NAMA is unable to say how successful it has been in dealing with developers who transferred mansions, helicopters and other valuable to their wives.
The agency promised a tougher stance on the practice last year, vowing to pursue 30 highly indebted builders who were still living millionaire lifestyles after being bailed out by the state.
But since making its pledge, not a single case has gone through the courts this year using powers in the NAMA Act. The law allows the agency to force a reversal of asset transfers that were aimed at putting valuables beyond NAMA’s reach.
Despite its displays of bravado about actively pursuing these developers, a spokesperson for the agency would not answer questions on whether it has reversed any transfers this year.
The Government is considering a move to include NAMA in the Freedom of Information Act and making the agency more answerable to the taxpayer.
The problem of asset transfers to wives, partners or other family members, was first raised in October 2010 when the then Finance Minister, Brian Lenihan, told the Dáil that NAMA and the banks were "examining spousal transactions and ensuring they are set aside".
Mr Lenihan said that laws setting up the agency contained a provision for "setting aside any transaction where assets are transferred to a spouse for the purpose of defeating the rights and just claims of creditors".
The phenomenon of developers continuing to live luxury lifestyles after their bad loans were taken over by the taxpayer was highlighted again in Prime Time documentary last December.
In its response at the time, NAMA said there were already three cases where transfers to developers’ wives had been reversed.
It confirmed that the "majority" of the top 30 developers in the agency had transferred assets, including mansions and large tracts of land, to their spouses.
The agency said it identified a number of cases where it "disagrees" with transfers and would seek to reverse them, firstly through discussions with developers, but also in the courts if necessary.A spokesperson for the Department of Finance said last night it was confident that the agency had been successful in pursuing developers, but that it had no obligation to inform the department of its progress.
Monday, September 5, 2011
NAMA silent on pursuit of transferred assets | Irish Examiner
Changing rent reviews will have serious consequences - The Irish Times - Mon, Sep 05, 2011
Moving to end upward-only reviews for existing leases must be fully debated
THE PREVIOUS government abolished upward-only rent reviews (UORRs) in new contracts but left existing ones untouched upon advice from the Attorney General that interference with them would be unconstitutional.
This Government proposes to go further, and has committed, in the programme for government, to “legislate to end upward-only rent reviews for existing leases”.
Draft legislation is due shortly, and the general expectation is that commercial property tenants will be allowed break contracts and reduce their annual rent bill.
Such legislation would be among the most radical ever introduced in this country, yet has had little or no debate or analysis. It has potential to transfer a huge amount of money from taxpayers to people who do not need it.
The basic issue is similar to mortgage debt forgiveness – to distinguish between those who need and do not need rent relief.
Economic consultants DKM undertook a study for the Irish Association of Investment Managers (IAIM), but its contents are more guarded than the third secret of Fatima and the major property interests have been silent, in public at least.
A report by Colm McCarthy for Retail Excellence Ireland argued all costs and rents need to fall as Ireland seeks to regain competitiveness, and noted the Government, a major renter, would gain. So far, the running has been made by a small number of high-profile Grafton Street retailers and retail bodies which have taken out newspaper ads reminding the Government of its commitments.
A brief look at the background helps to contextualise the debate.
Retail property values rose six-fold between the mid-1990s and 2007 – see Chart 1.
Since that year they have fallen by two-thirds, reversing all gains since 1999, and with a further 20 per cent decline in prospect if UORRs are banned. The latter calculation is by Investment Property Databank (IPD), which produces global property indices.
Movements in retail rents have been less extreme – they merely tripled – but have since fallen by 36 per cent. If they, too, were to fall by another 20 per cent, values and rents would have merely matched inflation over the past decade and a half, with no rise in the real value of retail property, a remarkable rollercoaster ride.
The McCarthy report opens by saying prime Dublin rents rose by 240 per cent between 2000 and 2007 – this is based on CBRE data for prime quoting rents for Grafton Street, which is not representative of the country. IPD data show an average 71 per cent rise in retail rents in that period.
The experience of the other commercial sectors has been less extreme. Office rents increased by less during the boom but have fallen by more and are now unchanged in inflation-adjusted terms by comparison with the mid-1990s. Industrial rents rose least, fell the most, and are now back where they were in 1995, a 50 per cent fall in real terms. The problem, if there is one, seems to be in the retail sector only – the Government’s intention is to ban UORRs in all three sectors.
Rents in the retail sector have fallen sharply, but this will only be reflected in new contracts as existing ones may have years to run and will have UORR clauses which will prevent reductions in the absence of agreement between the landlord and tenant and/or a decision to quit.
The most controversial claim so far has been the Retail Excellence Ireland contention that altering existing UORR retail contracts could create 20,000 jobs and/or save 30,000 jobs.
Chart 2 shows trends in retail sales and employment since 1998. It is obvious that one tracks the other and that the fall in retail employment – 15 per cent, or 38,000 jobs – is fully explained by the decline in turnover.
That employment should track sales is no surprise, particularly as rents are a small percentage of turnover – McCarthy quotes 15 per cent, employers’ group Ibec say up to 20 per cent, but industry sources put it at 3 to 7 per cent.
The impact of rents on employment is not discernible at the overall industry level, though undoubtedly they were important in some reported cases, notably Carluccio’s restaurant in Dublin, which had to close briefly before the landlords realised a lower rent is better than none at all.
It is fantasy to suppose the proposed changes could offset the bulk of the job losses recorded to date in the absence of a recovery in turnover to previous levels.
The costs associated with the proposal are major. Some years ago, unguarded comments from Michael McDowell on stamp duties caused a freeze in sales in residential property. Something similar has now happened to commercial property.
The number of transactions bottomed out at 13 in 2009 – see Chart 3 – but recovered to 29 in 2010 as investors perceived value.
Many of these were foreign, in contrast to earlier years when purchasers were exclusively Irish – in 2010, foreign purchasers accounted for almost one-third of the spend. The uncertainty due to the proposed legislation snuffed out the recovery, and the first half of 2011 saw three transactions – with two being tenants purchasing the premises they rented.
The biggest known casualty so far has been the Liffey Valley Shopping Centre deal. UK investors were bidding €350 million, but it fell through because of the prospect of lower rental income. There were others.
Retrospective changes to contract law are controversial. Differing legal opinions are no great surprise, but amendment of UORRs is so radical and potentially costly that it would be challenged in the courts, thereby engendering further delay.
It is by no means certain the Government would win such a case. If it failed, it would have to compensate landlords for lost rent, exposing it to a €1 billion to €2 billion annual cost. I am not sure whether claims for loss of capital would be entertained; if they were the hit could be much greater – one report suggests the total fall in values could be as high as €14 billion.
Whether the Government won or lost, there would still be huge costs for taxpayers because of further falls in the value of what is effectively State-owned property.
In May 2010, the chief executive of the National Asset Management Agency (Nama) wrote to the then minister for finance pointing out a change in the law would mean they had overpaid banks for assets bought. It has been reported a further 20 per cent fall in Irish property prices would cost Nama, and therefore taxpayers, another €2 billion to €2.5 billion.
Also, Anglo and the other State-owned banks have large exposure to Irish property, which could cost several billion more. The stress tests have allowed for extra falls in commercial property prices, any generalised scheme could quickly erode existing capital buffers in the banks to the ultimate detriment of taxpayers.
Pension funds and insurance firms are big property investors. Pension funds have €5.5 billion in Irish property. Their assets would fall by more than €1 billion in value and their annual income by a few hundred million euro.
Nobody would argue with McCarthy’s contention that costs should fall in the interests of competitiveness. However, his argument is diluted by the fact retail is the least internationally exposed sector, and his view that Government would gain from a lower rent bill is overwhelmed by the vastly greater costs incurred.
The consequences are so extreme that a retrospective amendment of existing UORRs should only be entertained if it is necessary on hardship grounds. Yet the retail industry lobby has ignored this matter, focusing instead on unrealistic job claims.
I did find one attempt to shed light on this area. CBRE surveyed 136 retail properties in Wexford, a typical country town. It is a pity they did not do Grafton Street as well. They found 45 per cent of businesses were owner-occupied, so for them the UORR debate was in one respect irrelevant. In another respect, a ban would reduce the value of their property by another 20 per cent.
Another 25 per cent were on new leases, at open market rent, while a further 13 per cent had not sought rent reviews.
Wexford is atypical in that few multinational retailers are located there. This is another category, size unknown, but substantial, that does not need rent relief.
The second finding by CBRE was that 80 per cent of the tenants who sought relief had been given it, with only three cases, 2 per cent of total retail units, refused.
This indicates landlords are taking a pragmatic approach, irrespective of the law. It has been reported that Nama also found rents had been reduced on the properties transferred to them.
So, the only, evidence available indicates some tenants are having difficulty with fixed rents but the percentage is in low single digits.
What is needed is a mechanism to quickly bring recalcitrant landlords to their senses and, failing this, an effective appeals/arbitration scheme.
General provisions that would have the effects of benefiting a majority of tenants not requiring such support, that would damage pension funds and insurance companies, expose the legislation to constitutional challenge, further damage the reputation of Ireland as a place to do business and expose the taxpayer to large potential bills should be avoided.
Friday, August 19, 2011
Friday, July 29, 2011
PAWS Animal Rescue take new letting at 51 Gladstone St, Clonmel
PAWS animal rescue have taken the lease on 51 Gladstone St, a former clothes shop.
We listed this retail outlet a week ago and met with huge demand.
We are delighted that PAWS will be opening here.
Here’s wishing them the best of luck.
NAMA fire sales aim to breathe life back into market - Independent.ie
Friday July 29 2011
BARGAIN hunters came out in force yesterday after bad bank NAMA put nearly 1,000 properties up for sale in the largest single sell-off in the history of the State.
The prospect of picking up a farm, pub, quarry, three-bed semi, hotel, apartment -- even an airport -- sparked an unprecedented wave of interest within hours of the list being published.
NAMA chiefs even promised to finance some of the sales as the agency announced losses of €1.18bn on dealings for last year.
It also revealed the extent to which NAMA is to recover money from reluctant debtors. In one case -- and as late as this week -- it seized jewellery worth €200,000 that had been given to a developer's partner.
NAMA bosses insisted they were not running a fire sale and kept asking prices and bids received a closely guarded secret last night.
But the reality is the agency will have to accept knockdown prices to get the property market moving and to meet strict financial targets laid down by the IMF.
That knowledge, combined with curiosity and thirst for a bargain, sent thousands on to the internet last night to pore over the portfolio.
Within hours, more than a thousand people had downloaded details.
NAMA's own switchboard was inundated and its staff fielded hundreds of enquiries -- before directing callers to the receivers that are handling the sales.
The list runs to 850 properties -- some of which are entire apartment blocks.
It includes everything from London pubs to fields in Offaly. But the 850 figure represents only one-tenth of the total number of property loans in NAMA.
The so-called 'bad bank' is even considering adding fine wines, art collections and jewellery that its officials have seized from troubled developers in its efforts to recoup money for the taxpayer.
NAMA is owed e72bn by borrowers from Ireland and abroad.
So far it has generated e2.6bn from sales and rental income.
The agency has also lent a further e900m in working capital to developers to finish off projects.
The agency has so far spent e46m on legal, audit, tax and board fees during the year.
Chief executive Brendan McDonagh earns a salary of e430,000, with chairman Frank Daly receiving e159,116.
The scale of the agency's customer debt was also laid bare yesterday.
For example, three developers owe more than e2bn each, but NAMA refused to name them. Another nine owe more than e1.5bn each.
Among the biggest debtors with NAMA are Sean Mulryan, Treasury Holdings, Joe O'Reilly of Castlethorn Construction, and Derek Quinlan, a former tax inspector.
Transparency
For all its new-found transparency, NAMA still cannot reveal how much even the biggest debtors owe, or even who they are.
Mr McDonagh admitted yesterday that some developers had failed to make a fill disclosure of their assets when asked.
"Some of them forgot to put some things on the list,'' he said.
However, he said the lavish lifestyles of developers were now over.
"The helicopters are grounded," Mr McDonagh added.
Information on hidden assets was also becoming available.
"Ireland is a small country. It's amazing what people might mention they know -- information that is always welcome."
The launch of the NAMA list is a marketing coup on a scale not seen since fake punters queued over night for unavailable Dublin apartments at the height of the boom.
NAMA said it went public with the lists in the interest of transparency, but bargain hunters are hoping it's a sign the toxic loan agency is under pressure to up the pace in shifting its €30.5bn property book.
The list of properties runs to more than 800 so far-- some of those listed include multiple units in apartment blocks and retail centres, so there are more than 1,000 units involved altogether.
Even that number is just a tenth of the total number of property loans in NAMA.
Irish Independent