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Archive for the ‘Northern Ireland’ Category

LaganLogo

NAMA is spending €2bn of your money investing in developments subject to loans to its developers – nothing new in that, NAMA announced that investment last May 2012. But trying to get any detail on that investment out of NAMA is generally like getting blood out of a stone.

By a happy coincidence, and just as certain Northern Ireland politicians have been lining up to criticize the Agency after foreclosing on loans attached to the Kennedy Group, the Agency has today announced a GBP 9m (€11m) investment in a 95-unit housing development in Dundonald, south-east Belfast. And it is another coincidence still that the criticism of NAMA in the Kennedy Group foreclosure has been limited to politicians from the DUP – Messrs Campbell, Wilson and Paisley junior – and lo-and-behold, Dundonald is a DUP-stronghold, its British Member of Parliament is Jim Shannon of the DUP, and four of the six MLAs from the constituency in the Northern Ireland Executive are from the DUP.

NAMA says the development will generate 100 new jobs over an 18-month period, and that the site has planning permission for 510 homes in total, and that after the construction of the initial 96 units, there may be further construction “in subsequent phases subject to market conditions and the success of the initial phase”

This is the first time that I can recall an announcement of a specific investment anywhere by NAMA in this way. Veterans of the Troubles who had engaged in extortion of businesses and protection rackets must be very impressed, though of course, there is absolutely no suggestion of criminality on anyone’s part here.

The development itself is at the 96-acre Millmount site in Dundonald. And there will be some relief that the dithering over the development appears to be coming to an end. The site was originally owned by the Taggarts but was acquired – using loans from Anglo Irish Bank thought to be GBP 70m – by a partnership in which the Lagan Group featured. NAMA acquired the loans from Anglo and in 2011, had administrators Baker Tilly Ryan Glennon appointed to the site. The announcement today confirms that the homes will be constructed by …. Lagan Homes, part of the partnership that once owned the site. Of course we have no idea how much was spent on insolvency experts, administrators and various lawyers in the past two years, just to end up with Lagan developing the site.

The NAMA chairman Frank Daly said today

“This is a real statement of intent about our Northern Ireland loan portfolio.  We are committed to supporting projects that can deliver a commercial return and I hope that there will be more projects like this in Northern Ireland.  We are funding this development because it will deliver quality homes for people looking to live and work in Belfast.  It will turn an unused site into a development that will benefit the Agency as well as homebuyers, the city of Belfast and the people who work on building it” [ENDS]

Separately, NAMA said that it was in discussions with a Northern Ireland lender to launch its 80:20 deferred mortgage initiative in the Province. With the Nationwide Building Society showing Northern Ireland’s housing increasing by 4.4% in Q1,2013, top of the UK league table, there mightn’t be great demand for a negative equity mortgage product at this point, but it’s all good PR. At this stage, all NAMA is saying is that the homes at Millmount might be offered with mortgages under this scheme.

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“An aggressive strategy by the Republic’s assets recovery agency in Northern Ireland could have a detrimental effect on North-South relations, Finance Minister Sammy Wilson has warned.” Belfast Telegraph report today

There is still much head-scratching going on at the political support which developer Alistair Kennedy has received from some local politicians in Northern Ireland after his hotel, the Ramada Portrush was placed in administration at the behest of NAMA last Thursday evening. Although NAMA is not commenting on this specific case, it has been vocal in the past with its claims that foreclosure is a last resort, and of course in this case, the Portrush Ramada continues to trade and there is no talk of staff losses or closure of facilities – indeed, if it is as profitable as claimed by Alistair Kennedy, making GBP 400,000 on turnover of GBP 2.2m, then there shouldn’t be any reason why it shouldn’t continue to thrive.

But the DUP’s Gregory Campbell, Ian Paisley junior and today, Minister for Finance and Personnel, Sammy Wilson have all expressed grave misgivings about the foreclosure. Not a dickey bird seemingly from the other main parties in Northern Ireland, Sinn Fein, SDLP, UUP nor Alliance. Ian Paisley junior and senior have had well-documented links to another Northern Ireland developer, but there hasn’t hitherto been any public association between Messrs Paisley and Alistair Kennedy.

Until now.

LikeABatOutofHell

Here’s a piccy from the launch in 2011 of the NW200, a road motorcycle race held every May in county Antrim and county (London)Derry. It seemingly shows the then 85-year old Ian Paisley senior along with what used to be called a dollybird and a nice Ducati. The picture itself is copyrighted and is available for sale here – the screengrab of the Pacemaker website is used here for comment and criticism. Ian Paisley junior is known to be a motorcycling fan and is a member of the British Motorcycle Federation and says this of the NW200 on his own website

“This is the largest out door sporting/tourist event in Northern Ireland. On average it attracts more than 120,000 visitors. Many of who visit the province for up to one week, tour and spend money locally. Whilst the event takes place in the Portrush, Portstewart & Coleraine triangle area the impact on North Antrim is immense. The organisers, under the management and direction of Mervyn White are all volunteers. In recent years Northern Ireland Events Company have given some financial support and guidance that in my view is insignificant given the size and significance of the event. A seven-year financial package in addition to that already being provided targeted via the organisers to enable the attraction of new racers and increase the pull of the sporting event is essential. Additional resources at the disposal of the organisers (Colerain and District Motorcycle Club) are essential, as it will enable over the next seven years a major growth in the event.”

The Kennedy Group, of which Alistair Kennedy is a principal, sponsored the NW200 during the boom years and as recently as 2009, the race was known as the Kennedy International NW200.

Today, Minister Wilson has come out and given some carefully considered comments to the Belfast Telegraph about NAMA’s foreclosure on GBP 48m (€57m) of loans owed by the Kennedy Group. There is no statement on the Department of Finance and Personnel website, so all you have is the Bel Tel’s reporting in which Minister Wilson says

“I don’t know all the background about the group on the north coast or the problems or discussions they have had with Nama about paying off debts, but I would be concerned this was a new approach with which Nama are trying to act robustly with businesses in Northern Ireland. I will be raising this with Nama.

We don’t want this to become a source of friction between the administrations in Northern Ireland and the Republic, which has done fairly well out of loans the UK has made to bail it out.

Such a new approach by Nama would give me grave concerns, as this business could be the first of many.If that isn’t the case, and this is a specific issue Nama has with this company, then Nama needs to say what that is. To close businesses making money is just daft” [ENDS]

The direct quotes in the Bel Tel report from Minister Wilson use less inflammatory language than might be justified in the Bel Tel conclusion that NAMA’s move could “affect North-South relations” but we obviously haven’t all of the comments. NAMA is not commenting on the case.

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Headscratcher of the Week

ABFILogo

“There is no proven link between alcohol consumption and marketing and sponsorship” Alcohol Beverage Federation of Ireland on 12th April 2013 responding to calls for a 1% levy on sponsorship to help fund research into alcohol-related illnesses

So I suppose the ABFI would disagree with this line from the campaign by the Irish broadcasting and newspaper industry last year

“Sales of companies that advertise aggressively during a recession rise 256 per cent more than those who don’t”

In fact, you’d wonder why drinks companies advertise or market themselves at all, at all…

Death knell of old media of the Week

“that the broadcast treatment of current affairs, including matters which are either of public controversy or the subject of current public debate, is fair to all interests concerned and that the broadcast matter is presented in an objective and impartial manner and without any expression of the broadcaster‘s own views”

The Broadcasting Authority of Ireland, that august body which in July last year said of Denis O’Brien “the Authority determined that Mr. O’Brien does not control IN&M.  Rather he has a substantial interest in the Company, as that term is defined in the Policy.” has this week produced a new set of guidelines for broadcasters.

The nation’s most popular presenter – yes, his ratings are only 170,000 viewers but that’s because the complete clowns responsible for scheduling at TV3 stick it on at 11.15pm each night, when most of us have gone to bed – Vincent Browne may have to consider his future in broadcasting, because it is the expression of his own views which forms 50% of his appeal, with the filleting of explainers providing the other 50%. Under new rules, which are seemingly operational now, Vincent will have to be very careful to avoid expressing his own views, and the betting is that he will be as unsuccessful as a first-timer on that game where you have to speak for 60 seconds without saying “em”. This week he poked fun at the new rules, laughing it off saying “someone else (wink) might say”, but these new rules will hamstring him. Maybe time to abandon broadcasting and embrace narrowcasting on the web, where the BAI and communications minister Rabbitte are powerless.

Divided opinion of the Week

EverybodysGotToLeaveSometime

“As a matter of recorded fact, Thatcher was a terror without an atom of humanity” Music legend Morrissey

“Ronnie and Margaret were political soul mates, committed to freedom and resolved to end communism. The world has lost a true champion of freedom and democracy.” Nancy Reagan widow of former US president Ronald Reagan

“Tramp the dirt down..Thatcher described Nelson Mandela as a “terrorist”. I was there. I saw her lips move. May she burn in hellfires” British MP, George Galloway – the phrase “tramp the dirt down” is lifted from the Elvis Costello song of the same title – lyrics here. Margaret however has the last laugh on this one, as she’s going to be cremated according to reports.

“She did a great deal for the world, along with Ronald Reagan, Pope John Paul II and Solidarity, she contributed to the demise of communism in Poland and central Europe” Lech Walesa, Polish trade unionist and champion of freedom

“The passing of Baroness Thatcher draws to an end a remarkable life devoted to the service of the United Kingdom. She was one of a kind: tough, possessed of a supreme intellect and driven by conviction. The entire country is indebted to her for all that she achieved. I know that her accomplishments will not soon be forgotten by a grateful nation.” Northern Ireland First Minister Peter Robinson

“Here in Ireland her espousal of old draconian militaristic policies prolonged the war and caused great suffering. She embraced censorship, collusion and the killing of citizens by covert operations, including the targeting of solicitors like Pat Finucane, alongside more open military operations and refused to recognise the rights of citizens to vote for parties of their choice.” Sinn Fein president Gerry Adams

Former British prime minister died this week from a stroke whilst staying as a guest of the Barclay brothers at the Ritz in London. She was 87. Reaction to her death was mixed with a small number of spontaneous street parties and the ascent in the charts of the Wizard of Oz standard “Ding, Dong, the Witch is Dead” grabbing headlines contrasting with generous and statesmanlike statements. Aside from the media here, there was generally a sense of “Sad that a former British political leader and mother had died but meh”

Playing card of the Week

No39NoLess

Sean Dunne might portray himself as the Ace of Spades in the NAMA most-wanted list, but it seems he is lowly number 39 on NAMA’s league table of biggest borrowers which would place him in the four rank. Now, you might all recall that Saddam Hussein was the Ace of Spaces, el numero uno but can you remember those at positions 38-42? There were three anonymous Ba’ath Party regional command chairmen and the minister of higher education and scientific research. And that’s where Sean Dunne is ranked. These are the NAMA top debtor rankings – Sean owes NAMA €185m and is believed to owe €400m overall to creditors including Ulster Bank.

NAMALeagueTable

Transparency call of the Week

EhmIsNotAnAnswer 

US daytime TV star, Judge Judy was in Dublin this week when she picked an award from the enterprising students at UCD. Not surprisingly, given how good TV has been to her, she called for proceedings in some Irish court cases to be broadcast. One day, maybe. But meantime, we might settle for the Court Service providing some basic information about its court cases. Take this one, reported on here, where NAMA was shown as suing an individual only identified as “STACK GEMMA”. Seems that Gemma is in fact a solicitor, and the Court Service has now changed the respondent to “STACK IN HER CAPAC AS LPR KEVIN FITZSIMONS DECSD GEMMA “. Because the Court Service doesn’t provide ANY additional information on its court cases, other than that shown on its website, poor Gemma has suffered suspicion for a couple of weeks that it is her personally that NAMA is suing.

Table of the Week

AdvertisingMarketSize

RTE commissioned a “aren’t we great” report from PwC in advance of announcing what are likely to be record losses for 2012. The PwC report supports RTE’s whinge that its funding has been substantially cut in recent years, and it seems that there has been a cut of 20% between 2006-2011, and tries to “big up” RTE’s performance and its contribution to the nation. It is an unashamed promotional report despite its claim of independence and it arouses suspicion that the results for 2012, which are expected to be announced imminently, will be worse than ever with a deficit of €50m and a loss on the pension fund in the tens of millions. There are some interesting statistics in the report though, and above we see the collapse in the advertising market between 2006-2011. And below we see the breakdown of that advertising, with the Internet contributing to old media’s woes by taking spend away from traditional media.

AdvertisingMarketSizeComposition

The report also sets out RTE’s competitors though there are glaring omissions like TV3, TG4, UTV and Distilled Media, publishers of Daft.ie and TheJournal.ie – it was interesting to see that half of Google’s worldwide revenue arises in Ireland, though we all recognize that is for tax avoidance reasons. Also interesting that the Irish Daily Mail and Irish Mail on Sunday only generate €19m in Irish revenue.

RTECompetitors

Quote of the Week

“I am the most guilty man in the house [Dail] for speeding over the years. More guilty than anyone else for speeding, I am very honest and open, but I don’t have to answer those questions” Independent TD Michael Healy-Rae responding to Juno McEnroe’s survey of TDs and whether they’d sought or had quashed penalty points for driving offences

Political correspondent at the Irish Examiner, Juno McEnroe, has been doing some real journalism as he investigated how widespread the quashing of penalty points has been in the Oireachtas. He contacted all TDs and most responded, though there were notable senior exceptions including An Taoiseach, Enda Kenny. He uncovered one case where penalty points were imposed on the wife of a TD because the wife had failed to send a document to the Gardai saying it was not her, but her husband driving at the time the offence was committed. In other countries, this investigative journalism would have led to wall-to-wall coverage in broadcast media but in Ireland, the death of Margaret Thatcher (87) dominated reporting. In the UK recently, a minister and his former wife were both jailed when they proactively sought to mislead the police by having penalty points allocated to the wife who hadn’t committed the offence, but in Ireland, there was more deafening silence when the same result – penalty points being imposed on the wife of the true culprit – occurred with Andrew Doyle and his wife, though they both claimed it was because of an oversight .

The Independent Kerry TD Michael Healy Rae was one of the 166 not to respond to questions, though he refused in his own unique way.

Economic development of the Week

ExtensionLoanRepayment

If you start off with the proposition that the national debt is fixed, then the only way to cushion the effect of living with and repaying the debt is to get an extension of time or a reduction in interest rates. Yesterday, the group of finance ministers from the 27 EU countries, known as “Ecofin”, agreed to extend the period over which Ireland repays its €45bn EU component of the €85bn bailout by seven years. No word on interest rates, yet, but Minister Noonan is heralding the agreement and claims that the only ratings agency to continue to rate our sovereign bonds as junk, Moody’s, will soon restore our investment grade rating. This should all be good news, as it does indeed cushion the effect of the debt which is predicted to peak at 121% this year. But the view on here is (a) with NAMA crystallizing loan losses at IBRC debt will rise to 123% and (b) it doesn’t address calls about repudiating some of the debt.

Lotto numbers of the Week

6 and 9

Last Saturday’s Irish Lotto draw has resulted in some additional winners. The Lotto draw overseen by a representative of KPMG, had a ball with the number 9 printed 12 times on it. Because of the risk of confusion between 6 and 9, this particular ball was underlined to make it clear it was number 9, but one of the 9s on the ball had the underline on top indicating a 6. Punters eagerly watching the draw were confused when the presenter called the ball initially as a 9 and then as a 6. The An Post National Lottery Company issued a notice in which it acknowledged the mistake but promised to pay out to ticket holders with either a 9 or a 6 and acknowledged that the mistake is estimated to cost a maximum of €54,000. Neither the Lottery nor KPMG were answering follow-up questions about responsibility – my theory is this is the KPMG auditor in a former life.

Ecumenical matter of the Week

“That”

On 10th April, the Central Bank issued a new commemorative €10 coin (price €46) featuring an impression of James Joyce and a line from Ulysses. Somehow a small mistake by the bank of inserting the word “that” into one of the two sentences of Ulysses text, generated headlines worldwide – at one point, it was the fourth most popular story on the BBC’s website.

Now, the old media can sometimes be sniffy about careless grammar standards in the new media, which is rich. And on here, a variety of forums are consulted on matters of grammar and language generally. And so, in this case, the community at English Forum was asked about the erroneous addition to Joyce’s script on the coins produced by the Central Bank. Sadly, even the new media can get sniffy and it seems some people can take offence at being challenged, with a response from here to the last comment below, suppressed, when all it did was link to the BBC World Service “Using English” sub-website and pointed out that collective nouns, like bank, take singular verbs when the noun is considered as a unit rather than a group of individuals.

ThatWouldNotBeAnEcumenicalMatter

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PrancingStallions

No, nothing to do with Paddy Shovlin who is biding his time in Earls Court ahead of his discharge from bankruptcy in May 2013. One of Northern Ireland’s wealthiest families has recently launched what is heralded as “one of the premier privateer race teams” which races Ferraris in European races. When they say “privateer” they’re referring to what the dictionary defines as “a competitor, esp in motor racing, who is privately financed rather than sponsored by a manufacturer” rather than officially sanctioned pirates.

Sorbus Racing features contributions from Peter and Shamus Jennings, the website saying “the father-son duo of Shamus and Peter Jennings bring the perfect mix of experience and youthful flair. A successful Go-karting background as well as a natural talent for track driving keeps the team at the front of the grid.” 2013 is the first season when the racing team will compete, The Jenningses feature amongst Northern Ireland’s wealthiest families and in 2010, Shamus Jennings was said to have been worth GBP 166m (€195m). Shamus is classified as being in “property”

In February 2013, the BBC reported that NAMA had placed an English shopping centre owned by a company controlled by Shamus and Francis Jennings.

There has been flurry of contacts received on here which complain about the Jenningses being in hock to NAMA and still racing about the place in Ferraris. But, just because a developer has loans in NAMA, doesn’t mean he is restrained in his personal life. Michael O’Flynn is a NAMA Top 10 developer but (a) it is understood his loans are amongst the 15% of NAMA loans that are performing and (b) Michael famously didn’t provide personal guarantees. So, it is possible that a loan may only be enforced against a specific property or against a specific limited liability company, which may leave individuals free to use their personal wealth in an unfettered manner and there is no evidence of the Jenningses having personal liability to NAMA. The NAMA chairman, Frank Daly has said “the jets, yachts, Bentleys or whatever are not supported by NAMA and in many cases we will insist they are sold by NAMA to reduce the level of indebtedness”

Still though, you’d have to wonder if the Jenningses were living on this side of the Border if NAMA would not be bringing pressure to bear to cut back on the Ferraris. In March 2012, it emerged at an Oireachtas Good Friday committee hearing that NAMA is more than three times more likely to foreclose on developers in the Republic than in Northern Ireland, though to be clear, there is no evidence that the Jenningses loans – other than the one relating to the Kendal  Riverside shopping centre in northern England referred to above – are non-performing.

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FacebookRamadaPortrush

This is how the news of NAMA’s placing of the Ramada Portrush Hotel into administration (akin to receivership on this side of the Border) was announced by the hotel itself on Facebook. A simple entry which was then liked by 140 people and commented on by 83 people in the last 12 hours, says

“To all our Facebook friends we have some very sad news to announce. As of approx 4p.m today the Ramada Hotel Portrush has been placed in administration by NAMA the asset management agency for the Irish government.

Firstly, the most important thing to point out is that the hotel will continue to trade as normal and we have been assured that all bookings and reservations are safe. If you have any concerns contact reception on 02870826100.

The Kennedy family who have owned and operated the hotel for the last 11 years would like to thank all our customers and friends for the support and custom they have given us over that period of time.

We hope you will continue to support Ann and all her team during what is obviously going to be a very difficult period for all involved.

Thank you everyone

Alistair Kennedy”

A few weeks ago, we reported that two of the principals of the Northern Ireland property group, the Kennedy Group, had placed their homes on the market. Yesterday, we learned that NAMA has placed their hotel in Portrush, website here, into administration. There are now concerns for the future of the 69-room hotel which employs 50 staff. According to the BBC, both the DUP’s Ian Paisley junior and Gregory Campbell have expressed concern about the administration and have said they will be raising the matter with the DUP’s finance minister Sammy Wilson.

NAMA has always treaded sensitively with its activities in Northern Ireland, being conscious of the perception of a Republic of Ireland state agency wading into the Province, taking over loans and properties and deciding the fate of Northern Irish businesses and individuals. NAMA has always been keen to emphasise that it would not hoard property or engage in fire sales, and its PR efforts have generally paid off with Minister Wilson welcoming NAMA investment and engagement with the Northern Ireland business community.

Last week however, our own finance minister failed to replace the former Northern Ireland NAMA board member who resigned in October 2011, Peter Stewart with another Northern Irelander. Instead, Oliver Ellingham was appointed to the vacant spot, though of course NAMA still operates a Northern Ireland committee.

What is striking is that we have news of a NAMA hotel receivership in Northern Ireland being responded to by two MPs in 24 hours, yet on this side of the Border, we have had countless receiverships met with silence from our own TDs.

UPDATE (1): 12th April, 2013. The BBC has obtained an interview with Alistair Kennedy of the Kennedy Group who tells the BBC Newsline’s Conor Macauley about how NAMA placed his hotel in administration. This is pathfinding material, in not one of NAMA’s 200-odd receiverships on this side of the Border has RTE broadcast such a timely interview. Alistair claims that NAMA demanded GBP 48m from him in a surprise demand letter delivered on Tuesday this week, and despite claims that politicians Ian Paisley junior and Gregory Campbell requested meetings with NAMA, there was no response, and then at 4.15pm yesterday, NAMA said it reserved its rights to foreclose on the loans and at 5pm, receivers turned up at the hotel. Alistair is baffled as to why NAMA has foreclosed on his loans and his hotel, which is apparently profitable and is heading into its busy summer season. Remember, you are getting the developer’s side of the story here. NAMA has been asked for comment.

AlistairKennedy

UPDATE (2): 12th April, 2013. As expected there is no comment from NAMA on the administration. So, all we have are NAMA’s general statements previously in which it claims that foreclosure is the last resort after trying to work out a plan with the debtor. And of course in this specific instance, the hotel is not being shut down and will continue to trade.

UPDATE: 22nd April, 2013. The BBC has obtained further information about the NAMA foreclosure of Kennedy Group loans and underlying assets. It is to be stressed that not all of the Kennedy Group is affected by the foreclosures. The BBC details foreclosures at ADI Developments, Kennedy Investments, Culzean Properties (No. 3), the Culzean Group and North Coast Hotels. The properties to which administrators have been appointed include “a business park and other land on the Ballymena Road in Antrim, near the Junction One centre”

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GoodbodyLogo

One sector that has largely managed to escape being the object in finger-pointing after the collapse of the property and banking sectors, has been Irish stock-broking firms. Davy was involved in the disastrous Irish Glass Bottle site in Ringsend where investors saw colossal losses. NCB saw 26 of its investment companies placed in liquidation in January 2013. Goodbody was very active in introducing property investments to its clients, and we have previously seen NAMA had receivers appointed to Goodbody investments.

The BBC today reports on accounts recently filed for two companies 99% owned by Goodbody reveals another disastrous episode overseen by the stock-broker. GSB Northern Ireland PLC (incorporated in the Republic of Ireland) accounts for the year ended March 2012 and GSB Millmount Homes PLC accounts for year ended December 2011 are now available.

GSB Millmount’s accounts reveal that GBP 32,631.08 was received as a “final dividend” from its GBP 29.7m investment in a venture called JVCO, which was a joint venture with Northern Ireland’s Taggart Homes, a company in severe financial distress.  That’s just .1p in the pound.

We are still waiting to find out how a GBP 25m investment by Goodbody’s clients/victims has ultimately fared in a separate company, GSB Northern Ireland PLC but that company has written down the value of the investment to nil, so probably not very well! GSB Northern Ireland appears to have entered into ventures with John Farmer’s Jersey-based Orana group which included, according to the BBC, a “36-`acre site at Crescent Link in Londonderry which was refused planning permission for a supermarket development last year”

In these two companies alone, it looks like Goodbody has realized losses of GBP 55m (€65m). Maybe time for the stock-broking sector to acknowledge its role and performance in the boom and crash.

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It’s not often that we see the financial performance of Irish financial asset management companies so  AIB UK Loan Management Limited’s report and accounts for the period ending December 2011 – available here – which were filed in the UK last September 2012 is of interest as we get a full set of accounts showing how AIB in Northern Ireland and Britain has dealt with its problem loans, we also see that NAMA valued loans acquired from this AIB “NAMA” at values in excess of the valuation at AIB. Could this be the reason why there have been troubling delays in the approval by the European Commission of the later NAMA tranches eg the €19bn tranche 3 and 4 acquired by in June 2011 still hasn’t been approved by the EC, nearly two years later?

The accounts show that some GBP 4.1bn (€4.8bn) of par value loans which were “vulnerable, impaired and other non-core” were transferred into this AIB “NAMA” by the parent company, AIB, in 2010. AIB valued these loans at GBP 2.6bn and it is working them out in much the same fashion as NAMA. Coincidentally it sold GBP 843m of par value loans to NAMA in 2011, and NAMA paid GBP 42m than the loans were worth, which is interesting because the UK property market had been generally improving after November 2009, NAMA’s valuation date and although NAMA paid a 10% long term economic value premium, it also paid for 5% of the loans with subordinated bonds which will only be honoured if NAMA makes a profit when it is ultimately wound up. So why did NAMA pay AIB GBP 42m more than AIB’s valuation?

The AIB “NAMA”  made a loss of GBP 41m in 2011 but this was mostly driven by a tax charge of GBP 113m and an impairment of GBP 97m as the UK bounces along the bottom of its economic cycle. The company had operating expenses of GBP 22m or 0.8% of the loan valuations, compared to NAMA’s €200m on €30bn of loans or 0.7%, which seems to show that NAMA’s costs are around the right level.

Compared with NAMA, the accounts are not blighted with derivatives and foreign exchange losses and hedging.

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[UPDATE: 9th April, 2013. Brochure now available here from selling agents, BTWShiells]

Belvoir

The recent Nationwide Building Society house price index for the UK showed that Northern Ireland was the best performing region in the entire UK for Q1,2013 when prices were reported to have risen an impressive 4.4% to an average of GBP 108,610 (€128,268). Mind you, according to finance minister, Sammy Wilson’s index based on all transactions for Q4,2012, Northern Irish residential prices are down 56% from peak in 2007, making their crash even crashier than ours and probably the worst property crash in the world particularly when the real decline after stripping out inflation is 63%.

So, prices might be stabilizing in Northern Ireland after an horrendous crash and anecdote suggests that well-located family homes are in demand with competitive bidding and short shelf lives. Today, a 62 acre development site owned by the Northern Ireland Department of Health, comes on the market in south Belfast. It is the site of the old Belvoir Park Hospital which closed in 2006. In its latter years it was known as a cancer specialist hospital but, when built in 1906, it was the “Purdysburn Fever Hospital”.  It is off the Hospital Road and Ballylesson Road. There is outline planning permission for 310 homes, and so far, full planning permission for 110 homes.

The property is being marketed by BTWShiells, and the brochure should be on their website later today. BTWShiells has acted in the sale of NAMA property previously eg the Cultra railway station in January 2013 and it has been doing brisk auction business. This is not a NAMA property and is being sold on behalf of the Belfast Health & Social Care Trust, which is ultimately under the auspices of the Northern Ireland Department of Health. The property will be sold by private treaty with no initial guide price and an online data room is being prepared.

Stuart Draffin Director from BTWShiells commented “Whilst the decline in house values in Northern Ireland over the past 6 years has been widely documented, demand for both new and resale housing in Greater Belfast has remained high, particularly in sought after residential areas such as South / South East Belfast.  There is also a limited supply of land zoned for housing development in the South / South East Belfast area, which should focus strong demand for new housing in this prime location with limited competition in the new homes sector of the market. Without doubt the overall package of location, heritage, Lagan Valley amenity space and strong demand for housing in this area; render this as one of the most attractive residential development opportunities in Northern Ireland.”

Simon Brien Director from BTWShiells commented “The sale of this most prestigious site represents a unique opportunity of a high quality residential ‘Village’ style development. The combination of the Lagan Valley backdrop and open rural amenity land; and the range of house types that will be incorporated within the proposed development including magnificent apartments within the historical listed buildings, townhouses, semi detached and detached houses; will ensure that the future development will offer housing to meet most sectors of the residential housing market from the professional person or retired seeking an apartment, to homes suitable for young couples and families”

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We seem to have forgotten that NAMA is selling €500-750m of assets a month, every single month by reference to the original book values of the loans it acquired. Remember that NAMA says it has, so far, disposed of €7bn of assets and this is by reference to NAMA’s values and NAMA paid just 43c in the euro when it acquired the €74bn of loans from the banks for €32bn.  The €7bn of disposals should on average relate to €16bn of loans by reference to their original values, and over the 30 months from mid-2010 to end of 2012, that represents an average of €542m disposals per month, every month.

And the constant question you all want to ask is “how well is NAMA doing?”

And despite this blog being mainly devoted to reporting on NAMA, and therefore should have some special knowledge in the area, the answer is “difficult to tell”

We rarely get individual accounting on NAMA’s disposals. We have a rough idea what happened with the €800m Maybourne loans and the €100m Montevetro building sold to Google in Dublin, but that’s practically it.

Fine, we don’t get individual accounting and NAMA will stonewall you citing “confidentiality” when it is challenged on individual transactions. But surely the NAMA accounts should tell us how it is getting on.

Again no, because there are so many damned accounting convolutions used in the NAMA accounts that we may not really know how NAMA is getting on until we start to approach its winddown in 2020. Some accounting standards mean NAMA doesn’t have to face the full reality of problem loans, whilst other accounting standards prevent NAMA from recognizing all the profit from its disposals. So, we can’t even look at the NAMA profit or loss and say, “that underreports the true profit” or “that underreports the full loss”

So, what we are left with is reporting on snippets of NAMA’s performance here and there in the hope that enough snippets will give us a picture of how well the Agency is doing. That’s how primitive it is and that’s as good as this blog gets.

This week we again get confirmation at how lousy NAMA is with marketing its property.

NAMAclowns

Take a look at the above listing of a property that NAMA has foreclosed. Here are the errors in NAMA’s record.

(1) NAMA says the property is on Saint Field Road. There is no such place, it is Saintfield Road and if you search for Saintfield Road on the NAMA database, you won’t find this result.

(2) NAMA has two categories of “other” in its type of property, there’s “Other” and “other” and one doesn’t pick up both

(3) NAMA indicates that the property is not for sale. But it is. Here’s the brochure, Colliers International is looking for GBP 1.25 (€1.5m) for it. Here’s page one of the brochure.

NAMAClowns2

(4) Saintfield Road is in Belfast and that doesn’t appear anywhere in the NAMA description.

I know that the NAMA foreclosed list is the most popular feature on the NAMA website, and it is the window by which most people get to see what NAMA has to offer. The above property is noteworthy because it was reported by the BBC in Northern Ireland here.

NAMA’s presentation of its foreclosed property is a disgrace. There have been humorous swipes at the error-ridden database on here before – here and here, for example  – and NAMA has refused point-blank to provide a monthly update of the new properties that it adds to its foreclosure list, so you’ll have to trawl through over 100 screens on the NAMA website to see what is new, and the NAMA email function on the NAMA foreclosure page doesn’t work.

It was the BBC which reported that NAMA had foreclosed the major piece of development land in south Belfast shown above. It belonged to John McCann of McEneany Construction fame. It has, according to the BBC, planning permission for “247 homes comprising 117 townhouses, 68 mews houses, 14 semi-detached houses and 48 apartments” The BBC says that John is Dundalk-based, though the a local Dundalk newspaper said in 2011 that he had an address in Crossmaglen in county Armagh but was based in Switzerland. It is not clear if this is the same John McCann that NAMA sued last month in Dublin’s High Court. The land in Belfast is owned by Brooke Hall Limited, whose last accounts for year ended December 2010 are here, which show a balance sheet insolvent to the tune of GBP 3.8m (€4.4m) and which optimistically suggest the company will be able to meet its liabilities, in part, because of the assessment of “the current status of negotiations with NAMA”.

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And just to keep the “five” theme going, some of the estimated €5bn in debt owed by NAMA developers just to NAMA will be written off in less than 5 months if Sean Dunne’s Good Friday filing in Connecticut plays out as Sean plans.

I really don’t see how justice minister Alan Shatter’s new bankruptcy law will ever be accepted, when it is finally commenced. If Irish people have to endure a “reformed” set of rules that will impose North Korean-style intrusion into their personal lives as well as reducing people to counting the euros and cents for every single purchase, be it for a jar of coffee or a roll of toilet paper, whilst NAMA developers up sticks, move to another jurisdiction, file for bankruptcy with multi €100m debts, and see themselves emerge financially reborn in a matter of months; surely all of this will spark widespread outrage.

There is a leaked 60-page guide doing the rounds which sets out in some detail how debtors will need curtail their lives if they opt for the new insolvency arrangements which are expected to be launched shortly; the Personal Insolvency Act 2012 was signed into law by President Higgins on 26th December 2012 but Minister Shatter needs to “commence” the Act so that its provisions apply, and because of delays with establishing the personal insolvency service, the infrastructure to deal with the anticipated flood of insolvency applications isn’t up and running yet. But the leaked guidelines indicate that when the arrangements are finally commenced some time this year, a family of four will be “allowed” a food allowance of €560 per month which equates to €5 per person per day, in fact €4.60 if the €560 relates to a calendar month. Personal insolvency is a new process for Irish people and is designed to allow you to pay off some of your debts over a period, 60 months or five years in the case of the Debt Settlement Arrangement, longer and shorter periods apply for other arrangements, as long as you agree to certain actions including living within a budget and selling assets, and at the end, you might see some of your debt written off.

Meanwhile, the tally of NAMA developers filing for bankruptcy outside the Republic of Ireland continues to grow, with Sean Dunne just the latest in the following list.

BankruptciesApr2013

So, how much has NAMA seen written off as a result of these foreign bankruptcies? It is impossible to tell for a number of reasons but we can have a stab at it. Firstly, we don’t generally know how much is owing to NAMA. Developer A may have had a €2bn loan from Anglo, but NAMA might have acquired that loan for just €1bn. We know that overall, NAMA paid 43c in the euro for the €74bn of loans it acquired from the banks for which it paid just €32bn. Secondly, we generally don’t have access to the bankruptcy papers in other jurisdictions. An exception is the case of John Fleming who filed for bankruptcy in the UK in 2010, and the papers were obtained by the Sunday Times and are available from Gavin Sheridan’s thestory.ie here. The bankruptcy period in the UK, including Northern Ireland, is generally 12 months. John owed nearly €1.1bn.We don’t know how much his assets were worth.

We do know that NAMA obtained €300m judgments against each of the two Grehan brothers, Danny and Ray. They will have had some assets to offset against these judgments, but with Irish commercial property down 70% from peak, development land down 90% and residential down 50%, the chances are that any recovery by NAMA will be minor. NAMA has pursued the Grehans in Canada, the US and Britain to reverse asset transfers, but even these are unlikely to make much of a dent in the €600m judgments in favour of NAMA, and remember they may have debts owing to non-NAMA creditors as well.

Bernard McNamara was regarded as a NAMA Top 10 developer which would mean that he owed an average of €1.8bn to the Agency – NAMA says that the Top 12 owed it €22bn. Again, Bernard will have had some assets to which NAMA had receivers appointed, or which will have been handed over by Bernard as part of the bankruptcy. But we know that Bernard’s €412m Irish Glass Bottle site in Ringsend is worth less than €50m today, so there may be massive losses there also.

Paddy Shovlin was understood to be in the table of Top 20 NAMA developers, and NAMA says the developers occupying positions 13-30 in its league table owed an average of €674m when the loans were acquired by NAMA.

We know that Sean Dunne has, on his initial bankruptcy filing, indicated debts of €400-800m and assets of less than €7m. I can tell you now, that there is huge anticipation amongst an army of observers waiting for Sean Dunne’s statement of financial affairs in the US.

In most other cases, we just have snippets about loans outstanding, and we generally don’t have records of the assets that developers may have had to give up as part of the bankruptcy process. But if the loss is somewhere between 57%, the NAMA evaluation in November 2009, and 98%, Sean Dunne’s claimed position in 2013, then even if the 17 developers had NAMA debts of €100m and if there is a 75% write-off then we are looking at a total to date of over €5bn*. Yes, six of the 24 on the list might be natives of Northern Ireland, and Tom Kane is an American, but the majority are Irish who, for all intents and purposes, have lived and worked in Ireland during the boom when the debts were rung up.

So, on one hand, if you owe €300,000 in Ireland mostly secured on a home that is worth €150,000, the best you might expect from Minister Shatter’s new laws is a five year term of basic rations, after which you might see €50-100,000 written off. Meanwhile, at least 20 NAMA developers have seen an estimated €5bn+ written off, and in Sean Dunne’s case he may be discharged in as little as 120 days. The pat response from ministers in Ireland to suggestions of reducing the burden of the insolvency process is that it will encourage more people to seek debt writedowns from banks which we mostly own. But if it is acceptable to allow 20 people write off €5bn, what is the problem with allowing 30,000 people write off €150,000 each or a total of €4.5bn? And these are just the NAMA developers, we have pop stars, betting shop proprietors cum broadcasters and the less well-known upping sticks and filing for bankruptcy elsewhere leaving colossal debts behind in Ireland.

* John Fleming gross debts €1.1bn, Bernard McNamara estimated gross NAMA debts €1.8bn, Paddy Shovlin estimated gross debts €670m, Grehans gross €600m NAMA debts. Assume 75% write-off of gross debts ie 75% of (1.1bn+1.8bn+.67bn+.6bn)=€3.1bn plus Sean Dunne net debts €600m (mid point of liabilities range less €7m of assets), plus 17 developers at estimated average of €100m gross NAMA debt with 75% writeoff = €1.3bn.

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