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Archive for February 4th, 2012

Although it was scheduled to be published on 6th February, this evening the catalogue for the next Allsop Space auction has been published early – the catalogue PDF doesn’t appear to be available yet but the online listing is here. There are 100 lots, which is slightly down from the last auction in November when 120 lots came under the hammer. The highlights are probably mixed retail/apartment building in Harold’s Cross with a maximum reserve of €595,000 and a 55-bedroom hotel in Rossnowlagh in Donegal with a maximum reserve of €650,000.

And yes, there are yet more Liam Carroll built apartments inCastleforbes Square…

The auction will take place at the Shelbourne hotel in Dublinon 1st March 2012.

There will be analysis of the catalogue tomorrow.

UPDATE: 6th February, 2012.

Where: The Shelbourne hotel, St Stephen’s Green,Dublin

When: 1st March 2012, with pre-auction announcements from 10.45am and the auction itself starting at 11am. My guess would be that it finishes between 2-3pm

What: 100 lots of commercial and residential property with 46 Lots in Dublin and the remaining 54 across the Republic. There is an online listing of the properties here. You can buy a printed catalogue here. Allsop Space say that there is a mix of foreclosed and owner sales.

How much: Allsop Space has published what they call “maximum reserves” which are the prices above which the property is guaranteed to be sold. The total of the maximum reserves for this auction is €10,282,000.

From Allsop

Largest Lot: Lot 39 – Sandhouse Hotel, Rossnowlagh, Co. Donegal (55 bedroom coastal hotel): Reserve not to Exceed €650,000.

Smallest Lot: Lot 55 – Drumcanon, Carrigallen, Co. Leitrim (country cottage): Reserve not to Exceed €7,500.

Yields: highest is 50.5%.Lot 10 – 8 Burnside Park, Letterkenny, Co. Donegal. Reserve not to Exceed €19,000. Rent €9,600. Overall there are 33 income producing Lots being offered with double digit yields,  6 income producing Lots are being offered with yields in excess of 20%.

Type of property

74 Residential Lots –   33 houses,  41 apartments

26 Non-residential Lots – 9 landholdings, 6 retail, 3  industrial, 1 hotel, 1 pub,  1 restaurant, 2 office suites, 3 mixed use buildings

Type of possession – 50 Lots tenanted, 50 Lots vacant

Asked by this blog for his thoughts on the forthcoming auction, Robert Hoban, Director of Auctions at Allsop Space, said “naturally we are keen to replicate the sales record of 2011, however, we exercise caution in carefully monitoring where the market is at, so as to ensure we price accordingly in 2012.  We continue to receive strong interest from investors, which is indicative of market confidence.  Our tenanted investment opportunities continue to offer attractive yields over other asset classes, and we hope that the ongoing positive message being sent abroad will attract further inward investment from overseas, to complement and bolster the domestic interest”

The view on here is that this will be another landmark auction, it’s worth remembering that before Allsop Space’s first auction in April 2011, 20-Lot auctions were considered “mega”. The number of Lots this time round is down on the December 2011 auction which was the largest ever in Irish history with 108 Lots. Reserves this time seem generally lower to me but there are exceptions, for example the first Castleforbes 2-bedroom apartment has a reserve of €135,000 where it seemed that a c€90,000 reserve might have applied previously. Some unsold stock from last year re-appears eg this investment apartment in Blackrock and industrial units in Clifden. There are leasehold office suites (part of an office building) on offer for the first time. The 55-bedroom hotel apparently had a peak valuation of €6m – with thanks to 2Pack for pointing this out below – to a present maximum reserve of €650,000, a 90% decline but let’s see what it fetches on the day.

Lastly, Allsop published a couple of weeks ago its facts and figures from the four landmark 2011 auctions – the report is here  – WARNING: it’s a 6mb report and might take a moment to loand – but there’s not a great deal you wouldn’t have guessed. There is also a fascinating spreadsheet showing the detail of what was sold last year, and some particularly interesting information on the nationality of buyers and yields – well worth reading.

UPDATE: 29th February 2012. Allsop Space report strong interest in advance of the auction tomorrow. When asked how this auction was shaping up compared with the signal successes of last year’s four auctions, the Allsop Space Director of Auctions told this blog “we have had equal, if not greater, interest in our first auction of 2012. Over 106,000 visits have been recorded to our online catalogue to date, and over 1,000 people have been through the properties at viewings. As ever, we cannot predict how the day will go but we are hopeful for a similar attendance and similar results”  You can expect another landmark auction tomorrow and the results will be analysed on here afterwards. Last year’s auctions seemed to indicate average declines from peak of 55-70%, though there were even greater individual declines, and tomorrow’s auction will be looked at to see where cash prices, which are excluded from the monthly CSO house price series, are pitched in the context of an auction sale.

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Earlier this week, it was confirmed that satellite TV broadcaster BSkyB is to create up to 800 new jobs in a Dublin call-centre operation which will provide support to the company’s 10.5m subscribers throughout Ireland and Britain. Wonderful news for Ireland which has over 300,000 unemployed or a 14.2% unemployment rate, and nearly 440,000 on the Live Register. BSkyB’s call centre operation will be based at Plaza 1,Burlington Plaza on Burlington Road in Ballsbridge, Dublin 4 where it is understood the company is taking 35,000 sq ft of accommodation in a building which has over 150,000 sq ft overall. So far, so good – nothing to see here.

But it seems that the creation of the call centre and the jobs was almost scuppered by NAMA. Why? Because the building atBurlingtonPlazais understood to be controlled by NAMA as a result of loans acquired from AIB. The building has 164,533 sq ft and is presently being marketed for rent by Jones Lang LaSalle. BSkyB only wanted to rent part of the building, but NAMA wanted to hold out and try to rent the building as a whole to one tenant. So NAMA apparently vetoed the letting of the 35,000 sq ft to BSkyB.

NowBurlingtonPlazais only one of five building in centralDublinwith over 100,000 sq ft of accommodation available for letting, so it might be that NAMA thought it might maximise its return on the building if it was let at a premium to a company that might have been looking for a large centralDublinoffice. But in rejecting the BSkyB deal, the Agency was (a) turning down immediate business and (b) was placing the creation of 800 jobs in jeopardy.

And had it not been for the apparent intervention by Minister for Jobs, Innovation and Employment, Richard Bruton, there the matter might have lay. But it seems the Minister was coaxed into telephoning the NAMA CEO, Brendan McDonagh. We don’t yet know what was said during the conversation, but the immediate aftermath saw NAMA change its position on the approach from BSkyB and agreement was given for the part-letting of the building.

This is not the first time that NAMA has come in for criticism and accusations of stymieing business and employment. BBC Northern Ireland’s Spotlight programme broadcast in November 2011, made a similar charge.

Neither NAMA nor the Department of Jobs Innovation and Employment has commented on the matter. With 14.2% unemployment, no-one is going to criticise the Minister but it is curious that he hasn’t made his apparent intervention public as required by the NAMA anti-lobbying rules…

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Despite this blog focussing on the activities of NAMA, it is truly amazing how little we know about the Agency’s financial performance. What we do know – because it’s contained in the NTMA investor road-show presentation in January 2012 – is that to the end of December 2011, the Agency had approved the disposal of “over €6.9bn” of assets and “raised €6bn of gross cash from the sale of assets”. And remember this is the NAMA valuation of these assets – NAMA has acquired €74bn of loans from banks, paying an average of just 42.5c in the euro – €31.5bn in total – so the €6.8bn of assets disposed of by NAMA will have been worth €15.8bn at the original banks. NAMA started acquiring loans in early 2010, so €15.8bn of disposals represents an average of €753m per month, EVERY MONTH in the 21 months since April 2010. And remember these disposals are not sales of milk or electricity, they are individual loans and properties with individual borrowers and individual buyers.

This country will obsess in the finest detail over the disposal of €2bn of state-owned assets in the next couple of years, and yet every three months NAMA is disposing of the equivalent, and we know next to nothing about the disposals. Isn’t that just amazing?

But what we do know about the disposals is the profit that NAMA has booked. We know that because it is separated out in the quarterly management accounts. But here’s the thing : NAMA reported €132.8m profit on disposal of loans in the Q3,2011 accounts published during the week, but that is the first time that NAMA has shown a profit. There’s no profit on disposals shown in the Q1 and Q2 accounts for 2011. And I cannot see any profit in the 2010 management accounts or annual report – at the end of 2010, NAMA had approved the disposal of €1.9bn of assets according to the annual report.

It is widely believed that NAMA is at a phase where it is disposing of so-called “low-lying fruit”, or good quality assets for which there is demand. NAMA says that 90% of approved disposals are outside Ireland, and generally believed to be in London and south east of England. London commercial property has recovered strongly from the UK financial crisis and prices have been rising since mid-2009. though recent evidence is of a slowing down in the pace of increases. It should be said that €6.9bn of disposals will not all have completed yet, and indeed if you strictly compare like-with-like, NAMA had approved sales of just €5.8bn between March 2010 and September 2011 “of which €2.5bn has been received at end of September 2011”.

But the profit figure looks extremely low. And if it is indeed true that NAMA is now  sitting on what are euphemistically termed “less attractive assets” and termed by others as rubbish undeveloped fields in Mullingar, but has only managed to eke €132m of “profit” out of €2.5bn cash receipts of “low-hanging fruit” disposals, then should we be really worried by the Agency’s financial performance? From this perspective, and assuming NAMA hasn’t hidden the profits somewhere in its labyrinth of accounts, then yes we should indeed be worried – not because of the fields in Mullingar which NAMA may have acquired and paid only agricultural values, but for the €9.25bn – at NAMA acquisition values – of Irish commercial property which has fallen in value by more than 20% since November 2009. Very worried indeed.

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