Archive for February 10th, 2012

NAMA continues to appoint receivers to developers at a brisk pace, and today we learn from Iris Oifigiuil that the bell tolls for County Antrim developer Alastair Jackson and three of his companies, Naviasky Limited, Tarajan Limited and Botha Limited – all three registered in the Isle of Man. For the first time, NAMA has used the services of Lisney in Dublin and Peter Stapleton is named as the property receiver.

According to the BBC, company documents suggest Naviasky had lands at Suncroft, the Curragh in County Kildare, Tarajan had property at Gowran in County Kilkenny while Botha had property at Walterstown, Nurney, County Kildare.

Alastair Jackson mightn’t be a very well-known developer on this side of the Border but he made headlines last year when the Revenue Commissioners (Irish tax authorities) recovered €3.6m from the main Jackson company, Eassda. Beyond the assets mentioned above, Alastair has been associated with two golf resorts, the Moyvalley hotel and golf club in Kildare and the New Forest golf club in Westmeath.

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

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This time last year, Fine Gael was in full electioneering mode in advance of the General Election on 25th Feb, and general commitments, off-the-cuff commitments, carefully-worded commitments, cleverly-qualified commitments and Leo Varadkar’s commitments were being flung about the place like confetti at a Moonie mass wedding. One such commitment was contained in the FG manifesto and related to Real Estate Investment Trusts, or REITs

Word on the street and from mortgage expert Karl Deeter is that the Department of Finance is at last considering legislation for the introduction of REITs.

What are REITs? They’re investment funds in which you can buy a share, much like a share in a company traded on the stock exchange. The investment fund buys property, rents it, maximises income from property and sells property. The hope is that a profit is made and that investors get a regular dividend, and that if an investor wants to sell his share, he can do so at a profit. The fund is professionally managed and shares are freely bought and sold. The fund is revalued periodically which involves a valuer assessing current market values of property owned by the fund. It allows small investors to invest in property, but in a tax-efficient way which also allows them to sell their shares quickly and cleanly and allows them spread risk over a number of properties. They’re big business in the US and the UK – take a look at these two property reports today on two different UK REITs – here and here. It might only be a matter of months before they’re available in Ireland. As we saw a few weeks ago, Ireland already has some vehicles for investment in property, notably Qualified Investment Funds, one of which NAMA is developing, but REITs should have much wider appeal.

NAMA generally supports the introduction of REITs because it will increase the demand for its property. As with any investment, values can go up as well as down, but the view on here towards REITs is favourable and if there is to be a recovery in Irish property prices, then REITs will allow smaller investors get a slice of the action.

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It was inevitable that with such a colossal portfolio of property-related assets under its control that NAMA would eventually come into conflict with itself. It is reported by the UK’s commercial property service, CoStar that the administrators which NAMA had appointed to the Battersea Power Station – owned by NAMAed Treasury Holdings and a related company REO – in London in December 2011 have lodged objections with the local council in respect of a development adjacent to the iconic power station. That adjacent development is being led by NAMAed Ballymore which is being financially supported by NAMA. It’s getting surreal.

CoStar has seen the objection lodged with Wandsworth council which oversees planning of the Battersea Power Station and the adjacent Elm Park development. The problem is that Ballymore’s development will now have a retail anchor which will place it in competition with the Battersea Power Station development, and reduces the attraction of investment in the power station site.

The conflict comes about because Ernst and Young, the administrators at the Battersea Power Station have a duty to maximise the financial return in selling the site, and remember that the site is being marketed by Knight Frank. And that duty is owed not just to NAMA, but to other lenders in the scheme including Lloyds and the former owner of the site, Victor Hwang.

Sean Mulryan’s Ballymore is NAMA’s pet developer and is steaming ahead inLondonto develop several sites at present in London’s docklands, in Hampstead and in the City. And of course in Elm Park in Wandsworth which will see some 2,000 homes and nearly 1m sq ft of commercial development. NAMA has approved advances to developers of nearly €1bn in total, though it is not clear if Ballymore has benefited from this financing, though the betting is that it has.

It is expected that more of these conflicts will arise in future; in fact, I’m surprised that there haven’t been such conflicts already in Ireland. That might be because very little is in fact being developed or it might be because NAMA’s receivers in its own backyard might be more sensitive to the Agency. The planning decision in respect of the Ballymore development comes before Wandsworth’s planning committee next Thursday, 16th February. The application is in fact a variation to a previous planning permission and can be seen here.

UPDATE: 17th February, 2012. It seems NAMA (Battersea Power Station) was unsuccessful in its objections to NAMA (Nine Elms) plans which were rubberstamped yesterday by Wandsworth Council, according to UK commercial property information service CoStar. This is another fillip to Ballymore which will now proceed to develop the site with a plan which is understood to have NAMA’s full-backing, including funding potentially.

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Figures released by the Central Bank of Ireland (CBI) this morning show that in the month of January 2012, the reliance by Irish banks on central bank funding fell steeply by €13.3bn from €151.4bn in December 2011 to stand at €138.1bn at the end of January. Central bank funding comes from two sources – the ECB and the CBI under the auspices of the ECB. The ECB funding fell by a record €14.6bn whilst funding from the CBI actually rose slightly by €1.3bn. Central bank funding is now at its lowest level since August 2010, though deleveraging by banks – mostly through asset sales – since 2010 make comparisons difficult.

What does this mean for Irish banking and the wider economy? If our banks are to return to some degree of normality, they will rely more on deposits from customers and lending from other banks. So today’s figures indicate (though don’t absolutely prove) that deposits and inter bank lending are rising as a proportion of overall bank funding. That is good news.

The ECB is now preparing for its second major intervention in EU banks. In December 2011, it lent €489bn to EU banks including those in non-euro countries. The lending was for three years and at the ECB’s benchmark interest rate, currently 1%. Yesterday the ECB indicated its next tranche of such lending which is expected on 28/29th February 2012 will be “significant” and of the same order of magnitude as the December operation. Some commentators and sources have suggested the ECB may make as much as €1tn available in February. Also the ECB is relaxing rules on the eligibility of collateral it will accept from banks in return for its funding. So expect an increase in ECB funding when the March 2012 figures become available.

We will get deposit information on Irish banks for January 2012, at the end of February. Deposit analysis for Irish banks for December 2011 is available here.

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