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Archive for October 9th, 2012

NAMA’s foreclosure action continues apace with news today from Iris Oifigiuil that the Agency has had receivers appointed to Limerick developer, Dineen and Company Limited, a company whose directors are John Kennedy (50), Brian Dineen (34) and Marie Dineen (84). The company is owned by Dominic Dineen and the Limerick Real Estate Company Limited, which is in turn owned by Dominic Dineen and Francis Dineen.

NAMA had Michael Cotter of Ernst and Young – that’s the company which until recently employed End Farrell’s wife, Alice Kramer – appointed on 5th October, 2012.

Dineen & Co are behind the development of the Mungret Woods/Mungret College in Limerick, sample homes for sale via MyHome.ie here.

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

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In this State, we have enough Irish jokes – what, with the 2008 bank guarantee and paying bondholders in utterly bust banks whilst putting at risk the credit worthiness of the State. But we haven’t had as good a joke as the report published by the Central Bank of Ireland (CBI) this morning. To be fair, the author Eoin O’Brien says at the outset that he is expressing his own opinion and it is entirely his work, but when something is published under the CBI brand, the CBI as a body corporate should bear some responsibility for its content.

So why the conniption?

The report sets out to examine prices of residential property achieved at recent Allsop Space Irish property auctions and to compare the current auction prices with peak asking prices and current asking prices. It’s not that he’s even comparing apples and oranges – or actual prices with asking prices – because at the peak where there was a sellers’ market, the asking price should intuitively be pitched considerably in excess of actual prices but today in a buyers’ market, you would expect asking prices to more closely reflect actual prices. So, 2007 oranges may well have a different quality to 2012 oranges. But what will really amuse you is the fact that he uses the results from the Allsop Space auctions to work out the actual price of residential property today, and the way he does it, he takes the total hammer prices and divides that by the number of properties sold, to get his average – or rather averages, mean and median (see * below for a refresher on the two). There is no attempt to match two bedroom apartments in Ballsbridge with other local two bedroom apartments, or even with two bedroom apartments in Ballyfermot. The statisticians refer to this matching of like with like as “hedonic regression”, but there is no attempt to do this with the auction results.

The report then goes on to calculate yields – simplistically the annual rent divided by the value of a home – but wait! For historical average prices, it uses the Department of the Environment, Community and Local Government average house price. Remember that’s the one that take a €58m sale like Walford on Shewsbury Road and a studio sale in Ballyfermot for €50,000 and says the average price of an Irish home is €29,025,000! No seriously, and by the way, even though the CSO index has become the premier index in the country, junior minister at the Department, Jan O’Sullivan has said that she will continue to fund the “marginal cost” of maintaining this utterly flawed series (which by the way excludes cash-only transactions!)

One of the regular commenters on here, WGU will shortly be on to say that auctions themselves are skewed towards cheaper property, and indeed the report’s author today does confirm this with his “Kernal density estimate” which shows the overwhelming majority of auction sales are in the €75-175,000 range.

So what are the conclusions anyway from the report? Here we go (the ranges are there to show mean and median)

(1) Dublin property is down 60-67% from peak asking prices
(2) Dublin houses are down 55-62%
(3) Dublin apartments are down 66-68%

(4) Non-Dublin property is down 72-77% from peak asking prices
(5) Non-Dublin houses are down 69-73%
(6) Non-Dublin apartments are down 80-83%

(7) Dublin property actual today is down 21-32% from current asking prices
(8) Dublin houses are down 3-23%
(9) Dublin apartments are down 28-33%

(10) Non- Dublin property actual today is down 46-57% from current asking prices
(11) Non-Dublin houses are down 39-48%
(12) Non-Dublin apartments are down 63-66%

If you were to extract messages from the above

(1)  Dublin is down less from peak asking than non-Dublin, which contradicts the CSO index which suggests prices in Dublin are down is the other way around – to the end of August 2012, Dublin was down 57% and non-Dublin was down just 46%.
(2) Apartments are down more from peak asking than houses everywhere.
(3) Non-Dublin sellers are being completely unrealistic today with asking prices double auction actual prices.

Lastly it is worth saying that auctions generally tend to achieve lower prices than private tender sales through estate agents. There are apparent exceptions like the Northumberland Road property which sold for €685,000 last week at the Allsop Space auction after being purchased three months earlier for €550,000 but the consensus “on the street” was that the property was undersold three months ago. Buyers at auction are taking more risks and tend to pay in cash. So actual auction prices may tend to overestimate the decline compared with what would be regarded as normal mark prices. But since we’re comparing apples and oranges, does it really matter?

Thanks to the Property Price Register we now have actual sales prices. It may be some weeks before the data is analysed so that some third party provides an index, and the data only goes back to January 2010, but the age of the asking price is coming to a close, and the prediction on here is that if there are two headlines next January 2013 – “asking prices down 10% in quarter” or “actual prices down 5%”, I be willing to bet you will click on the latter headline and ignore the former.

*Now it might have been some years since some of you did you junior cert, so to recap on mean and median take the following numbers

13, 18, 13, 14, 13, 16, 14, 21, 13

The average (or “mean”) is the sum of these numbers divided by number of numbers or ((13, 18, 13, 14, 13, 16, 14, 21, 13)/9 or 15

The median is the middle number when these numbers are sorted in ascending order so

(13, 13, 13, 13, 14, 14, 16, 18, 21) or 14

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The troubled Gleann Riada housing estate in Longford has hit the headlines again this morning after two incidents in which methane and carbon monoxide have been blamed for causing incidents including an explosion which, according to RTE, blew out a window and caused structural damage. There are no reports of injuries.

Gleann Riada, built by now-bankrupt Northern Ireland developer, Alastair Jackson and his Eassda Ireland Limited, was the scene of NAMA’s first demolition during the summer when an apartment block was levelled. The remainder of the sprawling estate was not affected by the demolition.

NAMA will not be pleased to hear the report this morning that €2m may be needed to repair the sewers serving the estate, as the Agency has only put aside a total of €3m to carry out repairs at all of its so-called ghost estates, believed to number about 30 housing estates dotted around the country.

RTE is reporting that the Health Services Executive is attending the site this morning for discussions with residents who have been advised not to light open fires in their living rooms.

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Yesterday in the Commercial Court division of the High Court, the redoubtable Mr Justice Peter Kelly presided over a preliminary hearing in the case NAMA has taken against its former employee, Enda Farrell. The case was ultimately adjourned for four weeks, but we learn, via Mary Carolan in the Irish Times today, that Enda has owned up to sending what is reported as “confidential agency data he [Enda] allegedly misappropriated from the agency” to at least 24 email addresses – or “14 third party entities”, according to the Irish Examiner – including

(1) named persons in a Canadian asset management
(2) the owner of a real estate investment management business based in London
(3) a person working for a Dublin estate agency
(4) two working with a Dublin-based investment management company
(5) a Dublin-based Canadian asset management company

In an affidavit, Enda admitted that the first email was sent on 16th October, 2011 – almost one year ago.

The reporting of yesterday’s proceedings is really poor but it seems that Enda has admitted sending emails from his NAMA email address whilst employed at NAMA to the work email address of his wife, Alice Kramer who worked at Ernst and Young, and it seems he asked his wife to forward the emails to her personal Yahoo account. NAMA is reportedly claiming that this was a scheme to bypass the NTMA’s IT security system which apparently examines emails from NAMA work email addresses sent to free personal email accounts like Hotmail and Yahoo. [It would cost less than €20 to buy a domain name like DistressedPropertyInvestors.Com, set up an email address Enda@DistresstedPropertyInvestors.Com and then send emails from NAMA without the NTMA detecting it, so it seems Enda was not just allegedly a bad egg but not very bright either and it should be recalled that NAMA has said it has taken legal action against a former employee and his wife]

It is reported that NAMA believes the information at issue has been – in the words of the IT reporter – “unlawfully deployed in the commercial property marketplace”. No further details of the “deployment” are forthcoming from any of the court reporting.

The case is still not showing on the Courts Service website but it is hoped that there will be better reporting of the case when it returns to the Commercial Court next month. NAMA sought the adjournment yesterday to allow it complete its investigations. It seems that NAMA is still considering whether to bring a claim for damages, and it looks as if the court proceedings are in part being used by NAMA to apply pressure to get full disclosure on what has happened to its information. NAMA was represented by Cian Ferriter and Enda Farrell was represented by Frank Callanan, who according to the Independent, “said his client wanted to co-operate in any way [he could]”

Meantime, it is probably a fair bet that if, by his own admission, Enda did send information to at least 24 email addresses, that the horse has bolted and the genie is out of the bottle and detailed loan information is quasi-publicly available, and NAMA is left unconvincingly claiming that the loss of the information won’t damage it, or its debtors to whom it owes various duties.

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