Archive for December, 2012

As 2012 draws to a close, this is a review of 2012 Irish property pricing, both residential and commercial, selling prices and rents. There will be a separate blogpost with some gazing into the crystal ball to the year ahead.

First up, this is a summary of the predictions on here a year ago, mid-year and the final outturn. Remember, the annual figures examine the latest property indices, for residential these are Nov 2011-Nov 2012 but commercial indices are published quarterly so these are Sep 2011-Sep 2012, this isn’t cheating, this is basis of the predictions clearly set out in the two previous blogposts.


Residential selling prices

Well, well, well, the 1.1% national rise in residential property prices in November 2011 was unexpected on here, and the publication of the last CSO index for 2012 last Friday has certainly given a fillip to the market. The Independent has declared that “the world’s joint worst ever property crash has finally ended” – the share price for IN&M, the group that publishes the Indo and Sindo closed at 2.9c on Friday valuing the entire group at €15m after a loss of €177m for H1,2012 and a massive debt that needs be resolved in the next quarter, so the Indo probably knows as much about the property business as it does about the media business, but it is still surely just a happy coincidence that rising property prices might give a desperately-needed shot in the arm of property advertising.

But stepping back, and examining the CSO’s index for the past 12 months does seem to indicate a change in the residential property market with prices increasing in four of the past five months, and prices overall down just 5.7% in the past 12 months. Yes, estate agents will tell you there was a stampede by first time buyers to complete by the end of 2012 to qualify for valuable tax reliefs which come to an end on Tuesday next, and the property tax relief in 2013-2016 is paltry by comparison, no-one is going to stampede over saving €157 in 2013 on a €150-200,000 home. There was certainly a major boost to first time buyer lending as revealed in mortgage statistics .

The Property Price Register which was launched on 30th September 2012 and you would rationally have thought in a buyers’ market, the Register would force prices to decline to the lowest comparable level or even below. Having said that however, if the Register was only available from the start of October 2012, then there is likely to be a time-lag in the work-out of the effect of the Register.

Allsop Space had another terrific year and clearly leads the Irish property auction field by a country mile and until the Register was introduced, these mega auctions were practically the main way of seeing what the national cash market for mostly distressed property looked like.

NAMA has had little effect on the residential market in 2012 despite all the fears beforehand. The Agency has overseen the disposal of about 1,000 of its 13,000 Irish homes and seems generally satisfied that the homes are located in rentable locations and doesn’t seem to be in any rush to sell. The 80:20 deferred mortgage initiative which now applies to 295 homes has apparently been a success but that seems to be more a function of marketing and profile than the mortgage product itself with few buyers apparently taking the new mortgage product.

Interest rates have not been much of a factor in the housing market this year with the ECB maintaining rates at record low of 0.75% with little imminent prospect of major change. Banks however have been lifting variable rates and that shouldn’t be a surprise as they rebuild their once devastated balance sheets – before our generous recapitalization, that is.

Vacancy levels in Ireland remain at about 14% which is about twice international standards and twice the actual level of vacancy in Northern Ireland, but there is wide variation in vacancy levels and indeed in some parts of the country, we may be at levels which would normally prompt new construction.

Residential rents

As with property, residential rents have had a year of two halves, with the first half experiencing mild declines but the second showing signs of robust growth. In January 2012, Joan Burton’s Department of Social Protection slashed rent assistance levels by a simple average of 13% but some rates were really slashed by 29%. This seemed to have an effect in the first half of the year with the CSO reporting monthly declines of up to 0.9% but then from the second half of the year, there has been growth every month with November 2012 rents up 0.6% on a month-on-month basis.

In Ireland, the rent versus value of a home and yields went out the window during the boom years. Who cares about achieving a 7% annual yield when the underlying property is appreciating by a stonking 10-20%. So it is no surprise that in the property collapse that rents have had less of a decline than selling prices. In fact the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of 2011 there has been a 6.1% increase (mostly recorded in February and October 2011 and February and September/October/November  2012).

The results of the Census 2011 showed that there has been a massive increase in renters, with privately renting households increasing by 120% from 145,317 in 2006 to 320,319 in 2011. The ESRI recently opined that this build-up in renters will eventually unwind, though the ESRI failed to consider the growth in the trend of renters. However for the time being, it certainly means that the demand for rented accommodation is elevated, particularly in the better urban and suburban locations.

Commercial selling prices

Estate agents or at least the select few selling major commercial property are a happier bunch at the moment, with 2012 seeing up to €750m of investment transactions, compared to a low of less than €200m in 2011 though we are still off the €3bn record in 2006. There is limited liquidity and buyers in the market, but yields are still all over the place and there have been transactions at close to 15% yields this year.

But 2012 should have been a bumper year and many thought prices would recover. Not so on here where it was predicted there would be a 0-5% decline and in the event, prices have declined 5.2%. Despite the give-away Budget announced in December 2011, where stamp duty was reduced from 6% to 2%, where reform of Upward Only Rent Reviews was abandoned, where capital gains incentives were put in place, despite all this, prices still fell 5.2%. If you assume the long term “normal” vacancy level for commercial property is 5% – and that is disputed in some quarters where it is suggested it should be closer to 15% – then current vacancy levels remain an extreme drag on prices.

But 2012 has seen a rebound in transactions in all sectors, particularly offices and hotels, though it seems on here that industrial continues to lag behind.

Commercial rents

Reflecting the shaky domestic economy and the overhang of vacant property, commercial rents generally continued to decline but at a lower rate than previously. Landlords have some degree of certainty that the Government will not tinker with Upward Only Rent Review clauses, so there is no incentive to negotiate with tenants unless the landlord believes the tenant’s business is jeopardized and that there will be voids in the event of any collapse in the tenant’s business.  NAMA has said that it has approved €6m of rent reductions in 2013 but remember that these rent reductions, or “abatements” , are temporary and provided on a year-to-year basis and as the economy improves, NAMA will be less likely to give its approval.

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This is the final part of a 3-part review of NAMA’s activities in 2012. Part 1 which covers January-April 2012 inclusive is here. Part 2 which covers May-August 2012 inclusive is here. And this is Part 3 which covers the last four months of the year.

September 2012 – he wasn’t a NAMA developer but Ivan Yates’s bankruptcy in Wales was a surprise after AIB’s failed bid to bankrupt the former politician in the Irish courts.  There was speculation that the public St James’s Hospital in central Dublin was going to acquire the private Mount Carmel hospital from NAMAed Gerry Conlon, but by year end, there was no progress as the health service scrambles to rein in a €500m overspend. It was reported in the Sunday Independent that NAMA had written off €50m owed for the development of Greystones Harbour, Minister Noonan later told the Dail that the report was wrong though the Independent continued to stand by the report which brought into focus NAMA’s debt writeoff policies in the case of consortia because in Greystones, Michael Cotter’s troubled Park Developments was jointly developing the project with Sisk, and it was understood the NAMA loans were to the Sispar consortium but it is Sisk alone that now appears to control the loans. NAMA opened a campaign against John McCabe with receivers appointed to McCabe companies and a barrage of High Court applications against various individual members of the McCabe family.  Meanwhile reports emerged that Jerry himself had been the victim of an advance-fee type fraud whereby he had paid fees to a Swiss/Dutch/Middle Eastern company to help refinance his companies’ loans. Paddy McKillen is hit with a €25m legal fees bill in the UK after his failed marathon case, a reported €5m was paid but Paddy is now appealing the decision with a hearing scheduled for February 2013; it wasn’t all bad news for Paddy in September with the Northern Ireland environment minister giving the green-light to develop  a major extension to the Ards Shopping Centre in Newtownards, county Down. Treasury Holdings’ woes intensified as KBC’s application to have the property group liquidated was boosted when NAMA supported the application after revelations of the sale of a Far Eastern company to Richard Barrett for a price which was later reported to be on the low-side of valuation estimates.  Ray Grehan might have been declared bankrupt in the opening week of the year, but that hasn’t stopped NAMA pursuing him through the UK courts over the disposal of a Knightsbridge apartment in central London – “the case continues”. We had some light relief when it emerged model Glenda Gilson had been hit with a €73,000 tax bill which prompted the best anacoluthon headline of the year on here – “Model who kicked NAMA developer in testicles is fined by tax authorities”. NAMA dismissed speculation on here that it had moved to offload its US loan portfolio through a US company, DebtX. David Arnold becomes the second NAMA developer to put his art collection under the hammer, with British auction house Bonham’s getting the business; weeks later NAMA says it controls art collections with an overall value of €7.5m.  It went from bad to worse for former NAMA employee Enda Farrell who faces up to five years in prison or up to €5m fine or both for allegedly removing confidential data from NAMA, the Garda investigation which started in September continues. NAMA has receivers appointed to a series of companies in which NCB stockbrokers is involved, apparently as a vehicle for its private clients. NAMA sues a range of the highest profile developers in a series of unrelated applications in Dublin’s High Court with Bernard McNamara, Liam Carroll and wife Roisin, Greg Coughlan and wife Ann and sticks in a few new McCabe applications for good measure. Fianna Fail again attacked NAMA for its “stinking practice” of selling property off-market.

October 2012 – The deputy Labour Party leader Joan Burton let slip on RTE Radio that NAMA faces a loss of up to €15bn but she did a u-turn on that a week later and toed the party line that NAMA would break even. One of the worst – Phil Hogan would be a close competitor – ministers in Government, James Reilly’s woes continue with a NAMA angle emerging in the controversial decision by the Minister to bump up two sites in his own constituency to be developed as primary care centres. The property at Dublin Street in Balbriggan was owned by NAMAed Seamus Murphy who is an associate of Minister Reilly but the Minister tells the Dail that Seamus won’t benefit from the sale, that NAMA will, which begs the question how the Minister would know this information as NAMA doesn’t disclose confidential information and the implication is that the Minister discussed the finances of the site with his associate which muddies the murky waters even further. It emerges the Minister discussed a site in Balbriggan with NAMA in April 2012 but it remains unclear, the Minister denies it, if the specific site was discussed with NAMA; apparently An Tanaiste Eamon Gilmore had an internal investigation into the matter which concluded there was no political interference based on the documents examined.  Michael O’Flynn puts nearly €100m of property on the market in London. It emerges that NAMA is selling an average six properties per day worth a total of €8m.  Treasury Holdings is finally liquidated which puts at a practical end the prospect of an appeal against the judicial review findings over the Summer – NAMA breathes sigh of deep relief, but that judicial review judgment stands ready to be used by other less distressed developers. The newly launched Property Price Register means we can now see what has sold and at what price, and it seems NAMA’s deferred mortgage scheme hasn’t been as successful as the Agency claimed, though the Agency stands by its sales figures and later in October, expands its offering of properties with the product from 115 to 295. NAMA is back in court against its former employee Enda Farrell and his wife Alice Kramer, it emerges that confidential information was initially forwarded by Enda to Alice who worked at Ernst and Young and this bypassed NAMA’s security which didn’t obstruct the sending of information from the Agency to one of the firms regularly used by the Agency. Alice then forwarded the information to a personal email address, and from there, it seems Enda disseminated it far and wide. NAMA  stretches the bounds of credibility by claiming no damage has been done to the Agency by this apparent leak. A nasty year at the troubled Longford estate Gleann Riada is capped with reports of an explosion in which luckily there were no casualties, a local MEP gets involved and as the year draws to a close, it is unclear who exactly is taking responsibility for remedying defects on Alastair Jackson-developed estate. Northern Ireland’s finance minister Sammy Wilson is delighted that NAMA is investing nearly €125m with Northern Ireland developers, though mostly on developments located in other parts of the UK. A High Court judge referred to the Attorney General for consideration of its constitutionality, part of the NAMA Act, section 101 which deals with NAMA’s responsibilities with respect to assurances given by the original lender if NAMA wasn’t aware of such assurances – as the year draws to a close, the Attorney General appears not yet to have issued her view on the section. NAMA obtains judgments of €270m against members of John McCabe’s family. It emerges that NAMA has sold €1.9bn of loans so far, with Maybourne, Cyril Dennis and Donal Mulryan – and possibly David Daly and Bill Durkan – accounting for the bulk of these. It emerges that Walbrook Partners LLP, a recently formed UK company is the buyer of the 17% stake in NAMA formerly owned by Irish Life, Minister Noonan refuses to provide any detail on the transaction. The court case in Connecticut with NAMA and the Dunnes warms up with each side foiling and parrying against the other – Gayle Killilea-Dunne is very unhappy at what she claims is the damage wrecked by NAMA on her reputation and prospects, NAMA maintains that she has improperly benefitted from transfers from her now- deeply indebted husband – the case is scheduled to be heard a remarkable 20 months hence in September 2014. NAMA appears before the finance committee in the Oireachtas and is predictably grilled about the Enda Farrell affair, both the sale of the house in Lucan offmarket and the alleged removal of confidential information; NAMA is defensive but says the sale of the house in Lucan took place after an “independent valuation” and that recipients of confidential loan information don’t have any advantage conferred on them. It emerges NAMA has approved €6m of rent abatements in 2012, Paddy McKillen wins right to appeal his comprehensive London High Court defeat and the battle is set to recommence in February 2013.

November 2012 – attention is drawn by Sinn Fein to the waste of the State operating two property management companies, NAMA and IBRC where disparities in practices, cost discrepancies and internecine competition for customers and resources just mean the State is pouring more resources down its banking bailout than it needs to. Minister Noonan rules out a merger of NAMA and IBRC for the time being however.  NAMA manages to look righteous as all Hell breaks loose on bankers’ salaries and pensions, with sacrifices at the Agency contrasting with refusals to cooperate with Minister Noonan at IBRC. NAMA Top 10 developer Michael O’Flynn finally has his day in court with junior minister Lucinda Creighton over comments she made in 2011. In the course of a brief High Court hearing, a settlement was reached and a statement was read out in court and a contribution, later put at around €50,000 by sources, was made by Minister Creighton to Michael O’Flynn’s legal costs with the contribution apparently passed on to the Crumlin Childrens Hospital. In Northern Ireland, one of NAMA’s most expensive properties, an office block on Bedford Street in Belfast city centre comes onto the market with a price tag equivalent to €50m. A €20m expansion of Gerry Barrett’s Scotch Hall development in Louth is announced, but where and when is the remaining €1.98bn of NAMA’s promised €2bn going to be spent- we had an answer from the IMF to the latter question in December: “it will be back-loaded”. NAMA slashes prices by over €100,000 on some property subject to its deferred mortgage initiative. Tom McFeely’s former residence on upmarket Ailesbury Road in Dublin finally comes onto the market, after the scrappy Priory Hall developer loses his appeal against the repossession amid a firm NAMA denial of his claims that it had offered him alternative accommodation. Broadcaster Pat Kenny’s property dealings came under the spotlight after the Ritz Carlton hotel in Powerscourt was placed in examinership, with Pat standing to lose tax credits if the hotel collapses, his other dealings particularly with Derek Quinlan partnerships remain under wraps but he is likely to be nursing losses. Paddy McKillen faces a severe dilution of his stake in the Maybourne group with the Barclay-backed board announcing a cash call which eventually is met by Paddy paying for his entire allotment of shares and also making it clear he has the finance for Derek Quinlan’s allotment should that become available – seems Paddy does have a pot to piss in, after all.  It emerges that €3bn-turnover, 16,000-employees faces liquidation after it fails to settle a €22m debt owing to a NAMA developer, the doughty Dunnes chief Margaret Heffernan writes strong letters of protest to the NAMA chairman Frank Daly who curiously doesn’t hand them over to the Gardai, though perhaps there are exemptions to such correspondence in NAMA’s lightweight anti-lobbying rules; in the end Dunnes settles the debt within hours of the liquidation hearing and Judge Peter Kelly is not happy with Dunnes Stores attitude to court rulings. Tragedy befalls a NAMA developer, Hugh O’Regan whose life ends on a roadside in Wicklow – there is an outpouring of sympathy from the public and development community; Paddy Kelly said “there is no compassion, it’s as though we don’t care for each other anymore. There is a poison in our country, where did that come from?” NAMA finally publishes a version of the report by Deloitte into the Enda Farrell purchase of property and it seems that all NAMA had when the sale was effected was a valuation “opinion”, Minister Noonan tries to draw a line under the affair by refusing to answer questions in the Dail about the valuation opinion. A constant headscratcher during the year had been the very low spend by NAMA on lawyers and in November, the mystery was solved – NAMA was booking the lionshare of its legal costs to its balance sheet where it expects to recover these costs from the developers’ loans, one particular source of amusement is the €8,000 booked as payable to McCarter and English, the US firm leading the fight against Sean Dunne and wife, with Sean owing €185m to NAMA and €164m to non-NAMA banks, the prospects for NAMA recovering these costs particularly in the US where there seems to be a bar on one side being awarded costs against the other, seems remote.

December 2012 – the Enda Farrell affair has not gone away yet and the question of NAMA’s legal and other costs in the matter need to be settled with the wife Alice Kramer disputing the costs, claiming she was unaware of the content of the emails sent to her by her husband. Two NAMA developers declare €100m losses apiece, in the case of Frank Boyd’s Killultagh Estates the loss is a real annual loss, in the case of Michael O’Flynn’s Tiger Developments, it is claimed the loss is offset by transactions elsewhere. One of NAMA’s senior property people, Kevin Nowlan leaves the Agency to return to the family firm, WK Nowlan but despite this, Kevin has been called to be deposed in the Dunnes case in Connecticut which will entail quizzing by the Dunnes lawyers in January 2013. NAMA redeems a further €1.5bn of its bonds bringing to €3.5bn the total redeemed in 2012 and €4.75bn the total redeemed to date which means that NAMA just needs redeem a further €2.25bn in 2013 to meet the target of €7.5bn that Minister Noonan unilaterally had copperfastened into the bailout agreement with the Troika in May 2012. An IMF staff report on Ireland reveals a couple of snippets which NAMA would probably prefer not be disclosed to the public, that it will be selling €3bn of Irish property in 2013-4 and that it is backloading its €2bn investment towards the end of the four year period which itself ends in 2016. NAMA has receivers appointed to companies in which Goodbody Stockbrokers have an interest, presumably on behalf of private clients.

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The final part of the three-part review of NAMA in 2012 will be published on here tomorrow, but in this blogpost, we remove the wraps from the crystal ball and gaze into the year ahead for the Agency. NAMA is now decidedly in its asset management phase having largely completed its acquisition of €74bn of loans from five Irish banks. As NAMA told us previously, asset management of underlying property consists of (1) disposals (2) renting (3) mothballing (4) development (5) demolition – of course if NAMA was a true asset manager, there would be a sixth option of co-development and seeking third party development risk finance.

Here’s a look ahead at ten areas in 2013.

Legal problems for NAMA. We appear to be still waiting for the Attorney General, Maire Whelan to respond to the request from Judge Charleton in the High Court in October 2012 to examine section 101 of the NAMA Act for compatibility with the Constitution. This section 101 allows NAMA to disregard assurances given by the original banks to borrowers if NAMA claims it wasn’t aware of such assurances when it acquired the loans.  Judge Charleton is unhappy with the section, and it reminds us that the NAMA Act 2009 is relatively new and has not been extensively tested in the courts. Separately, but related, was the surprising success of Treasury Holdings in its judicial review proceedings with NAMA, success which was swiped away by a technicality but as the law stands, developers are entitled to be consulted about their loans before NAMA forecloses and NAMA’s procedures and actual behavior must be fair.  In truth, many developers are deeply underwater with their loans because the underlying property is worth a fraction of its original cost, interest charges have mounted and the economy is still in the doldrums, so few developers have the wherewithal or need to challenge NAMA. But there are 15-20% of NAMA loans which are performing and not all developers are in distress. So don’t be surprised if NAMA faces more legal challenges. In the US, NAMA faces an uphill battle with the feisty Gayle Killilea-Dunne and her husband Sean as NAMA tries to show that certain transfers from the heavily-indebted Dunner to his wife took place so as to bilk creditors.

Enda Farrell. NAMA and Minister for Finance Michael Noonan would like to draw a line under the two strands of the Enda Farrell affair, the purchase of a property from a developer whilst employed at the Agency and the alleged removal of confidential data which was then widely disseminated.  The first strand won’t disappear until NAMA shows us the evidence that there was an independent valuation, because since the Sunday Times broke the story in August 2012, the Agency has been downgrading the valuation that was obtained and as it now stands, it was no more than an opinion, and at this rate, it might have been some estate agent asked if €410,000 was in any way defensible and the response was “whatever”. On the second strand, several developers including Sean Dunne are unhappy that their confidential data might be the subject of tittle-tattle by every agent and their receptionist in Dublin, and NAMA’s claim that the Agency hasn’t suffered damage from the alleged leaking just doesn’t stack up. The Garda investigation of the matter is still ongoing apparently, and Enda faces up to five years in prison and a fine of up to €5m or both should he be convicted of offences under the NAMA Act. There is also an investigation by the Data Protection Commissioner ongoing.  And there is the small matter of costs in the High Court  case taken by NAMA against Enda and his wife Alison Kramer (or Alice Kramer) and there is  hearing scheduled for January 2013 where it seems Alison is resisting any liability for costs as she merely passed emails on without knowing their contents, she claims. Stepping back from the individual Enda Farrell affair, you have to be impressed that NAMA with 227 staff and a further 400 approximately working at the Participating Institutions hasn’t suffered more scandal and it seems that the claim Brendan McDonagh spends considerable time interviewing and selecting staff is more than just executive PR. NAMA was coy over its disciplinary actions in 2012, and there has been speculation that Enda Farrell isn’t the only employee in hot water, but NAMA and Minister Noonan refuse to comment on such speculation.

Disposals in Ireland. When Minister for Finance Michael Noonan or NAMA are asked about their plans for disposals, they go all coy and say revealing such information would undermine the Agency’s commercial remit. However, we learn from the IMF in December 2012 that NAMA apparently has €3bn of Irish disposals planned in 2013-4. We previously learned from the Comptroller and Auditor General that NAMA was to hold its hotel assets until after 2015, we know that NAMA had 13,000 of residences in the State of which about 1,000 have been sold and most of the rest are highly rentable in well-located areas. So, it seems that at long last, the floodgates are about to be opened on the disposal of NAMA’s commercial property portfolio which was acquired at a cost of €9.25bn by reference to November 2009 values but is worth about €6bn today. NAMA is also making €2bn of staple finance available, although it did previously say such funding would be available to top quality property with blue-chip tenants and reputable investors. NAMA is a latecomer to the mass disposal of Irish commercial property and Certus, Bank of Scotland/Lloyds, Ulster Bank and even AIB have already been disposing of loans and property.  NAMA says that with effect from October 2011, it is marketing “nearly all” of its properties on the open market. The “nearly all” will come in for scrutiny in 2013 and the Fianna Fail senator, Mark Daly has warned that he will resurrect his NAMA transparency bill.  NAMA can expect to be challenged on its monthly foreclosure list which seems to deliberately obstruct analysis of additions and deletions and which continues to be ridden with errors. Related to disposals is NAMA’s renting strategy and we will soon see if NAMA will roll-over rent abatements granted in 2012 which have cost NAMA and its developers €6m so far.  NAMA demolished its first property in 2012 in Longford but indicated the demolition option would be pursued in a very limited instances. NAMA is taking an obviously more gentle approach in Northern Ireland where it is foreclosing on fewer developers and has now started investing on a larger scale; it previously committed to avoiding fire sales across the Border and the North’s finance minister Sammy Wilson appears to keep close tabs on the activities of the Dublin-based Agency.

Bond redemptions and cash balance. NAMA should meet its bond redemption target of €7.5bn by the end of 2013 with ease, it has already redeemed €4.75bn and the Agency has a healthy cash inflow as you would expect in its earlier years when it still has quality loans and property. That will change but NAMA should only really meet a cash flow challenge in 2017 when the majority of its bonds are repayable according to the internal NAMA schedule, though remember that internal schedule is not copperfastened into the Memorandum of Understanding.  NAMA remains atop a cash mountain for the time being, and don’t be surprised if Minister Noonan directs – actually “Directs” with a capital “D”, which is something the Minister is allowed do under the NAMA Act – NAMA to temporarily fund the €3.1bn Anglo promissory note that falls due at the end of March 2013.

Paddy McKillen and developers generally. Paddy is really no longer in NAMA, but remember that Paddy ultimately failed in his appeal against the British courts’ judgment which practically upheld the manner in which NAMA sold €800m of loans in the Maybourne Hotel group to the Barclay brothers, because the British appeal courts didn’t see the point in spending more time on a matter which was peculiarly foreign – Irish courts might take a different view, and it wouldn’t be a total surprise if Paddy were to take his grievance to the Irish judiciary, it mightn’t affect the sale of the loans as regards the Barclays, but it might land NAMA with a colossal damages bill. Paddy is separately appealing the British judgment which didn’t see anything untoward in the Barclays’ acquisition of influence and control in the Maybourne group – that hearing is scheduled to start in February 2013 and you might expect some sparks to fly. On a general level, NAMA has foreclosed on loans belonging to well over 27% of its developers in the Republic of Ireland and there doesn’t appear to be any let-up in the pace of new receiverships. In 2012, NAMA launched nearly 40 applications in Dublin’s High Court and warned that it was about to refer one developer to the Gardai. On the other hand, Ballymore had some good things to say about NAMA, but as we move in 2013, there is still a generally distrustful and combative relationship between developers and the Agency.  More than 20 Irish NAMA developers have been declared bankrupt in the UK and we can expect to see further bankruptcy bids in 2013, despite recent indications that the UK is tightening its application of bankruptcy jurisdiction rules.

Mergers and acquisitions. There is no long term logic in maintaining a separate NAMA and IBRC. There is also the burning issue of the loss-making mortgages in the Irish banks, particularly Permanent TSB and Irish Nationwide Building Society.  As regards cost control, NAMA appears to be far superior than its state-owned competitors and if you use accounting profit as a measure of performance, it is also a better managed organization delivering better results. So it might make sense for NAMA to merge with IBRC with NAMA taking on the dominant role.  There would be savings in costs and a reduction in harmful competition for customers and resources. Minister Noonan isn’t keen for now, but the writing is on the wall – there won’t be 3-plus state-owned bank asset managers by 2020.

Investment. We learned recently from the IMF that NAMA was backloading its €2bn investment to the latter part of the four year period ending in 2016. When the State is on the floor with 14.6% unemployment and anaemic economic growth, this seems inexcusable. If Minister Noonan can issue a Direction to NAMA to provide a temporary digout to repay the Anglo promissory note then, Minister Noonan can certainly issue a Direction to frontload the investment. Don’t be surprised if NAMA funds a major office block in Spencer Dock, it is certainly spreading investment across the State in shopping centres from Ballincollig to Charlestown. Gerry Barrett seems delighted that NAMA is investing €20m in Scotch Hall in Louth.

Transparency. The ongoing High Court case between NAMA and the Information Commissioner continues and if NAMA is unsuccessful, then it will at last be exposed to environment information requests, but I seriously doubt such requests will yield much information. It is unclear if the Freedom of Information legislation will be extended to NAMA as indicated by An Taoiseach Enda Kenny in February 2012 when he then said “the Bill relating to freedom of information will be introduced later this year. A number of areas require discussion and analysis before the Minister can move on it” NAMA appeared before four Oireachtas committees in 2012 and the betting is that it will be similarly challenged in 2013. In the Dail, Minister Noonan can expect to continue to field parliamentary questions. We can hope that the Comptroller and Auditor General will undertake another specialized report into NAMA’s asset management. There are two requests from here to the European Commission for paperwork and documents associated with the NAMA deferred mortgage initiative and the staple financing scheme, both are still being progressed despite objections from the “Irish authorities” – Department of Finance, I assume.

Political Interference. Remember the conniptions poor old Willie O’Dea was suffering in 2010 when he wondered if he could contact NAMA to discuss a building site in his constituency which had become a hazard and magnet for anti-social behavior. Politicians have since become quite bold in their overtures to NAMA, and it seems the once fearsome NAMA anti-lobbying rules which then-Minister for Finance Brian Lenihan promised would mean only the debtor could lobby NAMA about their loans, have been over time exposed as toothless. NAMA even provides TDs and senators with a dedicated email address and has appointed a relationship manager – sorry, Head of Relationship Management, Martin Whelan seems to be building an empire. In 2012 Minister Reilly met with NAMA over primary care centres, though the Minister insists he did not discuss a specific site on Dublin Road in Balbriggan. Minister Bruton insists he did not lobby NAMA over the lease of part of Burlington Plaza to BSkyB.  Minister Noonan Directed – with a capital “D” – NAMA to temporarily fund the Anglo promissory note payment that fell due in March 2012. A NAMA advisory board was appointed and even though it reports that NAMA is performing effectively, the board is being maintained. In 2013, there is a review of NAMA’s overall operations due as part of the NAMA Act and you can bet your bottom dollar that the review will be an opportunity for further political interference.

Financial performance. NAMA has reported a post-impairment profit of €222m for the first six months of 2012 and it looks as if the Agency is on course to beat its 2011 annual pre- tax profit of €12m. Despite the fact that NAMA’s year comes to an end in two day’s time, we don’t yet have a forecast of outturn for 2012. Given NAMA’s convoluted methodology for accounting for interest, its eight-year remaining lifespan to work out or claw back losses, and the artificiality of its accounting practices – all compliant with international standards, it should be stressed – we are likely to see profits in 2013 also. The crunch will come later if the Irish property market doesn’t stabilize and grow prices at a rate that exceeds the rate at which NAMA runs up interest and costs.

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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.

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This morning has seen the publication of the Central Statistics Office (CSO) residential property price indices for Ireland for November 2012. Here’s the summary showing the indices

  • at their peak (various months in 2007 depending on type of property and location)
  • the NAMA valuation date (November 2009)
  • 12 months ago (November 2011)
  • the start of this year (end December 2011)
  • last month (October 2012)
  • this month (November 2012)


The CSO’s indices are Ireland’s premier indices for mortgage-based residential property transactions. The CSO analyses mortgage transactions at nine financial institutions : Ulster Bank, Allied Irish Banks, Bank of Ireland, ICS Building Society (part of the Bank of Ireland group), the Educational Building Society, Permanent TSB, Belgian-owned KBC, Danish-owned National Irish Bank and Irish Nationwide Building Society. The indices are hedonic in the sense it firstly groups transactions on a like-for-like basis (location, property type, floor area, number of bedrooms, new or old and first-time buyer or not) and then assigns weightings to each group dependent on their value to the total value of all transactions. The indices are averages of three-month rolling transactions.

Cash transactions: With the launch of the property price register at the end of September 2012, the continuing relevance of a mortgage-only index from the CSO may be short-lived. Already DAFT.ie has begun the work to produce hedonic indices based on all the transactions made available by the Property Services Regulatory Authority, transactions dating back to January 2010. I would not expect the CSO index to be the foremost residential property index in the State by the start of 2013.

As for the key questions:

How much does property now cost in Ireland? The CSO deliberately doesn’t produce average prices. The former PTSB/ESRI index did, and claimed the average price of a property nationally hit the peak in February 2007 at €313,998, in Dublin in April 2007 at €431,016 and outside Dublin in January 2007 at €267,987. If, and it is a big “if”, you were to take PTSB/ESRI prices as sound and comparable to prices captured by the CSO series, then these would be the average prices today:

Nationally, €160,017 (last month €157,360, peak €313,998)

In Dublin, €192,603 (last month €187,789, peak €431,016)

Outside Dublin, €144,401 (last month €142,733, peak €267,987)

I don’t think the CSO would be happy with this approach but it seems to me that the PTSB/ESRI series, as represented by its historical indices, closely correlates with the performance of the CSO indices.

What’s surprising about the latest release? AThe decline in October 2012 agter three months of price rises appears to have been a blip and the 1.1% increase is the largest monthly increase since September 2006 when a 1.3% increase was recorded. Apartments nationally continued their decline with a stonking 3% month-on-month decline taking apartment prices nationally down 63.1% from peak in February 2007. Dublin prices were up a strong 2.4% in the month though that masked positive performance from houses and a decline in apartment prices.

Are prices still falling? No, and prices rose in November 2012 at the largest month-on-month rate since . This followed a 0.6% decline nationally in October 2012 after increases of 0.9% in September 2012 following a 0.5% increase in August 2012 and 0.2% in July and a decline of 1.1% in June, an increase of 0.2% in  May following a decline of 1.1% in April 2012, it was flat in March 2012 which followed a 2.2% decline in February 2012, 1.9% monthly decline in January 2012, 1.7% decline in December 2011, 1.5% decline in November  2011, 2.2% decline in October 2011, 1.5% decline in September 2011 and 1.6% decline in August 2011.

How far off the peak are we? Nationally 49.3% (50.1% in real terms as we have had inflation of just 1.5% between February 2007 and November  2012). Interestingly, as revealed here, Northern Ireland is some 55% from peak in nominal terms and 62% off peak in real terms. Are forbearance measures by mortgage lenders, a draconian bankruptcy regime and NAMA’s (in)actions distorting the market? Or are cash transactions which are not captured by the CSO index so significant today that if they were captured, the decline in the Republic would be even greater?

How much further will prices drop? Indeed, will prices continue to drop at all? Who knows, I would say the general consensus is that prices will continue to drop. This is what I believe to be a comprehensive list of forecasts and projections for Irish residential property [house price projections in Ireland are contentious for obvious reasons and the following is understood to be a comprehensive list of projections but please drop me a line if you think there are any omissions].

What does this morning’s news mean for NAMA? The CSO index is used to calculate the NWL Index shown at the top of this page which aims to provide a composite reflection of price movements in NAMA’s key markets since 30th November 2009, the NAMA valuation date. Residential prices in Ireland are now down 29.6% from November, 2009.  The latest results from the CSO bring the index to 791 (26.5%) meaning that NAMA will need see a blended average increase of 26.5% in its various property markets to break even at a gross profit level.

The CSO index is a monthly residential property price index calculated from mortgage-based transactions. There are four other residential price surveys, based on advertised asking prices or agent valuations (see below, details here). In addition Phil Hogan’s Department of the Environment, Community and Local Government produces an index based on mortgage transactions, six months after the period end to which the transactions relate, and which is not hedonically analysed – it is next to useless, and as some might say is a reflection of Minister Hogan, the Department will continue to produce these indices at a “marginal cost”.

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2012 saw NAMA move decidedly into its asset management role having largely concluded its asset acquisition phase. It was a year of foreclosures, disposals, litigation and for the first time, scandal with politicians continuing to encroach on the independent Agency’s activities. There were some decent financial results, but against a backdrop of still-declining property values in NAMA’s main market, life remains challenging for NAMA and the jury is still out on its likely ultimate performance.

This is a month-by-month account of NAMA in 2012 with January-April inclusive today, and the remaining two parts to be published tomorrow and Sunday.

January 2012 – On 1st January, we learned that NAMA Top 10 developer Michael McNamara was carving out a new business in Nigeria with the construction of a new €120m university.  Receivers were later appointed at the behest of NAMA to his Irish Glass Bottle site in Ringsend  during the year and in September, NAMA sued him personally in Dublin’s High Court though just before Christmas, it seems as if his wife, Moira sued NAMA. In November, Michael was declared bankrupt in London with NAMA learning of the bankruptcy on the first morning of its court case. Reporting of the Nigerian business prompted Michael to distance himself from the project but as the year draws to a close, it seems as if there is pending litigation in Nigeria involving two McNamara companies, Drams Construction and McNamara Nigeria and a Nigerian officer of the company, which might shed intense light on the construction of the Sokoto State University. NAMA started the year by suing Sean Dunne and eventually won a €185m judgment which it has not been able to collect, and with non-NAMA banks obtaining €164m judgments against Sean later in the year, Sean seems to hold the record for adjudged personal indebtedness to date. Ray Grehan would come a close second with personal judgments of €300m and it was on 6th January that we learned that Ray had been declared bankrupt in London, with brother Danny Grehan following in his bankruptcy footsteps a few days later.  Bill Durkan’s Durkan group announced that it had paid off its NAMA loans and that it found the prospect of dealing with NAMA “most uneconomic”. Durkan was seemingly the second NAMA developer to pay off his loans, just a month after David Daly did likewise. Sean Quinn senior’s bankruptcy order was annulled in Belfast and IBRC moved quickly to have Sean, once Ireland’s richest man with an extensive property portfolio which didn’t go to NAMA, declared bankrupt in Dublin. He will be 78 when the 12-year bankruptcy period expires.  After several months of unsatisfactory negotiations, NAMA pulled the plug on Richard Barrett and Johnny Ronan’s Treasury Holdings with the appointment of receivers which prompted an intense campaign of resistance from the dynamic duo; the receivers were appointed after the expiry of a standstill agreement when investment offers were examined by NAMA. Priory Hall developer Tom McFeely was declared bankrupt in a British court though a few months later that was annulled at the behest of one of his creditors and Tom was bankrupted in Dublin. NAMA suffered its second high profile resignation with the departure of its Head of Credit, Graham Emmett who seemingly then spent eight months gardening and fishing before joining a UK investment company, which had bought NAMA loans on the eve of his joining – NAMA had previously waved goodbye to iits director responsible for the credit committee, Michael Connolly. From a interview later in the year, it seems that Graham’s departure was prompted by Minister for Finance, Michael Noonan’s request for a 15% salary waiver for all staff earning more than €200,000. News emerged of the sale of a 125-acre landbank around Cork city for just €3-4m with the pre-sales effort seemingly confined to sticking a “for sale” sign up in a field. NAMA started a year of enforcement action against Limerick solicitor and developer Paul O’Brien with the appointment of receivers to several of his companies. Justice minister, Alan Shatter launched a new visa scheme whereby visas would be granted in exchange for investment or purchase of a NAMA property – a month ago, we learned that a total of three visas have been issued but no NAMA property sold. January began with the occupation of a NAMA building in Cork city and ended with a day-long occupation of a Dublin city centre building, both aimed at highlighting NAMA’s hoarding of empty buildings. NAMA indicated it was planning to create Qualifying Investor Funds or “QIF”s which would allow investors with more than €100,000 to spare, to invest in funds of its property. QIFs or Mini-Me NAMAs were placed on the long finger despite tendering for services and as the year draws to a close, they might be shelved after finance minister Michael Noonan announced the launch of Real Estate Investment Trusts.

February 2012 – the Cortina-averse developer David Agar was said to be shocked when NAMA had receivers appointed to his companies, and David became one of the very few NAMA developers to speak out against the tactics and attitude of the agency when it came to debt enforcement. Paddy McKillen cropped up on our radar for the first time in 2012 when he won a preliminary point against NAMA in a epic battle in London’s High Court – in February it was adjudged that Paddy had a right to consultation before loans connected to him were sold and that the sale could only be to a finance company. NAMA was facing a massive damages bill with the judgment which affected its sale of €800m of loans relating to the Maybourne group of luxury London hotels to a company controlled by the billionaire Barclay brothers – luckily for NAMA, the judgment was reversed by the British appeal courts in the summer and Paddy was unable to win a further appeal, but there apparently remains an option for Paddy to commence litigation in Dublin. NAMA was involved in a hullabaloo over whether it had jeopardized 800 jobs by putting the kibosh on the partial renting of Burlington Plaza in Dublin but NAMA apparently saw the light after discussions with the IDA – jobs minister Richard Bruton rejected the notion that he had lobbied NAMA on the matter. A €120m portfolio of property in the UK controlled by NAMA Top-10 developer, Gerry Gannon went on sale and we heard that packaging mogul, Michael Smurfit had purchased Gerry Gannon’s 50% stake in the Kildare K Club, the price was initially reported to be €10m but later reports put the sale price at a more respectable €40m. Minister Noonan created an odd creature, a NAMA advisory board which sat outside NAMA and reported directly to the Minister, it was believed in February 2012 that its members would comprise former HSBCer Michael Geoghegan, Northern Ireland quango-king Denis Rooney and US leviathan investor, Blackstone’s Gerry Murphy – when the board membership was announced in March 2012, there was no Gerry but NAMA’s own chairman Frank Daly became the third member of the Troika. Some reports suggest that Gerry Murphy had turned down the role, others suggest the Government was getting concerned at Blackstone’s insinuation into the fabric of Irish business life. In London, we saw the evidence of NAMA’s massive reach when the administrators of the NAMAed Battersea Power Station site objected to NAMAed Ballymore’s plans for a nearby development. We learned that NAMA’s operating costs were €1m per working day or nearly €200m per annum with banks, lawyers and receivers eating up most of this. Following Graham Emmett’s departure and the Geoghegan report on the future of NAMA, the Agency announced a modest reorganization with the creation of a new financial role which was later filled by Donal Rooney. The Treasury Holdings fightback against NAMA’s appointment of receivers opened in Dublin’s High Court with Treasury seeking a judicial review of NAMA’s dealings with its loans and for the first time, we heard of the TAIL transaction where €20m Treasury assets were sold to its founders for a price which looked suspicious; we also saw the affidavits in the case which gave a previously-unseen insight into how NAMA did business. Following a Sunday Independent story about NAMA jeopardizing jobs at Google, the Agency fought back by issuing a statement darkly warning of “increased efforts to spread damaging unfounded stories”

March 2012 – The intensity of NAMA’s foreclosure action in Ireland seemed to peak with receivers appointed every week to a wide range of smaller developers and we learned during the month that NAMA had receivers appointed to 165 of its 610 (Republic of) Ireland developers compared to just 15 of the 180 in Northern Ireland – the difference was stark 27% in the Republic versus just 8% in Northern Ireland. NAMA’s accounting for interest income was probed in the Dail following scathing comments from Fianna Fail’s Sean Fleming in February when he warned of an imminent showdown with NAMA on its labyrinthine accounting for interest income which includes predictions of future interest receipts.  NAMA announced €2bn of vendor financing or staple financing  which would help it shift its colossal Irish commercial property portfolio – estimated on here to have a current value of over €6bn. NAMA had receivers appointed to Alastair Jackson’s Eassda Limited which was responsible for the development of the Gleann Riada development in Longford. NAMA had the first of three appearances before an Oireachtas committee in 2012, and told the committee that the €7.5bn redemption target of its bonds by the end of 2013 was now copper-fastened into the Memorandum of Understanding with the IMF, in fact it wasn’t “copperfastened” until Minister Noonan chose to copperfasten it in May 2012. Paddy McKillen’s long-anticipated case against the Barclay brothers opened in London’s High Court – the secretive developer broke cover and the black-and-white photograph of formally-attired Paddy at an 1989 function gave way to a images of a colorfully tanned spry, silvery-fox who gave evidence in the case which was to last 40 days and which eventually gave rise to legal costs alone of €25m. Paddy was alleging the Barclays had acted improperly in their quest to wrest control of the Maybourne hotels from Paddy. The judgment in August was a comprehensive defeat for Paddy but as we end the year, the indefatigable Belfast-born citizen of the world has secured an appeal which is set to be heard from February 2013. There was shock as NAMA lost its case against Treasury Holdings in Dublin’s High Court with a judge paving the way for a judicial review of how the Agency had dealt with Treasury’s loans.  We had a narrow glimpse into NAMA’s disposal activities which see €500-750m of assets disposed of each month EVERY MONTH by reference to the underlying book values of loans. NAMA sold the Liam Carroll developed Anglo HQ  shell in north Dublin docklands to the Central Bank of Ireland, though it took more than another six months for the deal to be finally concluded, but in London we saw that NAMA was really offloading by bucketloads with the €150m sale of a Seamus Ross’s Mennolly Homes office block. Sinn Fein really got stuck into NAMA with a blistering barrage of questions which uncovered slow progress at NAMA which belied NAMA statements. Both Fianna Fail and Sinn Fein tabled legislation to abolish Upward Only Rent Reviews in commercial leases, the reform of which had ultimately been dismissed by Minister Noonan three months previously, both Bills were defeated in practice though as the year closes, a champion for the reform of UORR leases, John Corcoran continues a high profile campaign.  NAMA’s dignity was offended as Minister Noonan launched his three-card trick in the Dail which saw NAMA funding the payment of the Anglo promissory note for a three month period until Bank of Ireland agreed to fund the payment for a further year. Minister Noonan directed NAMA to carry out the transaction, the largest single transaction in the Agency’s history and the Agency complied but didn’t issue a press release.

April 2012 – NAMA lost its High Court case against Michael Whelan’s Moritz Developments and related companies. It had been seeking €300m-plus judgments but the judge accepted the legal argument, no doubt marshaled by Moritz’s solicitors Noel Smyth and Partners that the judgment was premature. It was a temporary reprieve for the company but the presence of Noel Smyth who is in his own right a significant NAMA developer who has relocated to London in recent times, was noteworthy. In London, the Paddy McKillen case rumbled on and we had the odd snippet of a claim about NAMA such as the claim that they were personally incentivized by the prospect of earning “millions”, something NAMA rejected. The NAMA chairman Frank Daly gave a radio interview in which he darkly warned developers who fly off to London for bankruptcy that the Agency doesn’t lose interest in them even when they emerge from bankruptcy. A second mansion in Connecticut connected to Sean Dunne is sold for millions – NAMA itself sells a block of apartments beside London’ Olympic Village for €170,000 apiece. NAMA publishes a split of its property available for social housing – we remember that environment minister, Phil Hogan announced the previous December 2011 that 2,000 NAMA homes would be provided for social housing, as this year concludes, it seems that just 133 have been provided to date and 58 of these were provided in the Beacon South Quarter in the summer of 2011. We learned that Dublin property company Spain Courtney Doyle was based in London and within months, we learned that two of the founders had been declared bankrupt. As the year draws to a close, it seems that more than 20 Irish developers have been declared bankrupt in London though in the aftermath of Bank of Ireland’s victory in stopping the O’Donnells, Brian and Patricia, it seems that UK courts might be adopting a tougher line in enforcing rules on centres of main interest. It was announced in April 2012 that NAMA was continuing to pursue the original NAMA UK bankrupt John Fleming over a pension, despite John’s bankruptcy term having concluded the previous November. Minister Noonan announced NAMA’s results for 2011 of a €200m profit, though by the time the audit was concluded and the final report published in July, that had dwindled to €12m. Minister Noonan also announced the review of NAMA in 2013 which is anticipated in the NAMA Act – this will offer yet another opportunity for the politicians to meddle in the independent Agency.  NAMA’s most senior man John Mulcahy and a portfolio manager, Paul Hennigan took to the witness stand in London where they gave a creditable account of themselves and the Agency. As the year draws to a close, there is still a fugue of controversy hanging over Paul Hennigan as it was revealed in court that he shared confidential information with a party in the case.  Minister Noonan announced that the 17% stake in NAMA owned by Irish Life and Permanent was sold but despite attempts over ensuing months, Minister Noonan was unable to confirm the buyer until October 2012; the sale was forced by the imminent reclassification of NAMA debt as national debt since the nationalization of Irish Life meant the Government controlled 66% of the Agency and any pretence of independence with Eurostat was in jeopardy. NAMA’s pursuit of developers and associates in Dublin’s High Court continued apace with news that the Agency was suing Limerick developer and yachtsman, Ger O’Rourke and wife Majella. By the end of 2012, NAMA will have initiated nearly 40 applications in the Irish High Court during the year though it has been on the receiving end of 11.  NAMA sells a second landbank around Cork city in controversial circumstances where the property wasn’t offered on the open market. We learn that NAMA has a €5bn mountain of cash as the country struggles with over 14% unemployment.

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It seems that Iris Oifigiuil published a Christmas edition on Christmas Day 25th December 2012 in which it is shown that NAMA has had Peter Stapleton of Lisney in Dublin appointed as receiver on 20th December 2012, to certain assets owned by a series of partnerships in which companies owned jointly by Limerick developer Ger O’Rourke and Goodbody Stockerbrokers, feature. There were five partnerships named in the notice whose assets are now subject to a receivership – this list below shows in brackets the Ger O’Rourke partner companies, it should be stressed that the receivership applies to the assets of the partnership and not the partnership companies.

(1) The Wicklow Limited Partnership I (Lidus Limited, directors Ger O’Rourke, Donal Leahy and David Clarke, owned by Chieftain Investments Limited (50%) and Goodbody Stockbrokers (50%)).

(2) The Wicklow Limited Partnership II (Loizou Limited, directors Ger O’Rourke, Donal Leahy and David Clarke, owned by Chieftain Investments Limited (50%) and Goodbody Stockbrokers (50%)).

(3) The Wicklow Limited Partnership III (Nigheim Limited, directors Ger O’Rourke, Donal Leahy and David Clarke, owned by Chieftain Investments Limited (50%) and Goodbody Stockbrokers (50%)).

(4) The Wicklow Limited Partnership IV (Chieftain Investments Limited and Laricous Limited.Chieftain Investments Limited has as its directors husband and wife, Ger and Majella O’Rourke and the company is entirely owned by the flagship Chieftain Construction Holdings Limited.  Laricous Limited has as its directors Ger O’Rourke, Donal Leahy and David Clarke, owned by Chieftain Investments Limited (50%) and Goodbody Stockbrokers (50%)).)

(5) The Wicklow Limited Partnership V (JRS Security Limited, directors Ger O’Rourke, Donal Leahy and David Clarke, owned by Chieftain Investments Limited (50%) and Goodbody Stockbrokers (50%)).

In Dublin’s High Court, NAMA sued yachtsman and developer Ger O’Rourke and his wife Majella last April 2012.

Remember you can see the list of NAMA’s enforcement actions here and in this regularly updated spreadsheet.

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