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Archive for April 13th, 2012

According to today’s edition of Iris Oifigiuil, NAMA has had receivers appointed to three related companies that operate in Galway. Ken Fennell of insolvency specialists Kavanagh Fennell has been appointed receiver to Kapstone Limited, Coolagh Construction Limited and Inchagoill Contractors (Salthill) Limited. The companies are controlled by Chris and Margaret Crehan and are associated with the following developments in Galway – Gort na Ri, Drom Oir, Letteragh Road, Sli Gheal, Linn Bhui, Ashleigh Grove, Knocknacarra Park, Hassets Field, Limerick, Sliabh Ard, Gort Siar, Carrigeen  Portacarron, Caiseal Ur, Gort Siar Apartments, Cluain Dara, The Rise, Cloch Ard Clybaun Road Hotel, Cluain Mhor, Windfield Gardens, Gleann na Tra, An Logan

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

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The advertising hoardings have been erected outside and Jones Lang LaSalle (JLL) has been retained for the marketing, and it finally looks as if the home of the old Hume Street Hospital at 3-8 Hume Street, just off St Stephen’s Green in central Dublin may finally get a new lease of life. The 40,000 sq ft handsome terraced row of six buildings is being offered for sale by tender for about €3m, the tender date has yet to be set and once it is, the full sales listing will be available from JLL.

The building was bought by a NAMAed developer, Michael Kelly in 2006 for €30m – AIB is understood to be the lender. It is understood that the AIB loan was in fact NOT acquired by NAMA, and indeed it was AIB itself secured a €60m judgment, relating to various loans, against Michael in November 2011. JLL is not disclosing the identity of the current owner.

Whilst not in NAMA, the building came to attention on here as a result of the campaign to save the site from deprecations of vandals and the elements. The “Save Hume Street Campaign” initially sought to stop vandals and thieves damaging the building and removing original fittings including copper piping and lead flashing. The removal of the flashing led to severe water ingress and damage. The Campaign’s Facebook page is here where you will also find a treasure trove of photographs of the building, inside and out, which highlighted the damage being done to what is one of Dublin’s great historic buildings. There is also a website which sets out further information about the history and condition of the building.

Today, the Campaign welcomed the fact that the property is being sold by tender with a reported asking price of €3m which reflects the preservation requirements for the building – the building is protected both internally and externally. The Campaign said “Hume Streetwould suit a mixed use: cultural: museum, educational, office hub for related innovative business and most importantly a residential element, which is stipulated in the development plan. There are very few people living inDublin2 – one of the reasons the thieves and vandals were able to do so much damaged unnoticed.”

There doesn’t appear to be any shortage of office accommodation in Olde Georgian Dublin, and the adjoining property, No 2 Hume Street presently has over 20,000 sq ft of rental accommodation available through HT Meagher O’Reilly – see listings details here.

UPDATE: 11th May, 2012. There is an attractive brochure for the property produced by Jones Lang LaSalle. The closing date for tenders is 2pm on 25th May, 2012.

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The Irish Examiner is this afternoon reporting about an application made at the High Court today by developers who claim that they are prevented from redeeming a loan. The case – reference 2012 33 IA – is being taken by Joseph Hynes and others against NAMA. The Examiner reports that Joseph was one of four investors who bought sites in The Island area of Clonmel,countyTipperary a decade ago and obtained a loan of €655,000 from Anglo for that purpose. The loan was subsequently acquired by NAMA and NAMA has now appointed receivers to the property. The case is complicated by the fact that one of the four purchasers passed away and a life insurance policy should have been enough to cover the outstanding loan, but it is claimed that the insurer Canada Life paid out half the expected compensation.

The case is set to return to the High Court on Monday next, 16th April.

UPDATE: 14th April, 2012. Ray Managh and Saurya Cherfi at the Irish Examiner today provide detail on the case which is set for a hearing on Monday next. In essence, four investors had expected that a life insurance policy would have covered any outstanding loan should any of the investors die. John O’Dolan, one of the four investors died in 2009 and it was expected the insurance compensation from Canada Life would have covered the outstanding loan, the original value of which is corrected in today’s report and put at Punt 655,000 (€822,000). However a year later the bank told the surviving investors the loan was being acquired by NAMA and that the insurance compensation  payout had only come to €536,000. NAMA appointed Eoin Ryan, of Horwath Bastow Charleton as statutory receiver.  A partner in Horwath Bastow Charleton is Brian McEnery who is a NAMA board member, not to mention  Minister for Finance, Michael Noonan’s election manager in the 2011 General Election. It seems that the receiver put the properties subject to the outstanding loan on the market in March 2012 and that prompted the three surviving investors to make the application in the High Court; they claim that they wanted to redeem the loan, presumably at its original value and that Anglo was to provide an explanation as to the shortfall in the life policy. Seems like a curious case and hopefully more light will be shone on the detail on Monday.

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NAMA was required to hand over its 2011 management accounts to the Department of Finance by 31st March, 2012, so the Bloomberg interview with the NAMA CEO, Brendan McDonagh, on 10th April, 2012 is worth examining because Brendan should know what the out-turn is for 2011. And Neil Callanan writing for Bloomberg says

“McDonagh said the public will be “pleasantly surprised” by the agency’s performance last year when it publishes its accounts and he expects the impairment charge to be lower than for 2010”

In 2010, NAMA eventually booked a €1.485bn impairment charge which led to the Agency booking an overall loss of €1.1bn for the year. Remember NAMA produces both management accounts and full audited accounts for the year – last year the management accounts showed a €1.0bn impairment charge, but three months later when the audited annual accounts were published, that had been revised upwards to €1.485bn. So the management accounts can be 50% out in the estimation of the impairment charge.

The betting – no money involved, and it’s not a hostage to fortune – on here is that the impairment charge in 2011 will be in the order of €3bn, taking account of the property indices in the markets in which NAMA operates. Unlike 2010, there will be an intense focus on NAMA’s impairment charge when it is eventually published – the management accounts were published last year on 5th May and the Annual Report which includes the fully audited accounts was published in July.

We all look forward to being “pleasantly surprised”

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Figures released by the Central Bank of Ireland (CBI) today show that in the month of March 2012, the reliance by Irish banks on central bank funding fell slightly for the third month in a row and is now back to levels last seen in August/September 2010. Overall central bank funding fell from €132.3bn at the end of February 2012 – and €138.2bn in January 2012 – to €130.1bn at the end of March 2012, a monthly decline of  €2.2bn. Central bank funding at the end of March comprised funding directly from the ECB of €85.1bn, down €2.0bn from €87.1bn in February, while funding from the CBI – understood to be Emergency Liquidity Assistance (ELA) – was down €0.2bn in the month from €45.2bn in February to €45.0bn in March. It is believed that the Anglo Promissory Note jig danced by Ireland’s Department of Finance at the end of March is not reflected in these numbers as the €3.1bn Anglo Promissory Note was in fact paid on 2nd April, 2012, so including that transaction, Ireland’s reliance on central bank funding would have fallen €5.3bn in the month.

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 increasing which suggests good news.

The figures from the CBI this morning show for the first time the significant effect of the second Longer Term Refinancing Operation on 29th February 2012 which saw €530bn pumped into EU banks by the ECB. This funding was for three years and an interest rate which is presently 1% per annum. Longer Term funding from the ECB rocketed from €70bn at the end of January to €79bn today.

It is worth pointing out that ECB direct lending to Irish banks today stands at €85bn. This compares with a €3tn ECB balance sheet, and indicates that Irish financing arrangements are now proportional to our economy, and that the ECB is no longer providing “unprecedented” support to Irish banks.

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

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Yesterday evening, without citing sources, RTE reported the geographical/property-type breakdown of the property which NAMA committed last December 2011 to making available in 2012 for social housing. The pre-Christmas announcement by Minister for the Environment, Community and Local Government said that 2,000 homes would be made available for social housing by NAMA in 2012. The total reported by RTE comes to 2,045 and this is the analysis by county and property type.

 

Dublin and Cork account for 78% of the total housing being made available, and apartments account for 76% of the total.

Despite the impression given by Minister Hogan that NAMA would be selling cheap homes for social housing, the reality is that NAMA doesn’t own any property – a fraction of the 10,000 residential properties in Ireland on which there are NAMA secured loans have been foreclosed upon and are in the hands of receivers who act in the interest of all creditors including NAMA. Beyond that, most residential property is still in the hands of the original developers, though clearly NAMA is overseeing loans and plans for property which in general is only now worth a fraction of the face value of any loan.

It is not clear why only 2,045 residential dwellings in Irelandare supposedly suitable for social housing, and why the remaining 8,000 aren’t. A report on the country’s housing waiting list last year showed that 98,000 households were in need of housing, and the need was spread right across the 26 counties.

RTE also reported that NAMA was “is in negotiations” with the GAA and Football Association of Ireland for the sale of 10 sites to be used for sporting facilities. Although RTE report “NAMA’s management of lands provided clubs with the opportunity to acquire lands that they normally would not be able to buy”, it is understood that NAMA continues to do deals at an arms-length basis in order to meet its primary objective of maximising income for the taxpayer and not favouring one social need over another by subsidising deals. The original RTE report said “NAMA deals with initial queries in relation to vacant green field sites” but this has been removed from later reporting, and it remains the case that the land-owner, generally the developer but in foreclosed cases, the receiver, should be contacted in the first instance.

A NAMA spokesperson said that there is no change to NAMA’s policies in its dealings with sports organisations and social housing, and that deals would be concluded on a commercial and arms-length basis, and that any deal would need be struck with the property owner, be that the developer or the receiver. It remains the case that anyone interested in NAMA foreclosed property should contact the receiver/selling agent in the first instance.

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