Costar, the UK commercial property website this morning reports that NAMA has sold a residential/commercial development in east London to a joint venture between a UK company called Development Securities and a Canadian company, Realstar Group. The development is at Wick Lane in Hackney and is next door to the Olympic Park where 27th July this year, the next Olympic games will commence. The Royal Bank of Scotland funded the transaction; so no NAMA staple finance needed, and evidence that some UK banks are lending. The brief press release from Development Securities is here.
The development comprises 112 apartments which occupy 116,000 sq ft and in addition, there is a nice 12,000 sq ft of office/retail space. Excluding the commercial space, the purchase price works out at just over GBP 140,000 (€168,000) an apartment for what would appear to be decent-sized apartments – 116,000 sq ft less 25% for common space divided by 112 apartments gives you 776 sq ft. The apartments are said to be in need of refurbishment and the development looks set to be rented to individual residential tenants. Two-bedroom apartments in the area appear to be on the market for well over €300,000.
Development Securities was in the frame for the purchase of Gerry Gannon’s Chrome Portfolio of UK properties, though the status of that €120m transaction is presently unclear.
NAMA has shown a property on its monthly foreclosure list called “Riverside Works” at419 Wick Lane in London E3 which was being marketed by Allsop after BDO had been appointed receivers. The developer appears to have been a company called Silverpeak Limited whose sole director was Frank Silver, but it is unclear precisely which company NAMA took enforcement action against.
NAMA almost never comments on individual sales – confidentiality under the NAMA Act, donchaknow – but there is an attempt on here to track NAMA’s sales through media and other sources.Remember that NAMA is selling the equivalent of 30 of the above properties each month every month as it nears its December 2013 deadline by which it has indicated to the Irish bailout troika it will dispose of 25% of its assets.
UPDATE (1): 11th April, 2012. The agent’s sales brochure and supplementary information are now available. The photographs tend to increase the bafflement at the price obtained, with a handsome apartment block and well-specced apartments, though there is still some refurbishment required.
UPDATE (2): 11th April, 2012. The sales brochure describes the apartments thusly : “All 112 live/work units have been finished to a high standard with timber laminate floors, double glazed windows, electric panel radiators and video entry systems. The kitchens have marble worktops, AEG ovens and Electrolux fridge freezers, washing machines and dishwashers. The scheme has been vacant for approximately 12 months and therefore, some remedial works will be required to a number of units. The B1 office units are in ‘shell’ condition while the A1/A3 retail unit is completed and ready for a tenant to fit out.”
NAMA Wine Lake 
Ok so if these are on sale at 50% the market going rate, albeit for some that need refurbishment, why…?
@Brian, you’d expect the justification to be based on volume – that is, buying 112 apartments should be cheaper per unit than buying just one – and secondly there’s the issue of refurbishment.
However as we saw with the recent Alliance Building sale to Kennedy Wilson – that’s the 210-apartment building in the former gasworks and the present Gasworks beside Barrow Street where Google is based – there isn’t much of a discount for volume. The Alliance Building sold for just over €40m and a yield of 7.25%, reportedly. If you were an investor and buying one apartment today you would generally be looking for a price that reflected a yield of over 7%. So not much of a discount for volume.
As regards refurbishment, these apartments were built in the past 7 years it seems, so it is unclear what refurbishment might be required. I hope we can get photos later on showing the current condition of the apartments.
Would you answer me how the holy can you get 7% in a market awash with stuff. That’s a 15 year payoff for heavens sake. And if there is 7% in it where the hell is the problem, that’s a 5% over the ECB.
I am not sure if this is the same complex but if not its a good comparable as regards likely rental income during the Olympics
http://www.accommodatelondon.com/6578/?utm_source=Guests&utm_campaign=efc86ff261-Wimbledon+%26+London+Olympics+private+invite&utm_medium=email
Reblogged this on Brian M. Lucey and commented:
Nama appears to sell property in London at less than half the market rate…the question is why?
Volume etc don’t give a 50% markdown. What are they at? Who purchased these? Why was the decision made to sell at that price? What was the originating price? Etc etc etc
Mushroomification continues
@brianmlucey, Someone is going to make a killing renting these out for the Olympics.
Why was the decision made to sell at this price level? NAMA has been underselling London assets for some considerable time now. It has been badly advised (from their viewpoint) by the agents who have been carving up the assets with their mates. A number of agents’ “subsidiaries” have even participated in the purchases…… It’s the Masonic Lodges and the plummy voiced public school wideboys v. “Paddy factor”. NAMA has no expertise in selling in London. No chance.
After paying the 3.1 billion they are effictively skint,expect more dumping of assets.As NWL,first reported most likely balance sheet insolvent,so get as much cash in the door as possible prior to releasing accounts.
Let’s be having you,two for love,love!
@brianmlucey; Just a PS. These assets should have been sold at an Allsop auction (or similar) by open outcry – much as BoSI does with its apartments in Castleforbes Square. The sales price would then be at market and transparent.
Agree. Mind you if suggested that all Nama assets be out on eBay…..
Brian, NAMA has been underselling assets in the world’s most buoyant market at a discount for two years now. It is a joke in London.
NAMA has also been taken advantage of, because it knows nothing about marketing real estate in London. – and London is very much a closed insider marketplace where a lot of the assets are sold to a cartel, who then sell them on for a profit to gullible outsiders. The Paddies were the target (the gullible outsiders) some 6 years ago, now they are the victims selling to the cartels at discounted prices.
The reason is that NAMA is incapable of producing and executing a management plan that would maximise the return on the properties. It just takes the expedient way out and wholesales the assets for the “best price” that the agents say are available.
This particular instance smacks of an insider deal and makes one wonder if some of NAMA’s officers are not preparing for a “golden hello” at some point; or if some of the stench is starting to waft from the more obvious undersold deals that are surfacing. And as I have reiterated many times, as someone operating in the London market – this is not the first by any means.
Or finished it,rented it,then sold it.
But that’s called Asset Management,when you are busy meeting the likes of Kroll security to chase down mythical pots of gold,suppossedly hidden by developers,no time to add value.
A Joint Venture if NAMA,does not have the confidence or skill set should have been considered too.But dumping half finished projects in prime locations is liquidation mode,why does NAMA exist at all,is this is the planned exit route.
Here you go NAMA,quick and dirty asset management plan,try utilizing on similar asset types in London.But when you have an old broker at the helm,who’s ingrained instinct is grab the fee,this is most likely too difficult to comprehend.
Send in the builders on fast track schedule,reach out to major corporations like ABC,NBC or IBM.Rack rent the entire building for the duration of Olympics at usurious rates,based on personal experience in Atlanta.They will pay outrageous amounts to house all staff in one location,synergies and all that.
Post Olympics rent it out cheap and cheerfully,biggest risk here is oversupply so control costs make sure you are very price sensitive.But NAMA has an unfair advantage over its competitors so use that.
Sell the stabilized asset and maximize the return to Irish taxpayer.
Alternatively,dump the asset and run like bunch of amateurs.
John dumping is fine if they make a nice profit. On the face of it they seem unlikely to have done so. If they cannot make money on ready to rent apartments beside the Olympic stadium in Olympic year…..
I’m beginning to suspect that NAMA aren’t the master dealmakers they are purported to be……
The banks have a right to be up in arms about this.
@Brian they are in panic mode 3.1 billion out the door,they have committed 1 billion for who knows where or what,have a contingent liability regarding McKillen off just under another billion,are balance sheet insolvent.Getting,flack left and right for NOT selling,may require additional funding.
Much more fun to watch videos of Battersea Power Station,read glossy brochures,hold endless pointless meetings with Treasuary.They had loan creep there of 30 million and 100 million at Treasuary,than actually do any asset management.Plus,the old guy in charge of asset managemt has a brokers background and mentality just another gouger looking for fees.
Sell ehm quick grab the fee!!
Good point. So Noonan’s non-deal (I still can’t get over that – I think the term might be “lolling”) has not just done the damage of costing us 90m this year, but further has drained NAMA of cash so it’s now incurring further losses in liquidating assets to replace some of that cash. If this were a circus, it would be world-famous.
@Brian congrats on the book,I could conceive and show how to execute an asset management plan for this on a beer mat!
Backing it up with detailed analysis may take half a day,NAMA left a very very significant amount of Irish Taxpayers money on the table here.They are adrift,berefit of sufficiently skilled people,wasting possibly billions of taxpayers money.Pursuing a laughable and ludicrous PR campaign involving demonising RE developers.
Obviously,they have neither the skill set or street smarts to execute here,given their penchant for persecuting broke BK developers who would want them as partners.Takented,sophisticated developers are fleeing Ireland,the Grehans could have executed here and may have been willing to work off their debts,by throwing in the profit they would have created.Instead some Brit firm and Canucks will make a good few million.
wake me up please. This nightmare is really bad and I cannot see the way out. What on earth are our press at? Are they all hoping for jobs as “press advisers? “Or are they all just plain lazy? It would appear that “Prime Time Investigates” has been nuetered at a very appropriate time.
If we take the sterling figures – NAMA sold for £140,000 per unit, and gave the retail away for free. The price equated to approximately £120 per sq. ft. This is a derisory price by anyone’s standards. It would not even cover the pure on-site cost of building, before any allowance for land, professional fees, VAT, overheads or profit. It’s just pathetic.
Asset management? My five year old would do better. to paraphrase the palace guard in in Hamlet, “Something is rotten in the State of NAMA!”
With the Olympics and the Para-O coming up, short term lets could bring in a tidy some. Though I’m not sure they’d be arsed having to furnish. I’m tempted to keep an eye on sites like this http://www.rentduringthegames.com/ over the coming months.
@AM it would be very interesting to find out what RTE,Dof FA Enterprise Ireland and IDA planned Olympic accomodation spend is.NAMA should have reached out to these and other Govt. organizations incurring accomidation costs,to work out a mutually beneficial arrangement, with the Irush Taxpayer a
winner for once.
Not to mention the goodwill created,the retail should have been used to showcase Irish products or services.
Seems these places are going to be rented.
http://www.weareair.com/2012/06/30/419-wick-lane-sold-due-market-olympics/
http://www.fjlord.co.uk/FJL045902782
Looks like a good deal for the purchasers. I guess they’ll manage the asset – whatever that is.