The lunacy of having several state-owned asset management agencies or bad banks is brought into focus today with a tender notice issued by IBRC (Irish Bank Resolution Corporation, the name for the entity which merged Anglo and Irish Nationwide Building Society together). The tender is for the “fit-out” of 52 apartments, 46 x 2-bed and 6 x 1-bed in Dublin 1. IBRC won’t provide the precise address at this stage but Dublin 1 covers much of central Dublin, on the northside of the Liffey and includes the IFSC.
The “fit-out” appears to be aimed at getting the apartments into a ready-to-rent condition and includes flooring, curtains, kitchen appliances, beds and basic furniture. It seems the apartments already have basic kitchens and bathrooms. The tender strongly suggests that IBRC is going to rent the apartments.
Which will place IBRC in direct competition with NAMA which has already foreclosed on several residential units in Dublin 1 – residential units at Castleforbes Square and Sherriff Street are included on the latest NAMA foreclosure list, though of course NAMA has foreclosed on only a fraction of its loans, so there will presumably be developers trying to rent property subject to NAMA loans in Dublin 1 also.
So that we get this straight – IBRC will presumably employ an estate agent and property management company to deal with the rentals. NAMA or its receivers will do the same. They will suboptimally compete with each other – in other words it might make sense for NAMA and IBRC to separately rent their foreclosed apartments but together it might make more sense to sell some and rent others or not put the apartments on the market right now.
Competition between NAMA and IBRC – and indeed AIB and Permanent TSB – has largely been ignored up to now because the big disposals have been overseas, but even there it makes sense to conclude that there was dysfunctional competition between these state-owned organisations. Now that it is closer to home, and both NAMA and IBRC deal with smaller domestic assets, the sub-optimal competition and duplication of cost should become clearer.
NAMA Wine Lake 
I understand your point about cost duplication, but competition between Nama and IBRC seems appropriate here and not at all sub-optimal. Although they are both state-sponsored agencies it is better that they compete in this market niche rather than having monopoly market power or duopoly power (if they colluded).
@Gregory, there are a large number of providers of apartment rentals in Dublin 1, so much so that NAMA/IBRC/AIB/PTSB is unlikely to have anything approaching a monopoly position which would be a concern. So you have NAMA and IBRC and AIB and PTSB each coming up with their own asset management strategies based on their own portfolios without regard to each other, timings, asset management mix. You potentially have Agent A for NAMA haggling over price so as to keep a potential tenant who might otherwise plump for Agent B representing IBRC.
In south Dublin docklands, it seems that NAMA has employed one agent for all of its commercial property rentals which could be anti-competitive were it not for the fact that there are so many suppliers and so much product. So NAMA’s single agent can avoid reductions and take an overall approach to NAMA’s portfolio, which should serve to maximise income.
What is an empty apartment block doing on IBRC’s book? I thought this type of loan was supposed to be moved to NAMA?
@Ahura, you’re to be forgiven for a common misconception. NAMA took over so-called “land and development” loans and even then the threshold for Anglo loans was €5m, it was zero for INBS. Investment property should have stayed OUTSIDE of NAMA unless the borrower also had “land and development” and then the investment property loans would have been acquired by NAMA as associated lending. NAMA seemingly didn’t take over some loans which might have been considered eligible eg the AIB loan for Hume Street seems not to be in NAMA, North Tipp TD Michael Lowry’s loans from INBS would seem to qualify for NAMA but the Deputy is saying he is not in NAMA, and Sean Quinn’s loans on international property had development dimensions and overall his exposure should have been systemic which is another argument. But these all seem to have escaped NAMA.
So no, it’s not a huge surprise though in general you would expect IBRC to appoint a receiver who would issue tenders for work, but in this case, it seems to be an IBRC repossessed building.
As a regular reader here, I’m familiar with the threshold and the ‘land and development’ aspect. The description of a 52 unit Dublin 1 property suggests a loan >5m is likely. If they’re looking to fit-out all these units, it seems likely that the building is empty.
Perhaps I’m wrong but I think an empty 52-unit building should have qualified for NAMA (i.e. if it isn’t producing a cashflow it’s more development than commercial). If the outstanding debt was less than 5m, then IBRC should have been in a position to repossess/sell and clear the outstanding debt.
If, what appears to be an empty developement, can remain on the bank’s books it calls into question the quality of assets left on AIB/BOI&IBRC balance sheets.
@ Ahura- Sub 20 m exposure?
@Don
Anglo >€5m
INBS, EBS no threshold
BofI, AIB > €20m
This is the Liffey Trust Building
@SD, the marketing literature refers to 96 apartments in the Liffey Trust Building (beside the O2/Point)
http://www.liffeytrust.ie/index.cfm?menu=business/residential.cfm
It may be that Anglo is only fitting out a portion of the total. That said, I can’t see any approved planning application in Dublin 1 for a building with 52 apartments so you could well be right.