Today, Britain’s Property Week magazine exclusively reported that NAMA has sold a GBP 100m (€121m) portfolio to a British consortium comprising The William Pears Group and Development Securties (commonly called “DevSecs” in property circles). The portfolio, the so-called “Chrome Portfolio”, was assembled by NAMA Top 10 developer, Gerry Gannon (of the K Club fame – see earlier blogpost today) and comprises residential and retail property in London and England and Scotland. Savills had been marketing the portfolio – see the 101-page brochure here – and the portfolio, which has very little vacancy, seemingly yields GBP 6.4m (€7.7m) in rent each year which gives a relatively attractive 6.4% implied yield on the transaction, though it should be noted that much of the retail property is in secondary locations. Property Week says that the yield on the residential portion equates to 3-4% and on the retail, 8-9%. Apparently other companies were sniffing around the portfolio, with Property Week citing Palmer Capital and Cannon Estates.
Neither NAMA nor the buyers are presently commenting on the reported transaction.
UPDATEL 7th February, 2012. Development Securities has issued a statmement in which it says “Development Securities confirms that it is in discussions with NAMA regarding the potential acquisition of a number of different assets. However, it is not in a position to comment on these discussions at this juncture” The Property Week report says that DevSecs and Pears have “won” the portfolio, but as with many of these transactions, there is quite a distance between an agreement and a final sale.
UPDATE: 6th August, 2012. Nick Johnstone at Property Week who first reported sale talks between Gerry Gannon and DevSecs and Pears has today reported that the sale has now concluded, though we don’t have a price as yet.
NAMA Wine Lake 
A couple of questions here. Firstly, is there any indication of what Nama actually sold the properties _for_. They are worth €121m, but is this what Nama got for them?
Secondly,
So, the rent could yield back the property cost in about 16 years. I’m not a property expert, but is this a good deal or was Nama better offf just renting the buildings then perhaps selling later on? What’s the metric by which these things are measured?
@OMF, no the sale price is not explicitly given in the Property Week report, which at this point is the only source – the parties involved are not commenting.
Yields.
Simplistically, that’s the rent divided by the value of the property. So yes, if a property has a 6% yield then that implies that the owner will collect the value of the property over (100/6=) 16 years. But remember you might have rent reductions and you might have voids when the property is not rented. In Ireland at present, commercial yields vary from 6-12% generally, with prime retail at the lower end and secondary industrial at the upper end. In the UK yields in prime areas might be as little as 3% but in secondary areas might be 7-9%. In secondary areas, there is a greater chance of rent voids, rent reductions and for property values to drop.
The metric or measurement is profit,as in the difference between what you paid and what you sell for.In this instance the only redeeming feature of this dogs breakfast is scale,lots of fees for the promoters.Management is a nightmare,no geographic or asset focus,maybe a break up play,lay them off in smaller lots to individual investors.Looks like the prior owner simply went on a shopping spree.Had,quick look at OM,there may be some holdover or non-paying tenants here,pushing the vacancy rate into low teens,more in line with market.Will review in more detail,also possibly significant expiry exposure.
http://www.costar.co.uk//en/assets/news/2012/February/Shop-vacancy-rates-set-to-rise-/?dm_i=UQT,OXL4,4KQZWH,20FDF,1
“I’m not a property expert, but is this a good deal or was Nama better offf just renting the buildings then perhaps selling later on? ”
They should look at join venturing these with up and coming small mid size firms,that would sweat the bricks.Awful,benchmark for Noel Smyth and Auburn,this must be the final nail in that coffin,did Noel also advise Anglo in its art collection appears they had same aesthetic.
Has to be all over about now.
NAMA,made the correct decision is disposing here,but they could explore taking back end pieces,the value is in breaking this up,but the fees would be prohibitive as a passenger.
@jg, I agree, it’s a “break up”play. The UK funds are buying in bulk off NAMA and the Irish banks and retailing 50% to 60% of the assets for the purchase price. This is not the first such sale. So much for maximising returns.
@WSTT ehm we had the ticker tape parade in the canyon of champions…had quick look at OM from Savills,will review later.
Begs the question why NAMA,is not executing these deals.The mere thought of owning/dealing with this garbage…they should capitalize a few paddies in the UK,it’s a fee deal.Gosh,Noel Smyth is going to lose everything,applying the implied capitalization rate to Auburn and he is insolvent.But he is a very devout,so it’s mere baubles to him.
I like this deal. The Savill’s brochure gives a good level of detail and it looks like anyone, how may have been interested, had a chance to get involved. It may be the case that selling individually could have produced better results (not everyone has 100m), but at least there is transparency unlike, say, the k club.
@Ahura M, The wide boys in London are cleaning up on the properties that NAMA is wholesaling. Agents, receivers and their sweetheart funds can be seen celebrating in Balls Brothers wine bar every Friday evening.
@Ahura M, P.S. I’ve even sat in the corner and listened to the “thick Paddy” toasts!
@ who_shot_the_tiger,
Taking on board your comments, I’ll rephrase that it’s a relief to see some transparency on a NAMA sale. Even if they still manage to get taken to the cleaners.
Are NAMA as dumb as you suggest? I had assumed they have individual valuations for these properties and that the offer price for the portfolio is close to this.
@Ahura, I don’t know about NAMA being dumb, they have certainly some very good competences and people, but in some areas they have yet to prove themselves. Here is part of An Taoiseach Enda Kenny’s reponse to Sinn Fein’s finance spokesperson Pearse Doherty in the Dail today
“The Minister for Finance has already signalled publicly that he is looking at the structure of NAMA, on which some initial work has been carried out. He hopes to have others appointed to a group which can look at what might be possible in terms of changing the structure. It is difficult to find competent people from this country who can do this work. This is a small country and persons with competence in this field may have a direct or indirect connection with a property owner or a property associated with the NAMA portfolio. The Deputy will, therefore, understand the Minister’s reticence in not being too hasty. He is anxious to find people who are really competent and who do not have a connection with anyone or anything associated with NAMA.”
@Ahura M, “Are NAMA as dumb as you suggest?”
You are kidding me…. right? Not on here, but over a few beers, I could give you chapter and verse. But, believe me – they are. And the UK agents and their mates have been running rings around them.
Hi Victoria,hope you left the room!
VICTORIA MITCHELL (60)
Appointed in August 2002.
Currently Consultant Director to Savills PLC, Non-executive Deputy Chairman of The Berkeley Group Holdings PLC and Non- executive Director of The Golding Group (South Africa) and Lennox LLP. Formerly an Executive Director of Savills PLC from 1988 to 2000.
http://www.developmentsecurities.com/devsecplc/en/aboutus/ourteam
@jg, As they say in Texas, “Thar ya go”, John. As I have said – this is not the first time. If it was in the deep south, it would be known as the “good ol’ boys” network. In London, there are many wolfpacks; the masonic lodges, the old school ties, the wide boys, the agents (all of them), the favoured local developers. the guys in the little round caps, the establishment….. and they are all feeding on the “Paddy factor”
Alan Shatter states:
“I do not believe that auctioneers and estate agents should ever be permitted to be directly involved in facilitating the putting together of financial packages to enable individuals to purchase properties. That should be left to the individual. I do not believe that financial institutions that fund developers should be allowed to provide prepackaged finance to facilitate the sale [278]by developers of the constructions, residential or commercial, that have been funded by that particular financial institution. There is a need to provide clear blue lines or red lines beyond which no one can travel, in the interests of the consumer.”
Minister Alan Shatter during the dáil debates on the property services regulation bill
9th November 2010
Alan also said
“I believe there should be an inquiry into the conduct of estate agents and auctioneers during the property boom period between 2000 and 2007. I believe there is a need for an independent inquiry. I believe there is a need for formal evidence to be taken. I believe there is a need to examine the practices that applied.”
What happened since then Alan? Yes they have all got big jobs in NAMA or else contracts as receivers to the companies they helped destroy.
Cat got your tongue.
@WSTT you can’t make this stuff up,tied in nicely with Enda’s comments,from earlier today.Its probably just a coincidence.
The “skinny” from inside NAMA is that the operatives are becoming very sensitive about the allegations that they are not getting the best value for the assets. The higher echelons have been heard to say that they are “tired of answering to Gerry Adams” and the current thinking is that there will be no further exclusive discussions on disposals with prospective purchasers. Everything will be exposed transparently to the market. We’ll see.
It is hard to believe that they know what they are doing. Last week, I asked a director of a Fund that had just visited NAMA for his impression of their ability and expertise. His response was enlightening. “They are completely out of their depth and are making it up as they go along.” I couldn’t have put it better or more succinctly. Not even gifted amateurs.
@wstt
– “They are completely out of their depth and are making it up as they go along.” I couldn’t have put it better or more succinctly. Not even gifted amateurs. –
well we already know you couldn’t have put it more succinctly…..even if you tried.
Well done for two years and counting of being right about NAMA the disaster, happening in a town near you….
and as for the qif’s….crystallize the loss to taxpayer upfront, hide the profit ….say it isn’t so.
@WSTT what market,the Irish one…they can expose it all they want.Have,they actually “value added” on any deal,so far appears all they have achieved is selling a few easy deals in the UK.
@sf ca writer, The QiFs are NAMA’s attempt to tempt the same naive “investors” that put money into the Davies, Anglo, AIB, and Goodbody Private Equity Property Partnerships to repeat their mistakes. I think that most will be more cynical, leery and cautious this time around. Or at least, I would hope so, because anything worthwhile has already been earmarked. And there are limited quality deals or investments in the Irish market. It will be NAMA’s attempt to sell property at an overvaluation to the gullible by fudging and spinning the contents of the QIF. Akin to the “slice and dice” confusion beloved of the funds of yesteryear.
@jg, To my knowledge, no value has been added to any asset by NAMA, with the possible exception of the Google building – but I can’t really speak to what went on between Johnny and NAMA in that case. The NAMA culture is to “sell”, with no regard to maximising returns. They have no wish to facilitate anyone who wants to add value. Their thinking towards their debtors is one of spite and there is no trust or partnership ethos operating between the debtors and the Agency. The “Stockholm Syndrome” is not in evidence here. And the situation gets worse by the day. I do not believe that there is any NAMA borrower who does not believe that they will be put to the sword without warning eventually. It’s just a matter of time – and such an atmosphere between the parties is not conducive to a cooperative working relationship. And that’s putting it mildly.
Liam Carroll Main Controlling Company just filled annual Return and Auditors Report,Any news/Opinion that the Agency has approved Funding to Complete Construction of Holiday resort in Sligo/Donegal.Talk of Over 3.5m to be spent on project by year ending 2012