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Archive for May 1st, 2012

RTE is this evening reporting that Johnny Ronan and Richard Barrett’s Treasury Holdings has commenced legal action against NAMA seeking damages and challenging the constitutionality of the NAMA Act. It is not clear from the report but it is probably the application has been made inDublin’s High Court but there are no records of the application there as yet.

RTE reports that Treasury is unhappy with NAMA’s conduct with respect to the Battersea Power Station site on the south bank of the Thames in central London – pictured below – and it seems Treasury believe the company has lost out “on hundreds of millions of euro in potential future profits”

NAMA isn’t commenting save to say it will robustly defend the action.

I’m beginning to lose track of the many official actions taken by Treasury and NAMA against each other which include

(a) Treasury is seeking a judicial review of NAMA’s dealings with its loans and won approval from the High Court inDublin last month to proceed with this review

(b) Last week NAMA obtained charges over several million euro worth of assets including €600,000 of cash as security for costs and damages in the forthcoming judicial review.

(c) NAMA had administrators appointed to the companies which control the Battersea Power Station site last December 2011

(d) NAMA has had receivers appointed to 35 Treasury group companies this year, the latest just last week

(e) Last week NAMA launched an action against Johnny Ronan and Richard Barrett last week aiming to reverse the so-called TAIL transaction where in 2010 on the eve of NAMA taking control of Treasury loans, some €20m of shares were transferred to Richard Barrett and Johnny Ronan for a consideration which most comprised loans. NAMA wants the transaction reversed, Johnny and Richard say the transaction was at open market values is all above board.

From this perspective it seems as if the NAMA/Treasury relationship has completelyt broken down and become almost personal; the progress of the conflict between these big beasts will be watched closely.

UPDATE (1): 2nd May, 2012. The summary details of the case are now available  from the Court Service. It seems that there are 19 – yes, 19! – Treasury companies suing both NAMA and National Asset Loan Management Limited – the presence of NAMA as a plaintiff or defendant usually indicates important matters as to the general operation of NAMA are at stake. Some of the Treasury companies have been subjected to receivership action, others like the  TSARSKOYE SELO GOLF CLUB ST PETERSBURG appear not to have been affected by the appointment of receivers yet. All 19 companies are represented by international law firm DAC Beachcroft, the 19 are

(1) TREASURY HOLDINGS

(2) SPENCER DOCK DEVELOPMENT CO LTD

(3) SDDS [NO 1] LTD

(4) SDDC [NO 2] LTD

(5) SDDC [NO 3] LTD

(6) SDDC [NO 4] LTD

(7) FAXGORE LTD

(8) RUSHRID LTD

(9) CARRYLANE LTD

(10) CALLSIDE DEVELOPMENTS LTD ,

(11) TREASURY ASIAN INVESTMENTS LTD

(12) BATTERSEA POWERSTATION SHAREHOLDER VEHICLE LTD

(13) COPPER LAKE LTD

(14) VISTABROOK LTD

(15) CHERMONTVALE LTD

(16) DEMIRAS LTD

(17) MAINBROOK LTD

(18) ZAO TSARSKOYE SELO GOLF CLUB STPETERSBURG

(19) PUSHKIN DEVELOPMENT AB

UPDATE (2): 2nd May, 2012. The Financial Times has some detail on the application itself and say it relates to Treasury’s displeasure at NAMA’s handling of the Battersea Power Station project and the loss of an investor, the Malaysian company SP Setia and the consequent loss to Treasury of €400m – that’s 400 million euros – of management fees and an unspecified potential profit share from the eventual full development of the Battersea site, though it is reported that there were to be GBP 4.5bn (€5.5bn) in gross profits over the lifetime of the flagship development. Hmmmm.

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The colourful Johnny Ronan appears to hold 186 directorships of companies, so there may be plenty more to which NAMA can have receivers appointed after today’s edition of Iris Oifigiuil showed that NAMA has now had receivers appointed to 35 companies associated with the Treasury Holdings founders, Richard Barrett and John (Johnny) Ronan. The latest company to fall to NAMA is Alhans Limited, a company associated with a 30-home residential development in Kinsealy, north Dublin. NAMA had William G O’Riordan and Declan McDonald of PricewaterhouseCoopers appointed on 25th April, 2012.

NAMA is certainly maintaining a drip-drip of recovery actions against Treasury with an application to Dublin’s High Court last week pursuing the pair personally after the so-called TAIL transaction in 2010 which saw the dynamic duo transfer assets worth €20m from their company to themselves in return for loans – NAMA was unhappy with the transaction though Johnny and Richard say it was an open market transaction and all above board. NAMA also secured charges over cash and property understood to be worth millions of euro in advance of the forthcoming judicial review of NAMA’s dealings with Treasury’s loans which saw mass foreclosure action in January 2012. And NAMA has been appointing receivers to companies in the Treasury Holdings group intermittently since January 2012.

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

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For all you salespeople out there whose managers might be pressuring you to close sales, you now have a novel addition to the excuse manual courtesy of CB Richard Ellis (CBRE). Property services powerhouse and NAMA valuer, CBRE has just published its two-monthly review of the Irish commercial property market and it makes the observation that activity has increased but as a result of the infernal “forensic due diligence”, this activity hasn’t yet translated into actual sales.

The report observes that there is considerably more property coming onto the market, including from NAMA and its debtors. It is reported that the sale of the €27m David Arnold-developed One Warrington Place in central Dublin “has now signed and is due for completion shortly” – the buyer isn’t identified save to say it is a “US investor” but rumours abound that it is a company called Northwood which has made the purchase, after the previous purchaser, Prudential dropped out.

There is a sense of the absurd about CBRE’s claims on yields because of the absence of transactions; regardless it is claimed prime retail is yielding 6.25% and is stable and industrial is stable at a yield of 9.5% – I think there will be close attention paid to the prices and yields of a number of industrial offerings at the Allsop Space auction this Thursday 3rd May to see how industrial prices are performing – CBRE does make reference to the last Allsop Space auction where a unit in Ballymount sold for €400 psm (€37 psf, or less than one half of the estimated current build cost).

Prime city centre office rents are reportedly unchanged at €296 psm (€27.50 psf) and CBRE reports that there is a very healthy 180,000 sq metres (2m sq ft) of requirements throughout Dublin at present with Microsoft and Arthur Cox amongst those looking for new space. Rents in the western suburbs of Dublin are estimated at €134.50 psm (€12.50 psf).

Retail rents seem to be holding up well despite the ongoing domestic economic contraction and CBRE notes that only 26% of international retail brands currently have a presence in Ireland which suggests considerable potential (at some future point).

It is noted that there is demand for residential investment property, specifically apartment blocks and reference is made to a number of transactions understood to have recently completed. The €40m sale of the Alliance building off of Barrow Street to Kennedy Wilson still hasn’t completed apparently.

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Or to be more accurate, property developer/investor and former tax inspector Derek Quinlan told the High Court in London yesterday that what some might see as a “lavish lifestyle” was in fact a necessity to avoid potential buyers seeing you as a distressed seller and consequently submitting low-ball offers. He was giving evidence in the marathon case that developer/investor Paddy McKillen is taking against the billionaire Barclay brothers to stop them taking control of the hotel group which owns three 5-star London hotels.

In recent days it has emerged that when the Irish banking/property sectors imploded in 2008, Derek Quinlan was one of the largest-scale borrowers in the Irish property mania, the shadow of which was cast across the globe. He is reported to have owed €3.2bn to Irish banks in 2009 but has subsequently repaid €2bn of that, so there has been a lot of disposal activity. And Derek says that maintaining his lifestyle was vital to obtaining the best prices.

A spokesman for NAMA was asked if the Agency had any plans to reverse the approach outlined by its chairman Frank Daly who told an Oireachtas committee in 2010 that NAMA was forcing developers to sell off their status symbols – “the jets, yachts, Bentleys or whatever are not supported by NAMA and in many cases we will insist they are sold by NAMA to reduce the level of indebtedness” I’m not holding my breath for a comment!

The Paddy McKillen case is set to wrap up over the next day or two with a judgment expected in June 2011.

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