This is Part 2 of a three part review of NAMA in 2012. Part 1 is here and covers January – April 2012 inclusive. This is Part 2 and covers May-August inclusive and Part 3 will be published on Sunday.
May 2012 – the Paddy McKillen marathon case in London’s High Court continued, and former tax collector and one-time King Midas, Derek Quinlan was waxing philosophically about the necessity for developers to keep the accoutrements of wealth so as not to appear distressed which would just invite low-ball offers for property. The ferocious war between NAMA and Treasury Holdings continued with Treasury suing NAMA reportedly for hundreds of millions for its treatment of the Battersea Power Station whilst NAMA continued to have receivers appointed with gusto to Treasury companies. Sean Quinn’s woes intensified as a Northern Ireland judge observed the shenanigans involving the Quinn international property portfolio smacked “irresistibly of an orchestrated, elaborate and illicit charade” – difficult words for the Quinns to hear but it was about to become a whole lot worse on the other side of the Border.; a BBC Spotlight programme on the international property shenanigans didn’t help matters. County Down developer, Alastair Jackson was declared bankrupt in Northern Ireland, he had developments in the Republic including the Gleann Riada estate in Longford. NAMA reveals that it controls loans covering some 13,000 homes in (the Republic of) Ireland, days before the long-awaited launch of the negative equity mortgage product, which was initially offered on a pilot basis covering 115 homes, a couple of weeks later we learned the scheme was a stonking success in that 16 homes were sold and 16 were “reserved”, only problem was it appeared none of the buyers opted for NAMA’s negative equity product. NAMA’s resistance to the information commissioner’s ruling that it be subject to environment requests continued in Dublin’s High Court and we witnessed the spectacle of two state agencies arguing the toss whilst the legal profession rubbed their hands in anticipation. NAMA had receivers appointed to companies formerly controlled by respected developer, Pat Neville a month after Pat passed away in the US. NAMA sold Killymeal House in Belfast for a price equivalent to €3.8m reflecting a 9% yield, not a huge sale but significant in the context of Northern Ireland. NAMA finally announces something constructive with plans to invest €2bn in its developments over the next four years which may create or sustain 35,000 jobs, and a little later we learn that NAMA is considering a major investment to build a new office block in Dublin city centre, at Spencer Dock apparently. We learn that NAMA has sold 700 of its 13,000 Irish residences. The Comptroller and Auditor General publishes a report on NAMA’s loan acquisition phase and we learn a lot of hitherto hidden detail on the Agency’s operations. NAMA is reported to be financially supporting a shopping centre development owned by the Bailey brothers, Michael and Thomas. NAMA publishes its management accounts for Q4,2011 and for the first time, we get the unaudited performance in 2011 – after an impairment charge of €800m, the Agency turns in a €200m profit, just over a month later, the impairment charge had risen by €200m but NAMA still managed to show a modest €12m pretax profit for 2011.
June 2012 – We learn that AIB has sold its 17% stake in NAMA to a South African investor, Prescient but still no news on the buyer of the 17% stake formerly held by Irish Life and Permanent – both sales were prompted by the Government’s control of AIB and Irish Life which meant that Eurostat was about to force us to add NAMA’s €30bn of bonds to the national debt. The disposals stopped that. NAMA has receivers appointed to Galway developer, Michael Newell’s Newell Construction. The Seanad debates a Bill promoted by Fianna Fail senator Mark Daly aimed at forcing NAMA to openly market all of its property and to publish selling prices – the Bill is shot down in the Seanad amid unconvincing claims that such transparency would damage NAMA’s commercial remit. One of the accredited architects of NAMA, Peter Bacon publishes a report on NAMA which is sponsored by …. “hopelessly insolvent” Treasury Holdings; it was not well received and the Treasury offer to NAMA to seek mediation to resolve differences a few days later received the cold shoulder from the Agency. We learn that NAMA is considering referring one developer to the Gardai for allegedly making a false declaration with their business plan submission – as the year draws to a close, there has been no public revelation of the details or identity of the developer. It emerges that Minister Noonan unilaterally conceded to a NAMA debt reduction of €7.5bn by the end of 2013 with the bailout Troika – the redemption of some NAMA bonds had finally been “copperfastened” NAMA gets tough with Priory Hall developer Tom McFeely and seeks to repossess his house, once worth €10m, on Ailesbury Road – after a bitter fight at the High Court, the house was surrendered and then Tom sought to appeal the decision but lost the appeal, and as the year ends, NAMA has placed the house on the open market. NAMA has receivers appointed to Ellen Construction and a few weeks later, its founders Martin Doran and Martin Doran are declared bankrupt in the UK. NAMA scores a PR coup with news that it has approved 97% of rent abatement requests by tenants in buildings under the Agency’s control, though that doesn’t stop a TD blasting the Agency a couple of months later for the closure of a Harvey Norman store in Mullingar. It emerges that Ferrari nut Paddy Shovlin has been declared bankrupt in London. NAMA announces its first demolition of an Irish property – a 12-unit apartment block in the ill-fated Gleann Riada estate in Longford, the demolition was delayed when protected birds were found nesting in the property but it was a temporary reprieve and at the end of August, the apartment block was no more and the space was returned to dug-up earth at a cost estimated at €150,000. NAMA is successful in its appeal against Paddy McKillen in London of the decision earlier in the year which found that NAMA was obliged to comply with the original terms of the loan agreement which governed Paddy’s loans. The Quinn family is judged to have been in contempt of court orders in Dublin’s High Court , days later Sean Quinn junior is jailed for three months, Peter Darragh Quinn fails to turn up for the hearing and remains a fugitive whilst sentenced in absentia and continues to live just across the Border; Sean Quinn senior is kept free so as to help IBRC reverse and make good certain transactions. NAMA redeems €2bn of its bonds.
July 2012 – It emerges that NAMA has done “a few” secret financing deals for Irish residential property but the Agency remains, and is allowed remain, tightlipped about the details. NAMA appears before the committee of public accounts at the Oireachtas and gets tetchy about the €5.6bn of state aid that it paid the banks as a premium for the loans it acquired. Research on here shows that more than one in six Irish hotel rooms is controlled by a bank and that of these, more than half are controlled by NAMA or a NAMA participating institution. NAMA confirms it has been repaid its temporary digout to Minister Noonan used to pay the Anglo promissory note in March 2011; the hot potato of the 13 year bond that was used as collateral for NAMA’s funding is handed over to Bank of Ireland who are now funding the bond until June 2013. NAMA calls for a commercial property sales register to help boost confidence and transparency in what will become its key market but Minister Noonan ignores the call – we did get a limited residential property sales register at the end of September 2012 and by the end of March 2013 we are scheduled to get a register of commercial property leases, so there has been some modest advances. The NAMA Advisory Board comprising Michael Geoghegan, Denis Rooney and Frank Daly apparently declares itself satisfied with NAMA’s performance, or so says Minister Noonan who then rules out abolishing the advisory board because it’s nice for the Minister to have someone to telephone on property matters. We learn that one quarter of the annual state property bill goes to NAMA or its developers. We also get an insight into the murky connection between politicians and NAMA when it is revealed that Paddy McKillen made representations to Minister Noonan in 2011 to stop NAMA acquiring his loans, which NAMA in the main complied with. Less than a month after An Taoiseach Enda Kenny emerges bleary-eyed and emotional after an EU summit which is hailed as a gamechanger for Irish bank debt, Minister Noonan confirms that NAMA is not forming part of any negotiation, so the €25-30bn potential liability on NAMA bonds remains firmly on our shoulders. NAMA finally publishes it annual report for 2011 which shows a €12m pretax profit, made to look slightly more respectable by a €235m tax credit, so an after tax profit of €250m. In a comical post-launch interview with veteran broadcaster and journalist Vincent Browne, the NAMA chairman asserts he is confident of NAMA’s ultimate profit because the Agency uses spreadsheet macros! A third house connected with Sean Dunne sells for over €4m in the US and a couple of weeks later, we learn that NAMA has launched a major legal attack on Sean Dunne and his wife, Gayle alleging shenanigans with transfers of wealth between husband and wife; the US court in Connecticut is not impressed by NAMA’s presentation and refuses an interim freezing order. As the year draws to a close, NAMA and the Dunnes seems to be giving as good as each gets and it seems there will be a court hearing in September 2014, nearly 20 months hence. NAMA takes a retrograde step when it launches a new website feature to facilitate searches for foreclosed property – unfortunately the feature means that you cannot see recently added property and need potentially trawl through 1,500 properties to find what you’re looking for. Treasury Holdings loses its judicial review with NAMA on a “technicality” that it had committed not to initiate legal proceedings against NAMA; NAMA breathes a sigh of relief but is exposed to further applications from other disgruntled developers.
August 2012 – NAMA incorporates a new company, NAMA Asset Residential Property Services Limited to facilitate its contribution to social housing which remains piss-poor as we come to the end of 2012, but that is not NAMA’s fault – Jan O’Sullivan is the principal culprit for the slow pace of acquiring NAMA property for social housing. August is traditionally the “silly season” or “Sommerloch” as the Germans call it, but on 5th August 2012, all Hell breaks loose when John Mooney at the Sunday Times reveals that a former NAMA employee bought a property for €410,000 whilst still at the Agency. NAMA initially claimed there was nothing to see as there were “independent valuations” before the property was sold to Enda Farrell and his wife Alice Kramer (Alison Kramer). The usually even-tempered Fianna Fail finance spokesperson Michael McGrath is outraged and calls for a Garda investigation. NAMA tries to kick the matter into the long grass by announcing an internal review conducted by Deloitte. Weeks pass before it emerges that Enda Farrell has emailed confidential information outside of NAMA which was then passed to a multitude of parties, but the story temporarily died whilst the internal investigation continued. It remains one of the biggest NAMA stories of the year because whilst we could all accept a secretive and opaque NAMA if it was doing its job correctly, the mask slipped and so did confidence when we learned its controls didn’t work and but for an accident, we might never have known that the Agency was selling property offmarket to its employees and that its controls over confidential data were poor. The judgment in the marathon Paddy McKillen case in London’s High Court is finally handed down and poor Paddy loses comprehensively in a curious judgment which Paddy went on to appeal and has now won an appeal hearing which is set to commence in February 2013. NAMA has receivers appointed to a slew of companies controlled by Limerick developer, Robert Butler. NAMA sues developers Reginald Tuthill and Derek O’Leary a month after having receivers appointed to their companies, a little later, it emerges that Reginald has been declared bankrupt in the UK.