It’s been won and done. No longer up for grabs. But real money and real ‘winnings’. Like everyone else, we’d like to learn more. Maybe there’s a chance of further winnings – who know? We can’t promise a top prize of £28.2m. Not even a million. But we will put your name in lights if you can shed light on the following questions.
2-14 Baker Street, London (10 Portman Square)
Background and Facts
McAleer & Rushe originally bought British Land’s interest in the 2-14 Baker Street (10 Portman Square) site for £57.2m. At the time, British Land said the price agreed was “significantly above” its March 2005 book value. The guide price for the building at the time was reported as £47.5m.
News of the deal was reported widely at the time including in the Belfast Telegraph. Interestingly, the deal was well beyond the capabilities of McAleer & Rushe who then borrowed the funds from Bank of Ireland. That loan is now with NAMA.
1st Question. Why did McAleer & Rushe pay well above the odds for 2-14 Baker Street? Was it good old stupidity on the part of McAleer & Rushe, or is there more to the deal than appears at face value?
For extra marks: Name the Bank of Ireland manager who stupidly signed off on the loan. Ten out of ten if you can ‘dish the dirt’!
Fast forward to 2010. British Land hits the jackpot – with winnings of an incredible £28.2m. The winnings suggest British Land might be better placed to use their managerial strengths for a game of roulette, poker or just using shareholder funds to take regular punts.
After all, why bother with developments and all the headaches if you can do deals like this?
So here’s the deal: Buy a site (2-14 Baker Street [10 Portman Square] – or any other). Sell it to a willing ‘friend’ (McAleer & Rushe). Doesn’t matter if they don’t have the money. All they need is a fool in a bank who can be convinced that British Land only offloads portfolio sites that are cash cows and not dogs.(all bank managers love dogs, don’t they? My bank manager claims to have five dogs at home…. with plans for more.)
In this instance a few glasses of the ‘golden stuff’ might be consumed behind the bank counter. Helps clarify the mind, and all that. The wool falls over the eyes of the bank manager helping him to ‘see the light’ and, bingo, the money’s in the bag for McAleer & Rushe. and so, we have the first moves in a game of ‘Pass the Parcel‘.
With the money in the bag, McAleer & Rushe were left holding the parcel (of land at 2-14 Baker Street [10 Portman Square]). But is is a dog – and not a cash cow.
The banks don’t get paid and don’t get to hold the parcel. The parcel gets heavy. Five years is a long time to hold any parcel. The weight starts to get too much and McAleer & Rushe begin to flag. Debts are mounting up and KMPG no longer have confidence, as auditors, that McAleer & Rushe can survive. There’s simply no money and no cash. McAleer & Rushe has itself become a dog. And we all know dogs are poor at holding parcels – particularly ones that cost a lot.
But heads held high – the Bank is in Dublin and those bank managers can’t leave home because the dogs need looking after.
Timing is everything. Before the McAleer & Rushe loans result in involuntary liquidation, the second side of the coin is readied and polished up. Knight in shiney armour and all that. British Land steps back into sight.
In April 201o McAleer & Rushe sell the 2-14 Baker Street (10 Portman Square) site back to British Land. The site, out on holiday for five years, goes home. At a healthy profit for British Land!
But at a very substantial loss to McAcAleer & Rushe and the real loss is the Irish people – who have assumed libility for the McAleer & Rushe borrowings. It’s hard to stand by watching winnings of £28.2 million handed off to British Land. A poor return on investment for the Irish State bailout of the Banks!
2nd Question: What was the site at 2-14 Baker Street really worth in 2005, and what was it worth in March 2010?
For extra marks and a special prize: What were the ‘private‘ arrangements between British Land and McAleer & Rushe?
The LSE announcement of the deal is dated the 16th April 2010.
For full marks: What is the importance of the date of 16th April 2010 in the scheme of the overall agreement between McAleer & Rushe and British Land?
And on to the challenge of making the pieces fit. So pen at the ready. There are a few facts first:
1. On the 16th April 2010, 2-14 Baker Street Trustee No. 1 Limited (Registered Number 105523) and 2-14 Baker Street Trustee No. 2 Limited (Registered Number 105524) were registered with the Jersey Financial Services Companies Registry.
2. On 28th February 2011 the annual returns for the two companies named above were filed. Both these list the shareholders as being:
Surname: “Dominion Charitable Trust“; and
Forename: “Dominion Trust as Trustees of The”
3rd Question: What is the real ownership of these two companies registered in Jersey on the 16th April 2010? Why are the real owners names not included? What agreement pertains to or connects 2-14 Baker Street to these two Jersey registered companies?
For full marks answer these two questions in as much detail as possible:
a. Is NAMA aware of these two companies?; and
b. Is McAleer & Rushe or any of their directors or associates (or wives, or wives of friends or family) party to these two Jersey registered companies (or either one)?
In the London Stock Exchange announcement of the acquisition of 2-14 Baker Street on the 16th April 2010, there is a statement as follows:
“A joint development agreement has been entered into with McAleer & Rushe whereby British Land acts as the development manager and McAleer & Rushe, an established construction group based in Northern Ireland, is the contractor for the scheme. As part of the sale arrangement, McAleer & Rushe will take a share in the development profits.”
4th Question: What is the mechanism enacted whereby McAleer & Rushe will take a share of the development profits of the development at 2-14 Baker Street?
Is there any connection between this mechanism and the two companies registered in Jersey Registered numbers 105523 and 105524 respectively?
For additional marks: Please explain the mechanism and any beneficiary terms in respect to any liability of (and disclosures by) McAleer & Rushe referencing their Bank of Ireland Loans and any liabilities that now fall within NAMA.
For full marks: Please explain the full workings of and all details pertaining to the establishment of the two companies named above and registered in Jersey. Please ensure you explain why these companies have been set up offshore.
Question No.5: Has British Land disclosed any interest in or role in the two Jersey registerd companies (Registered numbers 105523 and 105524 respectively) to their shareholders – and are details of any participation in or ownership in offshore trusts contained in their annual report?
Question No.6: A special prize will be awarded on the best correct answer. What is the breakdown of the Total Prize gained as a result of British Land selling the 2-14 Baker Street Site and then buying it back at nearly half price?
Who is likely to get what? How will the proceeds of the entire deal be divvied out? Who are all the beneficiaries?
Answers on a postcard please – or to be submitted via the comments box below. Any requests for confidentially will be honoured in full.
Legal Statement: The author of this article makes no claim of any wrongdoing by any party named here or by any party who can claim association of any of the events, properties, banks, companies or indivuals named here either directly or indirectly or by association.
This article presents publicly available information and poses questions relating to this public information.
This article and its author make no specific claim of any connection real or intangible or otherwise between McAleer & Rushe and/or British Land or any other party with a commercial interest in 2-14 Baker Street (10 Portman Square), and the two companies registered in the same name in Jersey on the same date as the sale of the said property (16th April 2010) by McAleer & Rushe to British Land.
The author stands by the suggestion that the Bank of Ireland manager (unnamed) who signed off the loan to McAleer & Rushe is a fool. If he or she is still in the job it is strongly suggested that they be sacked. Immediately. And keep them well away from London during the Olympics in 2012!
- Dicing with Death – Update: McAleer and Rushe’s Health and Safety Record (2to14bakerstreet.wordpress.com)
- Free Parking in Westminster : parking and congestion control exemption in Marylebone (2to14bakerstreet.wordpress.com)
- Mixed feelings as NAMA redeems another €500m of its bonds (namawinelake.wordpress.com)
- Brighton & Hove Council Legal Action against McAleer & Rushe (2to14bakerstreet.wordpress.com)
- British Land sees slowdown in property values growth (telegraph.co.uk)
- Q&A: 2-14 Baker Street, British Land and McAleer & Rushe (2to14bakerstreet.wordpress.com)
- Bank of Ireland returns to net profit, deposits up (seattletimes.nwsource.com)