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Archive for April 12th, 2012

NAMA might have judgment orders totalling €184m against him, and he may have a further €225m owing in personal guarantees to non-NAMA banks, but Sean Dunne – aka, “The Dunner”, or Baron of Ballsbridge – seemingly continues to be at the centre of million euro real estate. Following the report on here last month about the sale of 38, Bush Avenue, Belle Haven, Greenwich, Connecticut, a property associated with the Dunnes, there is now a second property, also located in Greenwich which has come onto the market with a price tag of USD 3.3m (€2.5m). The second property, at 42 Bote Road, Greenwich CT 06830, was last year reported by the Irish Independent to be associated with the Dunnes.

It’s a six-bedroom, six-bathroom 8,224 sq ft property on a 0.5 acre plot – there are photographs and details here. Unlike the property at38 Bush Avenue, there doesn’t appear to be the obligatory Irish architectural feature, the sun-room, though it does appear to have the obligatory Irish tarmacadam.

It appears that the property on Bote Roadwas put on the market last October 2011 with an asking price of USD 3.95m, but this was subsequently reduced by 17% in February 2012. The property was purchased on 20th January 2011 by Thomas J Heagney acting in trust for USD 825,000. The Dunnes were reportedly seen visiting the property but no confirmation of their interest in the property was forthcoming. In 2011 when the property was purchased, it was just a 1,820 sq ft house with three bedrooms and two bathrooms. According to reporting in the Independent, plans had subsequently been submitted to undertake USD 720,000 of works to enlarge the property to 5,676 sq ft though these were obviously superseded by a more ambitious and larger redevelopment.

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This morning Ireland’s Central Statistics Office (CSO) has released its inflation figures for March 2012. The monthly headline Consumer Price Index (CPI) was up 1.0% compared to February 2012, and up 2.2% year-on-year (about the same as February and January 2012). Housing has stopped being the biggest driver of annual inflation, mostly because mortgage costs have been declining – by 2.2% in the past year as ECB rate cuts and greater scrutiny of variable interest rates take effect. Just a few months ago, mortgage interest was rising by 20% per annum, and as mortgage interest costs account for 6% of the basket which measures inflation, the impact on inflation was substantial.

 

Energy costs in homes, which account for 5% of the basket examined by the CSO, have risen by 9% in the past 12 months.

Elsewhere private rents rose by 0.2% in the month of February 2012 and over the past year, such rents are up by 4.0% according to the CSO – there is some small rounding in the figures above which show 3.8%. It seems that in our financial crisis, the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of 2011 there has been a 5% increase (mostly recorded in February and October 2011). At the start of January 2012, the Department of Social Protection reduced its rent assistance payments by up to 29% (an average of 13%) and the Department says that some 40% of the rented market in the State is affected by rent assistance payments, which at the end of 2011, was paid to 98,603 households.  The Department’s 40% is derived from information provided to it by the Private Residential Tenancies Board. The Department is projecting it will save €55m in 2012 from its €500m budget for rent assistance, the saving comprising €33m to changes to the minimum contribution and €22m in relation to the new maximum limits. It may take a few months for these reductions to feed through to the market.

Private rents have tended to fall in line with rent allowance even though many landlords will not accept rent allowance tenants. The betting on here is that private rents will come under pressure in the short term but it might take a couple of months for the changes to feed through as most renters will have a couple of months to renegotiate their rents or move.

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Just over a year ago, NAMA had administrators appointed to a British developer, the Beetham Organisation which has developed residential and commercial property across England, including London and Liverpool. The administrators, Grant Thornton, have appointed Jones Lang LaSalle to market an iconic Liverpool mixed-use development, called the West Tower on Brook Street in Liverpool, pictured below. Despite the fact that NAMA showed this property in its February 2012 foreclosure list with JLL as the sales agents, the property does not appear on JLL’s website which shows a total of 16 properties for sale in Liverpool – NAMA was asked for a comment on this apparent omission and any response from the Agency will be posted as an update on here.

West Tower was developed by a Beetham company, Mapfield Properties and accommodates 123 apartments and a ground floor restaurant in its 140 metre, 40-storey frame. It was developed at a cost of GBP 35m (€42m); it’s not presently clear what its asking price today will be. The UK magazine Property Week today reports the property is on the market via Jones Lang LaSalle.

This news comes on the heels of the announcement of the sale of 112 apartments at Riverside Works in east London yesterday with a sale price of GBP 15.7m which continues to raise eyebrows, including those of prospective buyers.

NAMA has indicated that staple finance, whereby the Agency finances up to 70% of purchase prices at 2.5% above NAMA’s financing costs, typically 1-2%, may be available on some of its offerings.

UPDATE: 13th April, 2012. The asking price for the freehold of the building and 106 of the 123 apartments is reported to be GBP 12.5m (€15m).

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Spare a thought for poor old David Agar, the anxious NAMAed developer now contemplating post-NAMA life driving a Ford Cortina and living in a 3-bed semi – by the way, David might have some legitimate grievances towards NAMA, but his “Cortina” comments didn’t do much to bolster his standing. Fellow NAMAed developers, on the other hand, have already seen their mansions put on the block at a fraction of their peak values.

The Irish Times today reports that NAMAed Derek Quinlan’s adjoining properties at No 1 and 3 Shrewsbury Road in Ballsbridge, Dublin have finally been sold for a reported €5.5m which was 30% less than NAMA was seeking last year, and 80% less than the price reportedly paid by Derek in the first place in 2006. There is a superbly detailed account of the properties, with photographs, from the DublinEstates blog which first reported the sale over a week ago. It would be inaccurate to describe these adjoining properties as Derek Quinlan’s own mansion – the intention was to develop the property into a super mansion, but meantime it doesn’t seem like Derek ever lived at the properties.

Last week’s sale on Shrewsbury Road comes on the heels of the sale of NAMAed Robert Butler’s mansion in Adare Manor in Limerick, first reported by the Limerick Leader last month  The 16,500 sq ft mansion was apparently worth €12m at the height of the boom, had an asking price of €2.9m and eventually sold for €1.9m, over 80% off its peak value.

Today the Irish Times reports that NAMAed John Lally’s Humewood Castle in county Wicklow has come onto the market with an asking price of €8m, which is 70% off the €25m purchase price in 2006. Although John Lally might be in NAMA, it is not clear if Humewood Castle is subject to, or associated with, a NAMA loan. Reports reached here last year of weekend parties at Humewood and the impression was that John Lally hadn’t heard that the music had stopped and the party was over. Whether or not that is true, the Castle has a colourful history – it emerged in January this year that the arrested German internet millionaire, dubbed “Kim Dotcom”, the man behind the Megaupload website had partied at Humewood in 2009, and under its previous owner, Renata Coleman, it had played host to Hollywood’s then-Golden Couple, Brad Pitt and Jennifer Aniston. But as that relationship has gone south, so have the fortunes of John Lally and his company Lalco which reported a loss of €173m in 2009 and net liabilities of €393m. The joint agents for the 38,000 sq ft property on 427 acres are Sherry FitzGerald – listing here – and Christie’s International Real Estate.

It seems as if there is still a market for mansions in post Celtic Tiger Ireland, mind you, there’s still no sign of Frank Boyd’s Rademon country estate in county Down coming on the market.

UPDATE: 13th April, 2012. According to Donal O’Donovan in today’s Independent, the loans underpinning Humewood Castle have indeed gone to NAMA, that is sourced from the latest accounts for Lalco Holdings.

UPDATE: 21st December 2012. The Irish Times today reports that US media mogul (with Irish roots) John Malone has bought Humewood for €7.225m. His main Irish vehicle UPC is said to have invested €1bn in Ireland.

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[An Taoiseach Enda Kenny ringing opening bell at New York Stock Exchange in March 2012, flanked by Irish business leaders including Denis O'Brien, third from left, image via Government website]

Although we still await answers from IBRC which will justify that bank’s dealings with €150m of loans to Siteserv, the sale of which to Denis O’Brien’s company, Millington, was agreed by Siteserv’s shareholders last week, we found out yesterday that a Siteserv subsidiary, Sierra, is related to a complaint made to the Competition Authority by the Association of Plumbing and Heating Contractors.

The complaint centres on the contract entered into between State-owned Bord Gais and Sierra which apparently gifts a unique advantage to consumers who have had a boiler installed or serviced by Sierra, in that Sierra costumers can have the cost of the service spread over several Bord Gais bills. Competitors complain that they must charge 100% of the cost upfront, and claim Bord Gais’s contract with Sierra is also driving consumers into the hands of “black market” contractors.

According to RTE, the Competition Authority has confirmed receipt of a complaint but has not begun an investigation and, indeed, is still examining the complaint. Bord Gais reject accusations that the arrangement is anti-competitive, and Sierra is merely the party contracted by Bord Gais under Bord Gais’s terms, and the contract pre-dates Denis O’Brien’s involvement with Siteserv.

But consider this : Siteserv provides a range of services to both public and private sector companies in Ireland. Given the findings of the Moriarty Tribunal in relation to Denis O’Brien, is it healthy that this State continues to engage with a Denis O’Brien company for the provision of any service to a State company? The answer may be debatable but the  Minister for Communications, Energy and Natural Resources is Pat Rabbitte who has been vocal in recent days about the two Tribunal reports – he said on Prime Time last week “I think there are serious questions over his [Denis O’Brien] conduct at that time, yes.” – might be pressed into giving an answer.

If it is controversial for Ministers to meet with one of the protagonists subject to the Moriarty Tribunal and against whom adverse findings were made, or share a platform and be photographed with them, how much more controversial is it, to hand over to that protagonist, State contracts and money?

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