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Archive for September 6th, 2012

The BBC is this afternoon reporting that Northern Ireland house builder Dunergan Developments Limited, which went into administration in July 2012, is set to cost NAMA a total of GBP 9m (€12m) with the collapse of property prices in Northern Ireland. The company owes five banks a total of GBP 24m and NAMA will be the main loser from the collapse of the company,

A schedule of creditors – extracts with NAMA loans shown below – shows that NAMA acquired a raft of AIB loans secured on properties right across Northern Ireland. Surprisingly, it seems as if NAMA decided not to acquire Bank of Ireland loans to the company – in the past NAMA has rejected certain loans because of issues with paperwork and security.

The company is owned by the McCann family – Christopher McCann, Eoin McCann, Francis McCann, Hugh McCann, Joan McCann and Michael McCann whose main company is FP McCann Limited which produces a range of manufactured products sold across the UK.

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Item Number One for the political agenda when the Dail resumes on 18th September, 2012 should be the Personal Insolvency Bill which, as presently drafted, does NOT provide for a modern bankruptcy regime because it allows banks to stop your bid for bankruptcy. Whilst the pace of increase has relented slightly in the past two quarters, the number of mortgage accounts that are in arrears over 90 days is now at a record level of 83,251. And when you add in all accounts in arrears and those accounts that have been restructured which might not be paying a cent presently, there are over 168,000 accounts out of 760,000 which show some form of distress. The main way forward has to be reform of our bankruptcy laws.

So when Minister for Social Protection Joan Burton (pictured above) this morning announced a scheme to give homeowners being offered a restructuring deal by their bank, access to a free consultation with an accountant up to a value of €250, the response on here was that the initiative is little more than a sticking plaster on a gushing wound. But in the absence of proper bankruptcy, it seems like an honest attempt to provide homeowners with independent professional advice in relation to any restructuring scheme put forward by the banks. The announcement says the cost of the service which is borne wholly by the banks “could be in the region of €10m” which would equate to 40,000 * €250. It has been a long held concern on here that banks would take advantage of financially distressed homeowners to kick them off tracker mortgages in return for any restructuring, a move which could cost homeowners hundreds of thousands of euro over the life of the mortgage. So independent professional advice is to be welcomed, if only to stop banks taking advantage of  a bad situation.

It is the banks that are paying for the consultation. In the case of PTSB, AIB/EBS, IBRC and to an extent Bank of Ireland, that means the State paying for the advice because we own these banks. However it seems that all banks, including Ulster, KBC, National Irish and Bank of Scotland/Halifax are included in the scheme.

How do you access the new service? Take a look at the government-run KeepingYourHome.ie website and contact the Mortgage Arrears Information helpline on 0761 07 4050. Your bank should make you aware of the new service launched today.

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Where: Shelbourne Hotel, St Stephen’s Green, Dublin
When: 3rd October, 2012 with first lot being offered at 11am
What: auction of 127 properties, mix of residential/commercial/development. Maximum reserves of €15,475,000. Online catalogue available here

It will be billed as Ireland’s biggest ever property auction with 127 Lots and maximum reserves of €15,475,000 – the “maximum reserve” is the price above which the winning bidder is guaranteed to get the property, the maximum reserves might be reduced on the day but they won’t increase. The online catalogue was published this morning.

As usual there is a diverse mix of residential, commercial and development properties located right across the country, with only a third in Dublin. Commercial property includes pubs, pharmacies, petrol station, offices, warehouses and shops. There is a 39-bedroom hotel in Leitrim with a maximum reserve of €300,000. In previous auctions, actual hammer prices have been around 25-40% above the maximum reserves and 9 out of 10 properties generally reach their real reserves. There is a mix of seller which includes receivers and owners – this isn’t all Bank of Scotland foreclosed property by a long stretch.

They seem to have run out of apartments to sell in Liam Carroll’s Castleforbes Square development but I see there are still flats being offered at The Tannery on Cork Street. Most expensive lot by reference to its €850,000 maximum reserves is a 5,000 sq ft Georgian office/residential building on Fitzwilliam Place, just off St Stephen’s Green.

What do the Lots tell us about prices generally? Not much given we just have maximum reserves which would suggest 70%-plus declines from peak if they equalled hammer prices. As is usual with such catalogues there is a very wide range of yields offered, ranging from – as far as I can see – 7% on a 2-bedroom flat off Bloomfield Avenue in Dublin 4 to high teens. There is a property at Church Hill in Tullamore in countyOffaly in a development that was in the past associated with NAMA. There is also a leasehold café in Beacon Court in Sandyford in Dublin but it is not clear if this is one of Paddy Shovlin’s properties to which NAMA has had receivers appointed.

Allsop Space is a joint venture between British auctioning giant Allsop and Dublin estate agency Space. Auctions are held every three months or so, and the venture became the biggest auction operation in Ireland right from the get-go when the first auction was held in April 2011. The venture has revolutionised auctioning in Ireland with outstanding levels of transparency, live webcasting of the auction proceedings and the concept of “maximum reserves”. Allsop Space also don’t entertain bids before the auction which just heightens the transparency of its business.

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Poor old Bernard was one of the first mega property developers to admit he had problems back at the start of 2010. Since then, the banks have been working through his outstanding loans. Receivers have since been appointed by the banks to his properties. In the past three months, three of Bernard’s hotels – the Burlington in Dublin, the Parknasilla in Kerry and the Cork International – have all been put up for sale. At NAMA too where Bernard is understood to be a Top 10 developer, the Agency has foreclosed on his loans, including loans on the former Irish Glass Bottle site in Ringsend in Dublin and the Elm Park development in Ballsbridge. And the last we heard of Bernard was that he was carving out a new fortune in Nigeria – it should be said that the McNamara company operating in Nigeria has played down Bernard’s involvement and it is unclear if he is currently has any formal role in the Nigerian business. And that was that.

However yesterday in Dublin’s High Court, NAMA made an application against the Clare developer personally. The sole applicant in the matter – case reference 2012/3412 S – is National Asset Loan Management Limited which is represented by Irish legal powerhouse Arthur Cox solicitors. The sole respondent is Bernard McNamara personally. As is usual in recently filed cases there is no solicitor on record for the respondent.

In the past, NAMA has taken legal action against individuals to enforce personal guarantees or to secure personal judgments, but it should be stressed that we do not know if either of these objectives lies behind the current application. NAMA generally doesn’t comment on individual legal cases.

So far this year, NAMA has launched 22 separate actions in Dublin’s High Court and has been on the receiving end of six.

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I was wondering why so many public relations companies had recently signed up as subscribers to this blog. On Tuesday this week, the mystery was solved as the NTMA issued a tender for the provision of PR services. The three-year contract will cover all the many organisations which fall under the NTMA umbrella including the National Pensions Reserve Fund, the National Development Finance Agency, the State Claims Agency, and NewERA. But the principal organisation under the NTMA’s umbrella of interest on here is NAMA.

Earlier this year we learned from a parliamentary question from the Sinn Fein finance spokesperson Pearse Doherty that NAMA spent €135,948 on PR services in 2011, up from €63,032 in 2010. It would be a fair bet that the bill will have increased in 2012. Of course the overall size of the contract will be considerably more than this, when services to other NTMA organisations are included. You can totally ignore the report in the Irish Examiner today that €114m in fees have been paid to PR companies working for the NTMA in the past two years! I would guess the contract is worth at most about €250,000 a year for the provision of services to the NTMA, including NAMA.

The 21-page tender document is here. It is noteworthy that fees proposed by prospective applicants form just 20% of the marking used to award the contract. The most important attribute of applicants is the quality of the team with 45% of the marking. It is estimated that about 80 hours of service will be required each month. The closing date for submitting bids is 15th October, 2012.

Back in early 2010, NAMA’s management of information with the media seemed a bit like the Wild West with leaking happening on a large scale. However since current provider of PR services to the NTMA, Gordon MRM was appointed in 2010, the Agency’s dealings with the media have been transformed. The provenance of a couple of newspaper reports – notably the ones about NAMA covering its total lifetime operating costs already  and Olivia Kelly’s social housing report – looked fey, but you would have to say over the past two years, NAMA’s release of information has overall been democratic and transparent.

Gordon MRM was founded by Ray Gordon in 2009, has a staff which includes former Sunday Business Post journalist David Clerkin, and provides media services to clients which include Permanent TSB, the Society of Chartered Surveyors in Ireland and the Irish Stock Exchange. It was asked for a comment on the tender this morning, and if it would be pursuing a re-appointment but there was no response at time of writing.

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