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Archive for October 5th, 2012

By my reckoning, the news today that NAMA has sold 15 apartments in the Scotch Hall complex in Drogheda for €1.4m to Tuath Housing Association brings to a total of 17 dwellings sold by NAMA since Minister for the Environment Community and Local Government Phil Hogan’s gushing announcement of 2,000 NAMA homes for social housing last December 2011. But it’s a start…

The Scotch Hall complex was developed by Gerry Barrett’s Edward Holdings, and there are presently two apartments on offer on DAFT at the complex, a 1,000 sq ft 3-bed apartment with an asking price of €195,000 and an 800 sq ft 2-bedroom apartment with an asking price of €165,000. The Property Price Register shows only one sale of an apartment in the complex since January 2010, and that was Apartment 12 which sold for €127,753.30 in August 2010.  NAMA’s sale of 15 apartments for €1.4m works out at an average of €93,333 apiece, somehow I think we’ll see the asking prices in DAFT coming down….

We found out yesterday that NAMA is selling an average of six properties a day with an average individual value of €1.3m – so today, NAMA has exceeded its average by volume but is considerably down by value.

UPDATE: 14th November 2012. It is being reported today that NAMA is to invest €20m in the development of Scotch Hall over the next two years, which will see a new 8-screen 1,500 capacity cinema, shop units and a food court. Local Labour Party TD, Deputy Gerald Nash has welcomed the news.

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He might have gotten poor press with the viewing public in Rita O’Reilly’s Prime Time Investigates programme in December 2010 when he was secretly filmed on a helicopter-borne dayout at the races and it seems he took extreme exception Minister Lucinda Creighton speech at the MacGill Summer School which resulted in a defamation action which is set to get a hearing later this year,  but it seems that Cork developer Michael O’Flynn is one of the better-faring NAMA Top 10 developers – his loans are understood to be performing and the betting is that he is one of the developers with an agreed NAMA plan.

According to British commercial property portal, CoStar  a company in the O’Flynn Construction Holdings group called Tiger Developments, has put three London properties on the market in recent weeks –

(1) 9 Clifford Street in London’s Mayfair, 18th century building used as offices for GBP 18m (€23m)

(2) 130 Jermyn Street off London’s Piccadilly for GBP 45.6m (€57m) yield of 5.9%

(3) 1 George Yard in the City of London for GBP 12m (€15m) yield of 6.15%

Tiger Developments is ultimately owned by the O’Flynn group. It is unclear if the buildings are subject to NAMA loans with CoStar reporting that the proceeds of the 9 Clifford Street sale will be recycled into the company’s development pipeline.

Over the summer, it was reported that NAMA was funding the completion of the O’Flynn Ballincollig Shopping Centre, which is nice of NAMA particularly if elsewhere in the O’Flynn group, sale proceeds arebeing spent on new developments….

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The €410,000 sale in November 2011 of “Sunday Well”, the house in Lucan on two acres, by NAMA developer Thomas Dowd to former NAMA employee Enda Farrell may become NAMA’s most famous sale, but for all the wrong reasons. But what most people don’t appreciate is the massive volume of sales of property subject to NAMA loans. It has been estimated on here before, that an average between €500-750m of sales take place per month EVERY SINGLE MONTH, by reference to the original value of the loans.

We found out yesterday that NAMA has to date, since it started acquiring loans in March 2010, overseen the sale of 3,500 individual property units ranging from undeveloped sites to completed office units and probably every property type in between. In other words, in over the past 625 working days, NAMA has overseen the sale of an average of 5.6 properties per day – was the one sale to Enda Farrell the only one that had a shady context?

Yesterday, the Fianna Fail finance spokesperson Michael McGrath asked the Minister for Finance Michael Noonan for details of the property sold. He received a very top-level answer with few details, but we learned that NAMA’s debtors and receivers have so far received €4.6bn in cash from the sale of 3,500 individual properties “which can range from undeveloped sites and parking spaces to completed office blocks” This works out at an average of €1,314,286 per sale.

Minister Noonan also gave a pretty meaningless statistic of there being 2,500 individual cash receipts because this include deposits and presumably completion sums on the same property. Next to no detail was given on the property sold. Deputy McGrath will no doubt be snorting in derision at the claim by Minister Noonan that “the NAMA Board guidelines require, where feasible, the sale of assets on the open market and their public advertisement and I am advised by NAMA that in the vast majority of cases the sale of assets securing its loans have been so conducted.  In any event, NAMA requires that an independent valuation process be undertaken in respect of all asset disposals over €250,000 in value.” Deputy McGrath has previously complained about off-market sales including some in his own Cork constituency, and has said the practice of selling off-market “stinks”.

The full exchange is here.

Deputy Michael McGrath: To ask the Minister for Finance the number of properties that have been sold that is legally binding contracts in place by the National Assets Management Agency or by agents acting on behalf of NAMA or by agents appointed by NAMA controlled debtors and, of this number, if he will confirm for each category the number and total value of such properties which were up for sale on the open market and publicly advertised; and if he will make a statement on the matter.

Minister for Finance, Michael Noonan: As with a bank, NAMA does not own nor does it sell property assets securing its loans.  The sale of these assets is conducted by their owners, that is, NAMA debtors, or, in enforcement cases, on behalf of these debtors by duly appointed Receivers/Administrators. I am advised by NAMA that its debtors and receivers have recorded over 2,500 cash receipts in respect of asset sales totalling €4.6 billion as of end August 2012.  NAMA advises that cash receipts may relate to sales of individual properties or sales of multiple units as well as disposal of non-real estate assets such as shares and also deposits paid on such transactions.  Included in the these cash receipts are sales of some 3,500 individual property units, which can range from undeveloped sites and parking spaces to completed office blocks.

However, these sales have been achieved in accordance with NAMA Board guidelines, a key principle of which is that the conduct of disposals should be on a competitive basis wherever practicable and in accordance with prevailing market practices for the asset class and jurisdiction to which the sale relates.

The Deputy will further note that the NAMA Board guidelines require, where feasible, the sale of assets on the open market and their public advertisement and I am advised by NAMA that in the vast majority of cases the sale of assets securing its loans have been so conducted.  In any event, NAMA requires that an independent valuation process be undertaken in respect of all asset disposals over €250,000 in value.

I would also note that while it is the clear policy of NAMA itself to maximise the realised proceeds from all sales of assets securing its loans, it is also clearly in the absolute interest of NAMA debtors to maximise the realised proceeds from the sale of their assets in repayment of their debt.  The Deputy will also note the legal, fiduciary and professional obligation on Insolvency Office Holders to maximise the realised proceeds from the sale of debtor assets.

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It seems that the chickens are finally coming home to roost at Treasury Holdings, the once mighty Dublin-based property development company founded by the colourful Johnny Ronan and understated Richard Barrett. Mary Carolan at the Irish Times is reporting that this morning in Dublin’s High Court, Treasury told the court that it was no longer resisting the bid by KBC bank to have the group wound up, and it is expected that liquidators will be appointed on Tuesday next 9th October 2012 when the matter returns to court. The putative liquidators are named as Grant Thornton who are expected to be appointed to liquidate 16 companies in the group.

On Tuesday next, judgment day is expected on the controversial sale of a group company to one of the founders, Richard Barrett in August 2012. There are concerns over the sale, the value of the company sold and the consideration received, and these are set to be addressed on Tuesday next in what promises to be a riveting day at the Four Courts. This morning, it was stated on behalf of Treasury that an affidavit had been provided and you can expect some robust examination of this next week.

What now for Treasury? Their employees, variously put at 45 to 300, may be affected though KBC has said that most of these are employed by the Ritz Carlton hotel and are not employees of Treasury itself. The betting on here is that the Treasury appeal of its failed judicial review bid with NAMA, will now be abandoned and NAMA might be breathing a deep sigh of relief on that one! Will the dynamic duo, Messrs Ronan and Barrett continue to have any role in Treasury? That’s not known but the Ray Burke response about receipts from the Bailey brothers might be apt here.

NAMA continues to be engaged in a wide range of legal disputes with several Treasury companies and also with Messrs Ronan and Barrett personally. So regardless of whatever transpires next week, you won’t have heard the end of the Treasury story for some time to come!

UPDATE: 9th October, 2012. As expected liquidators were appointed to Treasury and 16 group companies today. Michael McAteer and Paul McCann of Grant Thornton are the lucky pair who will need sort out the €2.7bn debts of the group, including €1.7bn apparently owed to NAMA. No word on jobs yet.

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Some people might say that NAMA itself is a performing art spectacle, for example when, as one state agency, it went to court earlier this year to reverse the decision of another state agency, the Information Commissioner with respect to her ruling that NAMA was a public body for the purposes of environmental requests. The case is still ongoing, but if you want to watch tens of thousands of euro of your money being burned on legal costs in a fight between two state agencies, you can just go down to the High Court later this year when the hearing resumes. But when it comes to more traditional art, NAMA has control over a valuable collection – or rather four collections valued at €7.5m. In addition it is overseeing the sale of a fifth collection, understood to be David Arnold’s and last year it flogged a number of paintings from Derek Quinlan’s collection which netted nearly €2m. One of the four collections still under NAMA’s control is understood to be the 400-piece Noel Smyth caboodle which some have dismissed as “a load of tat”.

Some of this information was revealed yesterday when the Fianna Fail finance spokesperson Michael McGrath asked the Minister for Finance Michael Noonan to provide details of NAMA’s art holdings – the full exchange is shown below. Deputy McGrath also asked about sales arrangements and you might recall that a number of Irish fine art auctioneers were unhappy when Derek Quinlan’s collection was given to Christie’s last year – which, incidentally did a decent enough job in two sales in London and New York, but the local auctioneers were up-in-arms at Irish paintings in particular being given to foreign auction houses to flog. However Minister Noonan was not biting on that lemon, and as with NAMA with the recently-announced sale of David Arnold’s collection, he body-swerved the question and said it was for the developers to sell their art and that NAMA merely oversaw the process.

With the remaining collections worth at least €7.5m, you can be sure you have not heard the last of local auctioneers clamouring for the business!

Deputy Michael McGrath: To ask the Minister for Finance if he will provide details of all items of art that have come under the control of National Asset Management Agency since the agency’s establishment including details of the number of such items; the estimated aggregate value and the number of NAMA debtors involved; the full details including proceeds of any sales of art that have been executed so far showing separately sales by NAMA and sales arranged by NAMA debtors with the agency’s consent; if he will provide details of the sales arrangements that have applied including tendering procedures and the name of any selling agents appointed by NAMA and by NAMA debtors with the consent of NAMA; and if he will provide details of any further plans the agency has for the disposal of any items of art under its control..

Minister for Finance, Michael Noonan: The Deputy will note that NAMA has acquired loans that are secured, in the vast majority of cases, by property assets, a detailed breakdown of which is available in NAMA’s Annual Report and Financial Statements 2011. NAMA advises that, in the case of debtors that it manages directly, the value of art that it currently holds as security for its loans is of the order of €7.5 million. This relates to four debtor connections. NAMA further advises that art belonging to a fifth debtor connection has been sold for an amount €1.9 million and that art belonging to a sixth debtor connection is currently on the market for sale. The Deputy will appreciate that it is not appropriate for commercial reasons to discuss the expected realised value of assets that are currently on the market.

The Deputy will be aware that NAMA does not own nor does it sell assets, including art, securing its loans. The sale of these assets is undertaken and managed by their owners or, in enforcement cases, on behalf of these owners by duly appointed Insolvency Officer Holders.

NAMA advises that the sale of art by debtors and Receivers/Administrators is conducted in accordance with the prevailing market practice for that asset and the jurisdiction to which the sale relates. The strategies adopted, including the engagement of selling agents, are designed in all cases to maximise the realised proceeds from the sale of the art.

I would also note that while it is the clear policy of NAMA itself to maximise the realised proceeds from all sales of assets securing its loans, it is also clearly in the absolute interest of NAMA debtors to maximise the realised proceeds from the sale of their assets in repayment of their debt. The Deputy will also note the legal, fiduciary and professional obligation on Insolvency Office Holders to maximise the realised proceeds from the sale of debtor assets

NAMA advises that sale arrangements applied for the disposal of art are a matter for debtors and appointed Receivers/Administrators in accordance with Agency guidelines and that it would not be appropriate for it to detail the future disposal strategies, including timelines, for the sale of art by debtors and Insolvency Office Holders.

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The NAMA applications in Dublin’s High Court are now coming thick and fast. Yesterday the Agency launched action against two individuals Paul O’Brien (presumably the “Pual O’Brien” shown at the Courts Service is a mistake) and Tony Enright. As is usual with recently-filed applications, there is no solicitor on record for the respondent.

The case reference is 2012/3820 S. The applicant is National Asset Loan Management Limited represented by global legal giant, Eversheds solicitors.

With individuals named as respondents, we need to be very careful when even speculating about the indentity of the respondent. NAMA doesn’t comment on individual cases, and although there is a well-known Limerick solicitor and developer called Paul O’Brien, and NAMA has taken legal action against him personally earlier this year, we do not know if this is the same Paul O’Brien in this case.

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 32 separate actions in Dublin’s High Court and has been on the receiving end of six.

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