There has been much discussion in the media and among individuals about the disposal of NAMA assets at below and at substantially below market value. Is such discussion just speculation or is it justified? The information here sets out a statement of fact and a timeline relating to just one single NAMA related site.
The information here is presented for informational purposes only and is not a pronouncement on any single party or entity. Read it and then make your own mind up. Does this represent one of those ‘shady’ or even illegal deals we hear murmurings of? Or is this legitimate business?
August and September 2005
Several media articles report on agreement between British Land and McAleer & Rushe for the sale (by BL) of 2-14 Baker Street (later renamed as 10 Portman Square). This was the second reported purchase by McAleer & Rushe from British Land – the previous deal was for the Swiss Centre in Leicester Square.
Guide price for the 2-14 Baker Street property was UK£47.5m with British Land offering it as a potential 150,000 sq. ft development opportunity.
5th October 2005
2-14 Baker Street purchased by McAleer & Rushe by British Land for UK£57.2m. Purchase funded with a Bank of Ireland loan. The property comprised 94,000 sq. ft. held on a 98 year headlease from the Portman Estate. Travers Smith acted for McAleer & Rushe Group on the acquisition.
16th December 2008
Planning Application submitted to Westminster City Council listing Owners of 2-14 Baker Street as:
- Portman Estate (freeholder)
- Mourant & Co Trustees Ltd and Mourant Property Trustees Ltd as Trustees of the Baker Street Unit Trust, 22 Grenville Street, St Hellier, Jersey JE4 8PX
- Baker Street Investments Limited 17-19 Dungannon Road, Cookstown, BT80 8TL
- EDF Energy Networks, 40 Grosvenor Place, London SW1X 7EN (who had a sub-station in the basement of the building)
Planning application filed by Gerald Eve, Chartered Surveyors and Property Consultants
16th March 2009
Planning Approval granted by Westminster City Council to McAleer & Rushe Properties Ltd. Planning consent obtained for 139,000 sq ft of office space with retail units at ground level. This is nearly 50% larger than the original building – which was 94,000 sq. ft.
16th April 2010
McAleer & Rushe sell 2-14 Baker Street back to British Land for UK£29m – representing a loss of UK£28.2m (unadjusted) despite the site having been granted planning permission for new building that will be almost 50% larger than the original.
British Land issue a press release outlining the deal. The press release announcing the deal states “As part of the sale arrangement, McAleer & Rushe will take a share in the development profits.”
Notes: 2-14 Baker Street is a prime Central London location at the start of Baker Street and adjoining Portman Square. Property prices in the vicinity were not unduly affected by the property downturn.
The property was not placed on the open market. Commenting on the deal, JP Morgan say of British Land that they are “on the right side of the trade”
16th April 2010
Incorporation of 2-14 BAKER STREET TRUSTEE NO.1 Limited; and 2-14 BAKER STREET TRUSTEE NO.2 Limited in Jersey. A legal agreement signed with Westminster City Council in 2010 shows a connection between these entities and McAleer & Rushe.
11th October 2010
Planning Memorandum and Agreement signed with Westminster City Council. The agreement is signed as a Deed by 2-14 BAKER STREET TRUSTEE NO.1 LIMITED acting in its capacity as co-trustee of the Baker Street Unit Trust and signed by Andrew McNulty.
Memorandum and Agreement parties listed as:
- The Portman Estate Nominees (One) Limited and The Portman Estate Nominees (Two) Limited
- 2-14 BAKER STREET TRUSTEE NO.1 LIMITED and 2-14 BAKER STREET TRUSTEE NO.2 LIMITED acting in their respective capacities as trustees of the Baker Street Unit Trust
- The Lord Mayor and Citizens of the City of Westminster
Important Note: P34 of McALeer & Rushe Annual Accounts for 2010 and filed in March 2011 lists companies in which the directors of McAleer & Rushe own interests. This lists Baker Street Unit Trust as belonging to the directors of McAleer & Rushe. Note that it is listed not as an entity belonging to McAleer & Rushe – but is specific in stating it to be one of “a number of other companies in which Mr S McAleer and Mr E Lafferty have declared interests…”
21st March 2011
McAleer & Rushe submit a business plan to NAMA
22nd March 2011
McAleer and Rushe file annual accounts. Loss of £11m on turnover of UK£62m. Turnover down 45% from the previous year. As at March 2010 the company had £51m of term loans and a further UK£10m of overdrafts. All loans repayable on demand – implying there had been a breach of covenant. Auditor expresses uncertainty about “going concern”.
29th March 2011
BBC reports McAleer & Rushe loans taken over by NAMA – http://tinyurl.com/7zdhpcx
21st September 2011
Nigel Webb of British Land presents to a Offices Analyst & Investor Event at the British Land head office in London. The presentation document (page 19) refers to ‘10 Portman Square’ which was previously known as ‘2-14 Baker Street’ and wrongly refers to the sale of the property to McAleer & Rushe as a transaction that took place in 2004 instead of the correct 2005. See http://tinyurl.com/7dcfoh4
Excerpts from Nigel Webb’s presentation;
“…. we repurchased for approximately 50% of the value it previously sold for in 2004, we structured a three-way deal to purchase the site from McAleer and Rushe and the Bank of Ireland, with the consent of Nama.”
“This is not an insignificant achievement.”
“The acquisition has already performed very well to date. Since purchase, the valuers have increased the site value by 52% net of capex.”
So we have a site that has been sold with NAMA approval and with the agreement of Bank of Ireland (according to Nigel Webb of British Land) for at least half it’s real value. Where this leaves the bank loan raised for the original purchase of the site is unknown at this stage. But that loan (or any remaining part of) is now with NAMA.
In the year following the reacquisition of 10 Portman Square (2-14 Baker Street) by British Land – we have a senior employee of British Land (in the presence of members of the Board of British Land, and other senior management) boasting to analysts and investors that “…. we repurchased for approximately 50% of the value it previously sold for in 2004, we structured a three-way deal to purchase the site from McAleer and Rushe and the Bank of Ireland, with the consent of Nama.” And then rubbing it in with the comment “This is not an insignificant achievement.” And then boasting again that “Since purchase, the valuers have increased the site value by 52% net of capex”
Is this deal reflective of a straight and smart business transaction – or are you inclined to wonder or speculate whether this represents a case of asset-stripping the Irish State by disposing NAMA assets (and/or NAMA bound/NAMA Related) below market value.
Of course there is an added question as to why this property was not offered by McAleer & Rushe – or Bank of Ireland – or NAMA on the open market……
- Q&A: 2-14 Baker Street, British Land and McAleer & Rushe (2to14bakerstreet.wordpress.com)
- Brighton & Hove Council Legal Action against McAleer & Rushe (2to14bakerstreet.wordpress.com)
- Should we be getting worried at NAMA’s financial performance? (namawinelake.wordpress.com)
- NAMA versus NAMA, it’s getting surreal (namawinelake.wordpress.com)
- NAMA in 2012 (namawinelake.wordpress.com)
- NAMA provides geographical split of advances to developers which might offer clues as to why we have 440,000 on the dole (namawinelake.wordpress.com)
- Bank of Ireland upbeat as losses narrow (telegraph.co.uk)
- NAMA allowed €300k salaries at modest development companies which made a €30m loss last year? (namawinelake.wordpress.com)
- NAMA’s Irish competitors show that the Agency hasn’t a monopoly on foreclosures (namawinelake.wordpress.com)
- With a paltry €30m reversed in 14 months, just how serious is NAMA about reversing transfers to spouses? (namawinelake.wordpress.com)
- 10 Portman Square | W1: Can a Name Name Change Clean up a DIrty Image? (2to14bakerstreet.wordpress.com)
- Plundering Ireland? – Disposing NAMA Assets at 50%+ Below Value – McAleer & Rushe, British Land, Bank of Ireland and NAMA (2to14bakerstreet.wordpress.com)
- 10 Portman Square | W1: Can a Name Change Clean up a Dirty Image? (10portmansquare.wordpress.com)
- NAMA architect on shaky ground in defending Agency (namawinelake.wordpress.com)