NAMA sells €100m property in Cork and this time doesn’t even bother to stick a “for sale” sign up in a field

“the sale strategy “was a matter for the professionals retained”” NAMA spokesman defending the sale of €100m of land inCork which had reportedly not come onto the open market

In January 2012 the Irish Examiner reported the sale of 125-acres outsideCork city on the N25/Ballincollig Bypass for a price reckoned to equate to €20-30,000 per acre. The apparent fact that the marketing of the property was confined to erecting “for sale” signs on the property raised some eyebrows as there was the possibility that potential buyers who mightn’t have driven along the N25 might have been interested in the property. Some suggested the sale to the University College Cork/Munster Agricultural Society was a “sweetheart deal”. DTZ Sherry FitzGerald marketed the property on behalf of NAMA.

Today the Irish Examiner sets out the details of the sale of another property which it says never came on the open market. The newspaper “has spoken to the previous owners and the land’s tenants, several of whom said they would have had an interest in buying part of the land, but they either could not engage with NAMA, or did not know it was about to be sold” though it should be said that the sale of the property in one lot was a consideration for NAMA. The property in question is reported to be a 450-acre land-bank assembled by NAMA Top 20 developer Castlelands Construction at a cost of €100m and sold to a buyer, believed to be a local farmer, for “about €7m” or €15,000 an acre. Farmland in the State is typically selling for €8-12,000 at present.

This time it is Savills which is the agent for the sale and the Examiner reports “Savills described the bidding as competitive and recommended the sale as the best price possible”

It is not exactly clear what the Examiner means by the property not coming onto the open market. Typically in the trade it means that the agent quietly contacts what it considers might be interested purchasers. The price supposedly paid represents a premium on the going rate of agricultural land, and although the land is greenbelt and un-zoned, there may be some consideration of future development or infrastructure value of the land.

However what stands out from this newspaper report like a flashing red beacon is NAMA’s position on the sale where there appears to be a complete abdication of responsibility by the Agency for getting the best price for the property. NAMA seems to be saying that there was an initial valuation which suggested a price and the price now achieved by Savills was in excess of that price. It is not clear who provided the “initial valuation” – was it Savills themselves or NAMA or someone else? But regardless of who provided the valuation, the common understanding at present in the business is that there are so few transactions of development land that it is difficult to assess what the market value is. If NAMA or its agents had opened the sale up to all, then it would have seen what buyers were willing to pay on the open market which is ultimately the determinant of what a property is worth. But that didn’t happen according to the Examiner. A 450-acre land-bank might have been of interest to buyers from Belfast to Belmullet, from Boston to Berlin but NAMA washes its hands of the matter saying it “was a matter for the professionals retained”. Is there a property owner in this country that would leave the sale of their property 100% in the hands of estate agents? Yes there is and it is NAMA.

The NAMA spokesperson is also quoted as saying “the sales process was independently managed by Savills, on behalf of the debtor, and was designed to obtain the best achievable price for the property” It seems that Fianna Fail’s finance spokesperson Michael McGrath is aware of the sale and the Examiner reports ““he was surprised “a landholding of this size and importance should be sold without being put to the open market”” His party colleague, Senator Mark Daly has tabled a Bill to force NAMA to publish details of all property under its control and all property sold, but that Bill which was initiated in December 2011 probably won’t see the light of day.

NAMA is selling an average of €750m of property a month EVERY month by reference to the original par values of the relevant loans. It is thanks to sources like Tommy Barker at the Irish Examiner today that we get to hear of a fraction of what is being disposed of on our behalf. There is an attempt on here to track all NAMA sales, but it too is likely to be just the tip of the iceberg.

UPDATE: 9th May, 2012. Last week in the Seanad, Senator Mark Daly who introduced a bill to promote transparency in NAMA and IBRC spoke about this sale and complained that buyers were not even aware that the land was for sale.  Fine Gael’s senator Paul Coghlan dismissed any suggestion of impropriety saying “I wish to refer to an entirely different item, which is that yesterday, my friend and colleague, Senator Daly, made a serious and unwarranted charge with regard to NAMA. He spoke of approximately 450 acres of agricultural land, and so zoned, in a part of Cork. I understand he mentioned a figure of €100 million and how it was sold for €7 million.  I am rebutting something that was stated seriously in this Chamber yesterday. I put on record that two independent valuations of approximately €10,000 an acre were carried out by reputable firms in that regard. When NAMA acquired that loan, it reflected the state of the market at that time. It was sold in one lot at a price significantly above what the agency paid for it and consequently, a profit was made for the taxpayer. Savills, which is a highly reputable firm, acted on its behalf. It had checked the market and was in touch with all interested parties. I can only conclude that someone who did not get his or her own way got in touch with Senator Daly about the matter to give vent to his or her upset.”

How Senator Coghlan knew what NAMA paid for the loan is unclear.

UPDATE: 24th May, 2012. Fine Gaell deputy Jerry Buttimer asked Minister for Finance Michael Noonan about the above transaction in the Dail on Tuesday this week and was told that the final agreed sale price to a special purchaser was 40% more than the value advised by two independent professional sources.

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