes to Central Bank rules and these have been requested, and an update will be posted when they become available.

UPDATE: 7th February, 2012. To complete the fund management function tendered for above, NAMA is now seeking the provision of a custodian and fund administration service – the tender document is here.  The custodian service is to register the QIF’s interest in property and to collect income and make payments on behalf of the QIF. The fund administration function is quite diverse and involves keeping tabs of investors and their investment, preparing valuations for the fund and doing the accounts.


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News broke yesterday evening of imminent moves by NAMA to appoint receivers, Ernst and Young and, in addition, PwC to assets formerly controlled by Treasury Holdings, the Dublin property development company controlled by the colourful Johnny Ronan and the understated Richard Barrett. Treasury reacted to NAMA’s imminent move by going to Dublin’s High Court to seek an injunction preventing the appointment by NAMA of receivers. In addition, Treasury is reported to be seeking a judicial review of the way in which NAMA is engaging with Treasury’s loans. Both matters are scheduled to come before the courts at 11am this morning, though there is no mention of the applications in the Legal Diary, presumably because the applications were reportedly made minutes before 5pm yesterday.

So what’s at issue? Reporting suggests that Treasury believe that because two third part investment companies – identified as MacQuarie and Hines – are offering NAMA more for the Treasury loans than NAMA paid the banks. The figures being bandied about are that the Treasury loans have a par value of €2bn, were acquired by NAMA paying just 45c in the euro or €900m in total, and the two third party investors are said to be offering more – just “more”, no numbers yet on the value of these offers – than €900m for the loans. Treasury seem to be suggesting that NAMA should be accepting these offers because they are in excess of what NAMA paid. It’s hard to see how that would succeed in court, if that is indeed the Treasury argument. NAMA is set up to maximise income from its assets and although the Agency has said in the past that its main priority is to recoup what it paid for the assets – plus any additional advances to the developer in question – it is hard to see NAMA being bound by this. For its part, a NAMA spokesman is quoted in the Irish Times as claiming the Agency had “engaged rigorously with Treasury Holdings since 2010. Unfortunately, it has not been possible to achieve a mutually acceptable agreement on the way forward with respect to the group’s NAMA loans . . . NAMA analysed the two proposals made and they were not commercially acceptable. The NAMA board decided to proceed with the appointment of Receivers at the end of today’s standstill period.” It is also noteworthy that Treasury is criticising NAMA’s commercial engagement in this matter, and it is claimed that NAMA has not engaged in negotiation with the two third party investors, but has merely sought clarification of offers.

So the prospects for the injunction don’t look too bright from Treasury’s point of view. But with respect to the second matter, the application for a judicial review, that becomes less clear. We saw in the David Daly case last year that the courts weren’t very welcoming of objections from developers to NAMA’s treatment of its loans, when those objections were made late in the day. Remember Paddy McKillen objected to NAMA’s acquisition of his loans right from the start, and I think that was a critical factor in Paddy being eventually successful. The courts seemed to view developers objecting after NAMA had acquired loans, and after initial consensual engagement with NAMA, as rendering weak any claim by developers to entitlements not previously sought. NAMA acquired Treasury’s loans in the first half of 2010, and until the middle of last year, Treasury was regarded as a NAMA favoured developer, indeed the word on the street was that it might be the first developer to sign an agreement with NAMA – not just a memorandum of understanding and heads of terms. But things seemed to go downhill for the NAMA/Treasury relationship in the second half of the year and in December 2011, NAMA and other lenders had administrators appointed to NAMA’s most valuable asset, the Battersea Power Station which was controlled by a company, which was in turn controlled by Treasury. Since then the writing has been on the wall for Treasury.

So the betting on here is that NAMA succeeds in having receivers appointed. It is not clear what properties NAMA is targeting but reporting today has mentioned the PwC building in north Dublin Docklands (pictured below). Notably there is no mention of the National Convention Centre which was developed by Treasury. Other assets reported to be in NAMA’s cross-hairs include Central Park in Leopardstown and the Ballymun Shopping Centre. There is a related post on here which describes the ultimatum that NAMA had apparently given Treasury in the run-up to yesterday’s decision to appoint receivers. There will be updates here from 11am.

UPDATE (1): 26th January, 2012. Orla O’Donnell, legal correspondent from RTE tweets that there will be a hearing on 21st February 2012 where Treasury’s challenge to NAMA’s appointment of receivers will be dealt with. Orla also tweets that Treasury gave NAMA a commitment on 10th of January 2012 when the so-called standstill agreement was given that Treasury would not seek to challenge the appointment of receivers (“ah now, that’s not fair!” comes to mind). Orla tweets “NAMA says Treasury gave undertaking on Jan 10th that it wouldn’t challenge receivers if NAMA gave 14 day standstill period” and “Treasury Holdings’ challenge to appointment of receivers to some assets by NAMA to be heard Feb 21st”

UPDATE (2): 26th January, 2012. RTE is now providing a report on this morning’s scheduled proceedings. Receivers have now been appointed, apparently, and presumably PwC and Ernst and Young. But undertakings have been given between the parties as to the conduct of the receivers until the court has dealt with Treasury’s applications.  It seems that Treasury secured the services of Michael Cush SC to act as barrister on its behalf today – he was Paddy McKillen’s saviour but wasn’t all that effective in the David Daly case – and the respondents are to be expanded so that they now comprise NAMA, KBC, the Attorney General and Ireland – the last two indicating that constitutional matters will be raised in the course of the proceedings, and specifically the constitutionality of elements of the NAMA Act. It is reported that (unnamed) lawyers acting for NAMA wanted to put on the record “that NAMA received an unequivocal undertaking from Treasury Holdings that Treasury would not challenge the appointment of receivers if NAMA agreed to a two-week standstill period”  but it is further reported that “lawyers for Treasury said they did not agree with that statement” We still don’t have a comprehensive list of assets subject to foreclosure but presumably the January 2012 NAMA foreclosure list (due at the end of February 2012) will give the details.

UPDATE (3): 26th January, 2012. Just some housekeeping – according to RTE’s Legal Affairs Correspondent, Orla O’Donnell, NAMA was today represented in court by Cian Ferriter SC – details and photo here –  and the receivers appointed are David Hughes and Luke Charleton (both from Ernst and Young); PwC, a tenant in the Treasury-owned building beside the National Convention Centre appear not to be involved.

UPDATE: 27th January, 2012.  A little more detail emerging today in press reporting. The case on 21st February 2012 is pencilled in to last for four days. According to the Independent, NAMA has PwC as well as Ernst and Young appointed as receivers, which is noteworthy as PwC occupy a landmark building – owned by Treasury – beside the National Convention Centre – which is also owned by Treasury, but not referred to in recent reporting with respect to these receivership actions. The Independent names the following assets as now being “understood” to be under the control of the receivers – “PwC headquarters offices in the IFS, the Montevetro building that is in the process of being sold to Google .. and the Ballymun Shopping Centre” The Examiner has what seems like more credible reporting of the case. It refers to Ernst and Young receivers only, and identifies assets as the Alto Vetro on Barrow Street, Central Park in Leopardstown. It says 22 Treasury companies are involved in the action, and that it is yet to be decided if the four days in February pencilled in for the hearing will be for an interlocutary or a full hearing.

UPDATE: 28th January 2012. The Irish Times today says that PwC has also been appointed as receivers, but that it will not be involved with its own premises in Spencer Dock (next door to the National Convention Centre, both pictured above). So no conflict of interest so! REO (the Treasury controlled company which is also subject to proceedings) has requested the suspension of sharedealings at the London Stock Exchange and has issued a statement which says that NAMA has appointed receivers to nine of its companies, namely

(1) Wintertide Limited
(2) Radtip Properties Limited
(3) Tenderbrook Limited
(4) Sencode Limited
(5)  Lornabay Limited
(6) Twynholm Limited
(7)  Rigol Limited
(8) Ballymun Shopping Centre Limited
(9) Coolred Limited.

REO goes on to claim that NAMA’s receivers will give 48 hours notice before “initiating any process of sale”.  Together with another company, Montevetro II Limited. REO says NAMA is chasing it for amounts totalling €568,828,437. Meanwhile, Treasury is talking itself up with showing it is getting on with business and has announced €1.5m (presumably annual) new rental income from recent rental agreements. Mind you, according to JLL there is still 100,000+ sq ft available at Central Park.

UPDATE: 29th January, 2012. A note of the financial figures at the heart of the Treasury versus NAMA case. It is reported that the loans NAMA acquired from the banks relating to Treasury come to a total of €2bn. It is also reported that NAMA paid €900m for these loans, representing a 55% discount or haircut. It is further reported that of the €2bn of Treasury loans, some €500-900m relate to Johnny Ronan and his own companies; the remaining €1.1-1.5bn (reports vary) relates to Treasury proper and were reportedly acquired by NAMA for €560m. There are also claims that the offers made by MacQuarie and Hines were for €600m and related to the Treasury-proper loans. Since neither NAMA nor Treasury, nor indeed Hines or MacQuarie are commenting, the above might only have the status of speculation and indeed the reporting has confirmed errors – Ronald Quinlan claims NAMA took over Treasury’s loans in November 2009 (a month before NAMA came into being, and some three months before NAMA acquired a single loan).  Niamh Horan (or Niamh Whore On, as the feisty Sinead O’Connor might say) bases an entire report on an unnamed “source” and much of it is based on the “feelings” of the “source”.  In one account Ronald Quinlan refers to the loans as being worth €2bn with a NAMA acquisition price of €900m, and of these Johnny’s loans amount to €400-500m, and Treasury’s-proper to €1.5bn. In another report Ronald refers to the Treasury loans as being worth €1.1bn. So giant pinches of salt, but having said that, these are the only figures in the public domain.

UPDATE: 30th January, 2012. The are now two Treasury cases registered at the Courts Service, though it seems as if that is just an administrative error as both cases have the same reference – 2012/55 JR.  The solicitors on record for Treasury are DAC BEACHCROFT DUBLIN.

UPDATE: 8th February, 2012. In what looks like a whipsaw manoeuvre, Anglo (or rather the Irish Bank Resolution Corporation, IBRC) has appointed receivers to a company in which Treasury has a major stake. The bank is reported to have appointed David Hughes and Luke Charlton from Ernst and Young as share receivers to a company called Tora Company Limited, which is said to have been jointly controlled Treasury Holdings and entrepreneur, impresario and developer Harry Crosbie. The controlling company is called Brossbar Limited.  Tora’s main asset appears to be the Wool Store building – pictured here – in Dublin’s International Financial Services Centre in Dublin 1.

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