NAMA challenges “moral integrity” of developer seeking creditor protection

This sounds like a light-hearted way to end the week, but it is a matter of fact that this evening the Independent is reporting that NAMA was in court today to stop a borrower obtaining examinership protection and that one of the grounds on which the Agency is arguing, according to the Independent, is concern over the “moral integrity” of the examinership application.

The case involves Kildare oil distributor, Tougher ‘s Oil Distributors Limited which both distributes fuel and owns petrol stations. It reportedly owes NAMA about €53m.  On 31st October, 2012, it petitioned the High Court for the appointment of an examiner. For the non-Irish audience, examinership allows a distressed company to operate with protection from its creditors for a fixed period of time to  allow the company produce a restructuring plan and/or attract an investor, and at the end of the period a judge may approve a restructuring proposal which can see losses imposed on creditors. [The case reference at the High Court is 2012/601 COS, and Tougher’s is represented by Amoss Solicitors. NAMA is not a party to the proceedings but it was appearing today to challenge the examinership because of its standing as a major creditor of the company]

Tougher’s directors are Patrick Tougher (67), Geraldine Tougher (65) and Patrick Mercer (66) and the company is 99% owned by Geraldine and Patrick Tougher.

All that happened today was that the judge, Mr Justice Brian McGovern, listed the matter for an urgent hearing next Thursday 15th November 2012 and in the meantime, ordered that no payments be made by the interim examiner Michael McAteer of Grant Thornton which would have the effect of prioritising creditors ahead of NAMA.

NAMA isn’t the only creditor – the Revenue Commissioners and Bank of Scotland are also reportedly creditors. Sadly the Independent don’t expand on what NAMA meant by “moral integrity” – the report merely says NAMA “had concerns about the moral integrity of the petition and how it had proceeded and also had concerns about potential diversion of monies by the company prior to examinership”

UPDATE: 20th November, 2012. Today’s issue of Iris Oifigiuil confirms that an examiner was in fact appointed to Tougher’s Oil Distribution Limited yesterday, 19th November. Michael McAteer of Grant Thornton was appointed examiner.

UPDATE: 10th February, 2013. Gavin Daly in the Sunday Times – not available online without a subscription – today reports that Masterlink Logistics, a Cork based haulage company is lining up an €8m bid for Tougher’s 10 filling stations and home heating business. Masterlink was founded in 1992 and is controlled by John O’Regan.

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NAMA has receivers appointed to four new companies

According to today’s edition of Iris Oifigiuil, NAMA has had receivers appointed to new four companies.

(1) Shaw Street Developments Limited – Receiver:  Cormac O’Connor, KPMG – Date of appointment: 2nd November 2012 – Directors: Jeremiah Ryan (Jerry Ryan, 53), Paul Birch (60) – Shareholders:  Jeremiah Ryan (36%), Horan Keogan Ryan Limited (64%)

(2) Horan Keogan Ryan Limited – Receiver:  Cormac O’Connor, KPMG – Date of appointment: 2nd November 2012 – Directors: Jeremiah Ryan (Jerry Ryan, 53), Michael Gallucci (42) – Shareholders:  Daniel Daye (0.1%), David O’Connell (0.06%), Garrett Keane (6.24%), HKR Group AB (93.52%), Robert McCauley (0.1%)

(3) Outlook Developments Limited – Receiver: Aiden Murphy, Crowe Horwath Bastow Charleton – Date of appointment: 2nd November 2012 – Directors: Mark O’Donnell (41), Matthew Brennan (40) – Shareholders: Thomas Dowd

(4) Huius Limited – Receiver: Aiden Murphy, Crowe Horwath Bastow Charleton – Date of appointment: 2nd November 2012 – Directors: `Thomas Coyle (51), Valerie O’Loughlin (40) – Shareholders: Thomas Coyle

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

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Irish residential mortgage lending shows first annual increase since 2006

The positive mood music about Irish residential property continues with the release yesterday by the Irish Banking Federation of mortgage lending statistics for the three months ending 30th September 2012 which showed an appreciable increase over the second quarter but for the first time since 2006 showed an annual increase between Q3,2011 and Q3,2012. With the imminent ending of mortgage tax reliefs which Ministers Noonan and Hayes have sworn blind will not be extended into 2013 and with property tax plans which were delivered to Minister Hogan four months ago about to be made public in the December budget (at latest).

But for the time being at least, we have had three consecutive months of price rises nationally according to the CSO and we’ve had four consecutive months of increases in residential rent, again according to the CSO. The Property Price Register which was launched on 30^th September 2012 pointed towards a stabilisation and slight pickup of transactions with indications that in 2012 the number of transactions will be 6% up on 2011. And yesterday’s IBF mortgage statistics point to more transactions also.

First up, we have the volume of transactions. There were 3,532 mortgages drawn down for house purchase. That’s 25% up from Q2,2012 and 24% up on Q3,2011 but still a massive 89% down from Q3,2006 when there were nearly 30,000 mortgages drawn down in the quarter. So, positive news albeit from a very low base.

The value of mortgages advanced is also up considerably, by 30% for house purchase compared with Q2,2012 but up just 14% on Q3,2011. As with volumes, we’re at the highest quarterly level sinceQ4,2010 when the country turned to the IMF for funding assistance.

Average values of mortgages are also up for first time buyers and movers – by 5% approximately between Q2,2012 and Q3,2012 but are slightly down on a year ago. Buy to Let average drawdowns are substantially down – by 28% compared with Q2,2012 and 31% compared with a year ago.

First time buyers comprised more than 50% of the market, its highest level ever.

So just another indicator of stabilisation – it will be interesting to see if the transparency offered by the Property Price Register and the imminent Budget 2013 announcements will reverse the recent positive developments – the betting on here is that they will, but who knows.

Reacting to yesterday’s mortgage statistics, the Director of Public Affairs at the Irish Banking Federation, Felix O’Regan, stated “whereas data from previous quarters showed that contraction in activity continued to slow, the Q3 data is showing actual growth in activity – something we haven’t seen in some time. This is a very welcome trend and one we might hope to see sustained, particularly in light of reports from market analysts indicating a stabilisation in average house prices in Dublin, for example. Activity during the final quarter of this year will be closely watched as mortgages taken out after 31st December next will not qualify for mortgage interest relief. We will be well positioned to monitor trends more closely over the coming quarters with the help of new mortgage approvals data which we plan to publish shortly as a new lead indicator of future mortgage market activity.”

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Banking sector paycuts are just for Paddies

The Australian chief executive office of IBRC has gone on the offensive today to defend salaries at his bank after it emerged that 30 staff are earning basic salaries in excess of €200,000 per annum and after it was first revealed in a parliamentary question that IBRC had told Minister for Finance, Michael Noonan to get lost in April 2012 when Minister Noonan sought a 15% waiver in €200,000-plus salaries. Remember this was four months after Minister Noonan made a similar request to the NTMA and NAMA where there was subsequently 100% compliance with the request.

But stand back for a moment and you will see that employees in the banking sector have been making sacrifices and sometimes without being asked. There are others who have either not been asked to waive some part of extraordinarily large salaries or if they have been asked, they’ve said “no”. And the split is on national lines, with Irish executives waiving salaries and British and Commonwealth executives saying “no”. Here’s an overview.

First up, we have the anomalous position at the Central Bank of Ireland where the Governor, Professor Patrick Honohan is earning 40% less than one of his deputies.  The last Central Bank of Ireland annual report revealed that Governor Honohan was paid €276,324 compared with the salary paid to his deputy Matthew Elderfield of €340,000. Not only that, but in 2012 Governor Honohan is gifting a further €63,000 resulting in his annual salary for 2012 being €213,000, nearly 40% less than his deputy.  In October 2012 in response to a parliamentary question, Minister Noonan said he had no control over Central Bank salaries and said he had not sought waivers of salary at that bank.

Next up, we have the CEO of AIB, David Duffy, the Dubliner with the mid-Atlantic accent who revealed at an Oireachtas committee hearing last week that he was employed on the salary cap of €500,000 but that he had himself subsequently gifted a further 15% back to the Exchequer meaning he now earns €425,000. Contrast that with Zambian-born CEO of Bank of Ireland Richie Boucher whose basic salary is €640,000 and who apparently either hasn’t been asked to take a paycut or if he has, the accounts would suggest he’s said “no”

Next is IBRC, the name of the organization which merged Anglo Irish Bank with Irish Nationwide Building Society. Australian Mike Aynsley had a package last year worth €866,000 and will this year be paid €500,000 plus allowances of €38,000 and a 25% pension. Compare IBRC with NAMA and on practically every level, NAMA has a bigger and tougher job than IBRC and is doing that job at a cost of 33% less than IBRC. Yes, IBRC may have to deal with the Quinn family but NAMA has to deal with Paddy McKillen, Johnny Ronan and Treasury. It should be made clear that there haven’t been allegations of malfeasance against Messrs McKillen and Ronan but both have proved to be difficult and litigious individuals, and the Treasury story is far from finished – and Paddy McKillen has launched another appeal against a decision in Britain involving NAMA. And yet Brendan McDonagh is paid €430,000 and has waived 15% of his salary so that in 2012 he will earn €365,500. And it was recently revealed that pension costs at NAMA are an average of 5% of salary.

And at IBRC we know from the Sinn Fein finance spokesperson’s parliamentary questions this week that IBRC has rejected Minister Noonan’s attempt to secure paycuts at the top level of that bank.  We don’t yet know what salary attaches to IBRC’s British Chief Financial Officer Jim Bradley but the betting is that he is one of the five IBRC staff on €400,000-499,999 as revealed by Minister Noonan. Ditto for IBRC’s “special projects” specialist who pursues the Quinns, Briton Richard Woodhouse. However there has been one pay cut at IBRC and that has been to the chairman’s salary. Chairman Alan Dukes has taken a paycut of €100,000 to his €250,000 annual fees and he may have offered a subsequent waiver in June 2012.

Back over at NAMA’s parent organization, its CEO John C Corrigan has taken a 15% cut to his €480,000 salary. The days of the CEO of the NTMA being paid €1m are long gone and John will get paid a gross salary of €408,000 in 2012.

Many people will probably look at the reduced salaries of the Irish working in the banking sector and say that they are still too high. But there has been sacrifice there which has not been mirrored by non-Irish banking personnel.  And they might say, why should they offer pay-cuts, they’re not Irish and not expected to put on the “Green Jersey” but if the evidence is that Irish peers will accept paycuts in a sector which is largely controlled by Minister Noonan, then maybe we should be seeking personnel changes.

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Catalogue for December Allsop Space auction published

Where: The Shelbourne Hotel on St Stephen’s Green in Dublin
When: from 10am (note the earlier time, most previous auctions commenced at 11am) on Tuesday, 4th December 2012
What: 109 Lots in total of which 55 are commercial – this is being billed by Allsop Space as “the largest number of commercial properties to be offered on a single day in Ireland” Overall maximum reserves of €13.6m comprising commercial €13.6m and residential €4.6m. The commercial Lots include 26 retail, 7 offices, 3 pubs, 13 land and 6 industrial.  The online catalogue is here.

It seems that Allsop Space is growing with at least five auctions pencilled in for 2013 – some possibly with 200 Lots – but before that, we will have the last auction of 2012 on 4th December, as usual in Dublin’s Shelbourne Hotel. The catalogue was published last night and there are 109 Lots up for grabs with a strong emphasis on commercial property.

Of the 109 Lots, 37% are tenanted and 63% are vacant. Of the 54 residential properties offered there are 30 houses, 21 aparments and 3 so-called “houses of Multiple Occupancy” (i.e. split into residential units). As with previous Allsop Space auction, properties are offered from the four corners of the country with 44 Lots in Dublin and 65 Lots in the regions outside Dublin.

Properties of note.

Dartmouth Square, Ranelagh, Dublin 6 – 2 acre Georgian Garden Square, entire freehold interest. It is being sold on the instructions of Tom Murray of Friel Stafford Corporate Recovery, the court appointed liquidator over Marble and Granite Tiles Ltd – Reserve not to Exceed €140,000

Market Place, Clonmel, Co. Tipperary (pictured above) – Almost an entire shopping district being sold as one lot.  Retail portfolio of 18 units and buildings, on both sides of the street. 9 of the units are tenanted, with tenants including Specsavers, Elverys and Xtravision. Rents reserved at €231,645 per annum. – Reserve not to Exceed €900,000

Block of apartments in Fearann Ri, Doughiska, Galway City – Freehold block of 9 apartments, whereby one apartment has been sold off on a long lease. Fully rented at €61,000 per annum. – Reserve not to Exceed €310,000

Moonduster Bar, Restaurant and Apartment, Crosshaven, Co. Cork – Seaside bar and restaurant with apartment overlooking the water. The bar and restaurant are vacant with the two bedroom apartment currently tenanted producing €5,500 per annum. The 7 day publican’s licence is currently in place and will be transferred to the new purchaser – Reserve not to Exceed of €225,000.

As you would expect , the properties are again pitched with tantalising maximum reserves but remember that the average hammer price on the day has tended to be 30-40% above the maximum reserves quoted, but there are investments on offer here with maximum reserves indicating 20%-plus yields. The “maximum reserve” is an Allsop Space innovation and is the highest reserve for the specific property – the actual reserve might be lower; what the “maximum reserve” means is that if your’s is the highest bid at or above the maximum reserve, you are guaranteed to get the property.

This will be the ninth Allsop Space auction and the partnership seems to be pleased with its position as Ireland’s Number One property auction company by a country mile. Apparently there were sellers of over 400 properties chasing a slot in the December 2012 catalogue, which was whittled down to 109 (actually 108 as I see Lot 29 has now been WITHDRAWN). The sellers are a mix of receivers and private sellers.

Allsop Space recently drew attention to its success in getting better prices than in private treaty sales.  Their operation is certainly transparent and unlike Osborne King, they don’t accept offers before the actual auction which is broadcast live.

This sale will be of particular interest to NAMA which controls loans on €6bn-plus of Irish commercial property. The investment commercial property market in particular has collapsed from a high of €3bn transactions in 2006 to just €180m in 2011 (2012 looks like heading to €500m).

UPDATE: 27th November, 2012.  Speaking this morning, the Director of Auctions at Allsop Space, Robert Hoban said there has been a notable difference in advance of this auction in the profile of investor contacting the office, with a larger proportion being commercial buyers reflecting the make-up of the catalogue, with commercial investors focussing more on due diligence and investigations into legals, tenancies etc. Allsop Space has advised that buyers considering buying the property at Dartmouth Square, that this Lot will be open to registered bidders only on the day of the auction. “Those parties wishing to bid will have to pre-register involving cleared funds being lodged as deposit, with a bidding number being assigned. While this is a regular procedure in the UK, it is our first time to use it in the Irish auctions.” Given the prevalence of commercial property in this auction, there will be keen interest in the auction from latent sellers of commercial property including NAMA which has Irish commercial property worth about €6bn underpinning its loans. But IBRC, AIB, Bank of Ireland, Ulster, ACC and BoSI/Certus also have large commercial portfolios.

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