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Stop Press: NAMA is selling a major Irish property and for a change, is offering it on the open market

June 6, 2012 by namawinelake

Yes the title above is meant to be sarcastic after NAMA’s recent sales in Corkwhere it sold one major land-bank with marketing apparently confined to sticking a “for sale” sign up in a field and another €100m 450-acre land-bank was sold without the property ever coming onto the open market. At least the Edward Square shopping centre is to be fully marketed by joint selling agents DTZ and DNG, according to Jack Fagan’s report in today’s Irish Times. The asking price for NAMA Top 10 developer, Gerry Barrett’sGalway city centre shopping “enclave” which comprises just eight stores is €27m, but that price represents an initial yield of 8.6%. We should at least be thankful that this property is coming on to the open market…

Today from 5.45pm, there will be a debate in the Seanad on Senator Mark Daly’s bill aimed at forcing NAMA and the IBRC to produce comprehensive lists of property for sale and then to publish sale prices after sales are concluded. The Bill is available here with commentary. The Bill was first introduced before Christmas 2011 and is just now getting its first airing, it is likely to be shot down but that shouldn’t detract from the legitimate and important issues the Bill tries to address. Fianna Fail Senator Daly from Kerry – pictured below –   has spoken out before and suggested shenanigans at NAMA in its disposal of property below market value to people associated with the defaulting developer, but has thus far refused to provide details, even using his privilege in the Seanad.

 

NAMA is disposing of an average of €750m of property each month EVERY MONTH by reference to original loan values. In most cases, it is the developer or receiver that is selling the underlying real estate asset or the loan. But each of these sales represents an individual asset, an individual buyer and seller, it is not as if NAMA is selling litres of milk, kilowatts of electricity or cubic feet of gas. And what external oversight is there of these disposals, most of which are below the value of the outstanding loan and accordingly involve a loss for the Irish taxpayer? NAMA says that it has the Comptroller and Auditor General on site keeping an eye on its activity including disposals. “What”, you might ask “does the CAG know about domestic and international loan and property sales?”

The Bill is problematic because NAMA will have commercial and contractual reasons for not disclosing information, not to mention the confidentiality requirements laid down by the NAMA Act. But at the same time, NAMA is crystallising tens of billions of losses for the Irish taxpayer and we know next to nothing about these losses. The NAMA accounts are so top-level and so distorted by accounting convolutions that we can discern very little – NAMA has made a lifetime profit of €300m from disposals so far of its best and most liquid assets, and that’s about as much as you’ll get, though there is a modest attempt on here to track NAMA sales.

The debate in the Seanad will be reported here over the next day or two. It behoves those who object to the Bill to suggest workable alternatives. The debate amongst the 60 senators who each cost us €65,621 per annum plus allowances, expenses, pension and other perks can be viewed live online at the Oireachtas website and it might be an opportunity to see just how valuable this organ of Irish government is, and whether or not it is an unnecessary undemocratic luxury as some claim, or a valuable store of wisdom, expertise and lifelong experience as others claim in defence.

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Posted in Developers, Irish Property, NAMA, Politics | 3 Comments

3 Responses

  1. on June 6, 2012 at 8:17 am patrick

    Shopping Complex on Buncrana Road Derry sold for 20m+.Will post link when get a Chance but would be Covered on BBC NI I would think,Buyer is owner of Retail Park in Newry


  2. on June 6, 2012 at 8:31 am Garfunkel

    Ambitious price, considering galway’s a poorly performing retail destination and for any investor the third city of the republic might be just a little provincial. Dublin first etc


  3. on June 6, 2012 at 4:35 pm john gallaher

    quick and dirty numbers on the listing,prime asset/secondary mkt.

    @WSTT curious what would DTZ/DNG be splitting,3% of sales price ?

    Asking Price 27,000,000.
    NAMA mtg. @ 70% 18,900,000-that’s the ‘staple financing’-non recourse ?
    Est. closing costs/fees of 1,500,000.
    Equity/Cash/2nd/mezz. required of 9,600,000.
    Mtg 4% say 25 year amort. pmt. 1,197,134 pa.
    In Place NOI 2,273,800 bumps to 2,435,517.
    ROI/cash on cash going in 11.22%
    Steps up to 12.90%

    One of the concerns/issues would be the ‘health ratio’ or % of sales to rent for the retailers,their covenants did Irish subs sign the leases or UK parents,not an expert on these market rents,but if dramatically over market and weak guarantees or credit it may impact appetite.

    If strong convents,24/7 city,core retail,stateside a 5 to 6% cap with multiple offers,NO vendor financing.

    Buyer could/may have some fun with NAMA,what is the 70% mtg. ‘on’ PP or total PP incl. costs fees,also one could be a bit sporty and ask for interest only,at least until the rental bump.

    NAMA should publish its standard loan doc.s for review,one hopes each loan is not bespoke,the legal bills would be astronomically,never mind the amount of hand holding,teeth gnashing.
    Are the NAMA loans assumable, repayable w/o penalty,non-recourse,prohibit 2nd positions,mezz. debt,why does NAMA not have and publish standard loan doc’s,all other lenders forward standard loan doc.s upon request for review.

    You could also argue,that developers in NAMA,have an unfair advantage over non-NAMA developers from a sales perspective,as NAMA is enhancing the yield by offering non-market financing.

    All cash yield is 7.97% with NAMA financing,it leaps to 11.22% going in,with a further bump to almost 13%-10 year T-bills are below 2% !

    Most astute buyers would want to pick up the resi. portion in order to control their destiny,despite the mixed use nature of it.



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