Archive for February 1st, 2012

“Receivership is absolutely the last resort, and it is a decision that is never taken lightly. It is only taken after the process that Mr. McDonagh has explained, in response to Deputy Shortall, namely, an independent business review, going through portfolio management, lending, credit, risk, treasury review in NAMA, going through a credit committee and going through the board. It arises only where at the end of this process we reach the conclusion that the business is not in a position to continue trading and we come to the conclusion that we cannot put good taxpayers’ money after bad when there is no prospect of getting it back, and it would be irresponsible of us to act in any other way. However, I want to assure the committee that we are very sensitive to the consequences and it is an absolute last resort, and in the event, is based on the fact that we have to protect taxpayers’ money” NAMA Chairman, Frank Daly speaking before the Oireachtas Committee of Public Accounts on 18th November, 2010

Despite it being what NAMA calls a “last resort”, the Agency shows no sign of slowing down its enforcement activity as we get stuck into the new year. Credible sources say that NAMA summoned David Agar to its offices in Dublin last Friday 27th January, 2012 and informed him that the Agency was moving against his properties. David was reported to be one of NAMA’s biggest exposures and it is understood that David was one of the many developers co-operating with NAMA despite not having signed a full agreement with the Agency. It is understood that David believed the relationship was progressing well and is now said to be shocked by NAMA’s actions. I wonder will David regard NAMA’s move as “an absolute last resort”

David is probably most associated with Dublin-based Profile Properties which has a range of commercial and residential developments including the 60,000 sq ft Harcourt Building on Harcourt Street in central Dublin, the 110,000 sq ft Westland Park an office park in Clondalkin, west Dublin, the 600,000 sq ft mixed residential/commercial Beacon Court in Sandyford, south west Dublin and the 540,000 sq ft Kilcarbery Park commercial development also in Clondalkin, west Dublin. He is also behind Agar property.

It is not clear at this stage what property NAMA has appointed receivers to. NAMA doesn’t – in general – comment on individual receiverships. Neither Profile Properties nor Agar has commented on NAMA’s move.

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

UPDATE: 4th February, 2012. Although the official state journal, Iris Oifigiuil still hasn’t published any details of a receivership relating to David Agar’s assets, it is reported in today’s Irish Independent that NAMA has appointed Aiden Murphy of Horwath Bastow Charleton to assets of three of David’s companies – Dasnoc Limited, Heratt Limited and Sammark Limited. The assets affected are understood to be development sites in Dublin and Wicklow according to the report. And although I’m sure it wasn’t intended in a humorous way, the paper says “The land has not been developed which means realising value from the sites will be “slow and difficult”, according to Mr Murphy” – you could almost add “comma, the €x hundred per hour receiver, rubbing his hands in anticipation”.

UPDATE: 5th February, 2012. The Sunday Independent carries remarks made by David Agar in the aftermath of NAMA’s foreclosure action. There’s little that’s newsworthy save the claim that David doesn’t have performance guarantees and has been working without reward for some time.


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With over 4,000 members in Ireland, the Society of Chartered Surveyors Ireland (SCSI) annual survey into the state of the property market in Ireland together with an outlook for 2012, is worth reading. The 17-page report is being generally published today, and it looks at both residential and commercial property. The report is here and there is an accompanying press release here.

In general the report confirms the decline in prices that has been reported elsewhere, though residential declines in 2011 are seen as slightly smaller than in 2010. Interestingly, the report does highlight the fact that agricultural land has, to a large extent throughout the country, stabilised in price. The report suggests, without confirming numbers, that cash has assumed a greater role in residential purchases – there is now a pattern emerging from statements by Sherry FitzGerald, DNG, Karl Deeter, the former boss at the SCSI and others of cash transactions comprising 25-35% of the total residential market which may prompt questioning of the monthly CSO series which excludes cash transactions.

What is surprising in the report?

Residential prices fell and the consensus outlook is that prices will decline 60-70% from peak – if the CSO decline of 47% to the end of December 2011 is accurate, this would indicate 25-43% decline – yes 43%, if peak was 100, current prices are 53 and the bottom is 30, then the decline from today’s prices is 23/53, or 43%, from current values.Dublin is expected to reach the bottom and recover before rural areas.

Residential rents fell in all parts of the country except Dublin where rents actually rose by 0.8% over the year – this is at odds with the most recent CSO figures which show private rents rising by 3% nationally in 2011.

Office rents fell by 10-15% during the year, and whilst it still reportedly costs €30 psf for prime 3rd generation space in central Dublin, you can get prime 3rd  generation space in Connaught/Ulster for just €6psf. Yields – simplistically annual rent divided by the price of property – increased everywhere during the year and now range from 7.5-10.1%

Retail rents are down 10-20% in general except Neighbourhood Shopping Centres and Retail Warehouses where rents actually increased substantially – “this finding is indicative of the fact that retail units on the outskirts ofDublin are appealing more to retailers than prime and city centre units”. Yields are up slightly on the previous year in nearly all retail subcategories.

Pubs and hotels dropped in price during the year but the declines varied widely from just 2% for hotels in Dublin to 45% for hotels in Connaught/Ulster.

Industrial space rents all fell during the year by about 10-20% and yields all grew to an average of over 10%

Development land continues to tumble in price with an average decline of about 30%. The report doesn’t describe the drop from peak, but the implication is 90%+.

Agricultural land has generally stabilised in price, and in some areas there is evidence of increases eg 5% increase inMunster.

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The Nationwide Building Society has this morning published its UK House Price data for January 2012. The Nationwide tends to be the first of the two UK building societies (the other being the Halifax) to produce house price data each month, it is one of the information sources referenced by NAMA’s Long Term Economic Value Regulation and is the source for the UK Residential key market data at the top of this page.

The Nationwide says that the average price of a UK home is now GBP £162,228 (compared with GBP £163,822 in December 2011 and GBP £162,764 at the end of November 2009 – 30th November, 2009 is the Valuation date chosen by NAMA by reference to which it values the Current Market Values of assets underpinning NAMA loans). Prices in the UK are now 12.8% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of December 2011 being GBP £162,228 (or €195,485 at GBP 1 = EUR 1.2046) is 18% above the €165,781 implied by applying the CSO December 2011 index to the PTSB/ESRI peak prices in Ireland. The average home in Northern Ireland in Q3, 2011 was worth €163,438, according to the University of Ulster/Bank of Ireland survey.

With the latest release from Nationwide, UK house prices have now fallen by 0.3% since 30th November, 2009, the date chosen by NAMA pursuant to the section 73 of the NAMA Act by reference to which Current Market Values of assets are valued. The NWL Index is now at 831 (because only an estimated 20% of NAMA property in the UK is residential and only 29% of NAMA’s property overall is in the UK, small changes in UK residential have a negligible impact on the index) meaning that average prices of NAMA property must increase by a weighted average of 20.4% for NAMA to breakeven on a gross basis.

The UK residential outlook remains shaky with unemployment, slow economic growth and availability of credit all pressing down on prices. Inflation remains elevated over 4% but that is set to reduce to 3-4% in 2012. Supply concerns remain in some regions and the UK is being slow to unblock its planning constraints, the base interest rate remains at 0.5% and the UK has a healthily expanding population.

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