Thursday, August 9, 2012

Nama 'veil of secrecy' over deals criticised - The Irish Times - Tue, Aug 07, 2012


THE NATIONAL Asset Management Agency has been heavily criticised by Government and Opposition TDs for brokering private deals and maintaining a culture of secrecy.

Fianna Fáil finance spokesman Michael McGrath said he was troubled by Nama’s practice of selling assets in private deals without the identity of the other party being revealed.

Fine Gael TD for Dún Laoghaire Mary Mitchell O’Connor also criticised the asset agency for surrounding its activities with a veil of secrecy, a phenomenon she said ran counter to the public interest.

Both were referring to the disclosure that a former executive with Nama, Enda Farrell, bought a five-bedroomed house that was part of a portfolio of assets which had been transferred to the agency’s control by developer Thomas Dowd.

When the controversy arose at the weekend, Mr Farrell said he had attended a compliance course at Nama at which it was indicated the purchase of a house under the agency’s control as a principal residence would not breach the code. He said he had acted with probity at all times.

Yesterday a spokesman for Nama said it had no record of giving clearance before, during or after the transaction.

It is understood this relates to both formal and informal clearance.

Mr McGrath said yesterday the former employee’s claim that Nama had given informal clearance must be clarified urgently.

“The reassurance from Nama that it has no record of giving clearance for the specific property purchase by former executive Mr Farrell does not answer the central question,” he said.

“Mr Farrell has claimed he was informed by the agency’s compliance unit that he could purchase a Nama property in a private deal provided it was used as a private residence.

“It would be truly shocking if this proves to be the case, and it would reveal a deeply disturbing culture within the agency.”

He added: “Nama must immediately clarify its policy on agency executives purchasing property under the agency’s control by way of private deals.”

He also said the case raised another troubling question: did the agency know the true identity of those buying properties from it?

“I have brought the issue of Nama selling assets in private deals to the attention of the Minister for Finance in the Dáil but he has defended the practice,” he said.

“With properties under its control underpinning loans of €74 billion, Nama has a critical role to play in Ireland’s economic recovery. It is absolutely essential that the general public can have trust in the agency.”

Ms Mitchell O’Connor said the agency had to be open and transparent with the public about its property portfolio.

“I believe that Nama has a habit of keeping details of property sales closely guarded, making it difficult for members of the public to view and purchase properties in its portfolio,” she said.

“I am very concerned about this practice, and I am calling on Nama to be more open and transparent about how it puts all of its land and properties up for sale.

“It is crucial that ordinary members of the public have full visibility of Nama’s property portfolio and that properties are not just being sold to a select group of people.

“Nama is obliged to get the maximum price for land and property it has acquired. If these properties and land are being sold behind closed doors, then the taxpayer is being short-changed.”

Nama sells £100m of Gannon portfolio - The Irish Times - Tue, Aug 07, 2012

SIMON CARSWELL, Finance Correspondent

THE NATIONAL Asset Management Agency has sold a £100 million (€121 million) portfolio of UK properties previously owned by property developer Gerry Gannon, one of the agency’s 10 most heavily borrowed debtors.

Two British property companies, Development Securities and the Pears Group, have exchanged contracts on the portfolio, which was put up for sale last February, UK publisher PropertyWeek said.

The portfolio comprised 38 development and investment properties, including residential blocks in Victoria, Chelsea and Covent Garden in London, covering more than 300,000sq ft.

The properties, known as the Chrome Portfolio, generate £6.4 million a year in rental income – £4.1 million from the commercial properties and £2.3 million from the residential properties – according to the sales brochure published by estate agents Savils.

More than 90 per cent of the properties are occupied and more than 75 per cent of the income is generated in London and the southeast of England. Just over half the properties are in London.

Jonathan Rose, managing director of the Pears Group, told The Irish Times that he could not comment on the report as the two companies were bound by confidentiality agreements.

Nama and Development Securities also had no comment to make.

Development Securities said in February that it was in discussions to buy the properties from Nama.

The company purchased an unoccupied 122-apartment block next to the Olympic Park in east London last April with Canadian property company Realstar.

Nama, which acquired €74 billion of loans from five Irish lenders with debts of €32 billion, has primarily focused on property sales in the stronger UK market to reach the target of repaying €7.5 billion of its debts by the end of next year.

Nama said last month that it had approved asset sales of €9.2 million and that there were a further €2.2 billion of active sales in the pipeline.

Businessman Michael Smurfit, former chairman of packaging group Smurfit Kappa, bought out 49 per cent of the K Club owned by Mr Gannon to take outright ownership of the Co Kildare hotel and golf resort for more than €40 million in a deal completed in May

NAMA’s €454m property portfolio in Limerick - Business - Limerick Leader

PROPERTIES in Limerick account for €454 million of the Irish property portfolio managed by the National Asset Management Agency, the ‘bad bank’ has confirmed.

For the first time, NAMA has disclosed a county-by-county breakdown of property in their annual report, showing where the bulk of their seized acquisitions now lie.

In all, the Irish portfolio property accounts for €17.5 billion, with Limerick properties accounting for just 2.5% of their hold. Of that sum, close to €11 billion in property is located in county Dublin and a further €2 billion is in Cork.

The agency’s €11 billion portfolio in Britain includes approximately €6 billion located in London, with a further €1.3 billion in Northern Ireland. The portfolio also includes approximately €1 billion of property located in Germany, or 39% of its overseas assets, and more than €400 million in the US.

By comparison, Galway has more than €800m worth of property on NAMA’s books, and Kildare, Meath and Wicklow also have a substantially higher value of properties than Limerick.

However, the values of the properties were determined in 2009, and the value for Limerick does not account for properties outside of Ireland seized from local developers.

The 157-page report reveals that the agency made a profit of €247 million after tax in 2011, with Brendan McDonagh, chief executive, saying 2011 was a year of great progress for NAMA. Now for the first time, a simple search on its website reveals what enforced properties in Limerick are for sale and how much they can be snapped up for. Two NAMA properties in Limerick have been sold in recent weeks, including a 2.6 acre site on the Golf Links Road in Castletroy. Valued at €450,000, it sold within the past week and includes planning permission for eight three storey Georgian style semi detached properties.

After a major revamp of the state agency’s website, the updated list of properties in its possession can be quickly scanned to find bargain buys in any part of Limerick, the country and the UK. Previously NAMA just disclosed a list of properties in its possession, and did not reveal the sale prices of these acquisitions. At present only properties in the Republic, Northern Ireland and Britain can be found in the online database. Amongst those up for sale in Limerick include major development sites, such as an 8.5 acre residential development site at Blackabbey Road, Adare for an unspecified sum, and a development site in Evanwood, Castletroy, valued at €3.25m.

Part of a residential development in Coolbawn, Castleconnell, is for sale for an unspecified sum, and includes planning permission for 69 units, 31 of which have been constructed. Again in Castleconnell, there are four-bed semi-detached houses in Castle Rock for €208,000.

Elsewhere in Limerick there are a number of units in Coonagh Cross to buy; student apartments in Brookfield Hall, Castletroy, for €100,000; and units at Daar River Walk in Newcastle West, with two and three bed houses available from €90,000, and houses in Blackabbey, Adare for €290,000.

Property tax must be seen to be fair to avoid animosity - The Irish Times - Sat, Aug 04, 2012


INSIDE POLITICS: The Government is avoiding speculation about the budget but the rest of us need a national debate about it

THE NATIONAL obsession with property runs deep, going back to the time when Charles Stewart Parnell urged tenant farmers at Westport, now part of Enda Kenny’s constituency: “Keep a firm grip on your homesteads.”

It’s four months to the budget in December and already the speculation is starting. But when the present writer sought to winkle some information out of the Tánaiste late last month, Eamon Gilmore wasn’t having any of it. The Labour leader has an effective way of dealing with difficult or awkward questions. He repeats the subject again and again with great emphasis and the uninitiated think they are getting somewhere, but they later realise he has given nothing away.

This is what he said: “I’m not talking to you about the budget: i’m not talking about the budget until the budget time. this is july, the budget isn’t until December and it’s far too early for discussion and speculation about the budget.”

In two sentences, Gilmore mentions the budget five times but at the end we are none the wiser. It’s no surprise that he is reluctant to be drawn on the subject. Even in a single-party government there is jockeying and infighting as ministers and their departments compete for a bigger share of the cake, and this is a Coalition embracing several shades of the political spectrum.

However, as he might say himself: the budget is the budget is the budget. The Tánaiste may see it as the best part of his play to remain tight-lipped but the rest of us need to have a good national debate in advance about its contents – and I don’t mean some motormouth in the studio audience giving stick to Michael Noonan on television.

The Irish people are like the Cúchulainn statue in the GPO. We are strapped to a rock, the life draining out of our bank accounts. The troika is the equivalent of the raven landing on the Celtic hero’s shoulder, signalling he has finally given up the ghost.

Under the bailout agreement there must be at least €1.25 billion in new taxes next year and spending has to be reduced by €2.25 billion. The personal income-tax base must be broadened and that includes bringing in a property tax at what the International Monetary Fund calls “a suitably high level”.

The household charge was meant to be an appetiser for the property tax, set at a modest €100 per annum. It turned out to be a major turn-off instead for many people, not least because of the method of collection.

In the words of former taoiseach Seán Lemass: “People pay other taxes in sorrow but they pay their rates in anger.” Wisely, the Government has decided to give the Revenue Commissioners the task of collecting property tax. Property tax is the new rates and, if it is not to incite serious public ill-feeling, must be seen to be fair. Although it’s still early days, the notion of a higher rate for owners of larger homes is being floated. That’s the way it is already with income tax: the more you earn, the higher the percentage deduction.

How you assess the value of a house in the current uncertain market is another issue. Using the site as a basis for valuation doesn’t always make sense: you can have a mansion or a shack at a similar location.

Another issue is ability to pay: allowance would have to be made for the many households already in mortgage distress. In addition, there are substantial homes around this State inhabited by elderly retired couples or individuals who have little by way of income. Forcing them to sell their sole asset in the current market – is that fair? The poll tax riots in Britain were a major event. Could we have property tax riots here? Not inconceivable if it was perceived to be unfair to the less well off.

The owners of big houses could start acting up along such lines as, “Are you penalising people who created wealth for themselves but also for others along the way?” The owners of the big houses would be a natural Fine Gael constituency and that has to be a factor.

The programme for government merely stated that the Coalition would “consider” various options for a site valuation tax, which may now be off the agenda.

The Fine Gael general election manifesto was very blunt: “Fianna Fáil’s proposal, now endorsed by the Labour Party, to introduce by 2014 an annual, recurring residential property tax on the family home is unfair.” Alternatives suggested included site valuation.

Whatever Labour was saying before the election, its manifesto contained no property tax proposal and was, if anything, more conservative than Fine Gael’s. There should be a site valuation charge but not until 2014, to allow time for a detailed study to be carried out. In the meantime, the second-home levy would be increased substantially.

An expert group headed by former civil servant Don Thornhill has submitted a report to Minister for the Environment Phil Hogan.

Four years ago, Thornhill co-authored a paper with Donal de Buitléir that suggested a property tax “could be collected in instalments through the PAYE and ROS [Revenue Online Service] systems”.

In a recent study by the Economic and Social Research Institute, the main scenario had most homeowners paying annually “in the region of €2.50-€3.00 for every €1,000 of house value”. This is between €1,000 and €1,300 on homes valued at €400,000 to €500,000 for example. That’s serious money.

Michael McGrath of Fianna Fáil has described property tax as “political dynamite” which is no doubt one of the reasons even the left-wing parties in Leinster House are so unenthusiastic. But the troika must be obeyed and the budget is the budget is the budget.

Businesses to value own properties in 'fairer' rates laws -

COMMERCIAL rates, long criticised for being unfair, are set for an much-needed overhaul after the Government published new legislation last night which will allow businesses to value their own property.

The Department for Public Expenditure and Reform unveiled the Valuation (Amendment) Bill 2012 to change the system used to collect rates.

The current system is unfair because some businesses are forced to pay high rates because their property was valued at the height of the property boom. Other businesses pay lower rates because their property was valued at different times.

Companies are also often critical of the cumbersome appeals process.

The bill, which must be presented to the Dail, aims to provide up-to-date valuations for individual properties, accelerate the valuation process, minimise exemptions and streamline the appeals procedure, the department said.

"It is an important programme, especially given the changes in rental values following the economic downturn," the department said last night.

"The revaluation process is the mechanism whereby economic changes that take place in the property market are reflected in the valuation lists for rates purposes and in individual ratepayers' rates liabilities."

The bill's new features also include the removal of a step from the appeals process to allow those who want to appeal to the Commissioner of Valuation.

There is also provision for the commissioner to employ additional techniques to assist the production of up-to-date lists of values on which the local authorities can levy rates. These include statistical modelling.

- Thomas Molloy