IBRC “transfers control” of landmark London property from receivership to one of the former owners

NAMA has been making noises over the past year about the prohibition on selling property back to defaulting debtors – its chairman Frank Daly said at an Oireachtas hearing in March 2012 “It might not be popular to say it but, for example, the restriction in the Act which bars us from selling assets back to a defaulting debtor is a restriction that does not apply to any other body in the same business or space as us. I do not know if that will be a problem in future but it is something we must consider.” Privately, developers also have been getting antsy at the fact that they can’t bid for their former property because of the prohibition in the NAMA Act and it is claimed the taxpayer is losing out because the former defaulting owner of a property is a special purchaser and may offer well in excess of the market price.

The prohibition in the NAMA Act is there for political reasons – it is hard enough for the nation to stomach the burden of the bank bailout which was needed because of failed property loans, but it rubs salt into the wounds to see developers buying back their own land at what is likely to be a huge discount to the original loan.

If you’re a newbie on here, you might wonder how on earth defaulting developers could be in a position to buy back their own land, but it can happen in a variety of lawful circumstances where the original loan has been pursued to the maximum extent possible. For example, Ray Grehan who has recently emerged from bankruptcy might conceivably obtain a loan and approach NAMA to buy assets. But even if his is the best offer, NAMA cannot entertain it because of the proscription in the NAMA Act.

What about at IBRC though, is it more economically rational? According to NAMA’s Frank Daly, no “other body” is subject to this restriction.

Last week, the UK’s commercial property portal CoStar reported that a landmark building on London’s Oxford Street opposite Selfridges which was until recently the subject of a receivership by the Irish Bank Resolution Corporation – “IBRC”, the name for the group comprising Anglo and Irish Nationwide – is now under the control of one of the two companies which previously owned it. The building at 431/451 Oxford Street, London W1 was reportedly bought for GBP 70m (€85m) in 2005 by a joint venture comprising well-known British property company, Structadene and a Liechtenstein registered company Continental Resources Development Corporation. Seemingly, Anglo was a lender for a number of properties to the joint venture and in May 2012, IBRC had Allsops appointed as receivers.

Now CoStar reports that “Structadene will now assume complete responsibility for managing the prestigious asset”  and the well-known managing director of Structadene, David Pearl – he was featured in the British Channel 4 programme “The Secret Millionaire” – has reportedly said “The West End market is attracting a considerable amount of investment and development interest and I look forward to continuing to work this property to realise its maximum potential. I believe the building could be worth in excess of £120m”

In the case of the property at 431/451 Oxford Street we DON’T know if the loan on the property was completely paid off – if the building was bought for GBP 70m and “could be worth GBP 120m” then it could well have been paid off – but we do know that last year, IBRC had receivers appointed to it. It might also have been the case that there was ringfencing of liability for any loans, and that Structadene has completely repaid its ringfenced element.

But the transaction does beg the question why NAMA should be subject to a restriction which its chairman says does not apply to 100% state-owned IBRC.

Both Structadene and IBRC were asked for comment on the matter, but had not responded at time of writing.