Colm McCarthy: State’s gigantic portfolio of property and bank loans will be a tough sale

Colm’s Sindo wide ranging column this week takes NAMA and the disposal of its assets as its focus but also calls for an inquiry into several important matters. From the piece:

Viewed from behind the desk of an international investor with plenty of options around the world, this is not a pretty picture. The reputation of the country has been damaged and the perception created that Ireland is suffering from an acute outbreak of crony capitalism.

This may be unfair but perception is what matters and the perception needs to be altered decisively if foreign investors are to be re-assured. The sheer scale of the capital inflows required means that portfolio investors new to this country need to be involved on a massive scale. These people are perfectly entitled to be cautious about committing funds to a small country which must appear to them to tolerate a dodgy business and political culture.

In the circumstances the Government must focus on rebuilding reputation and has consciously made this a priority. There are other positives — the Irish commercial courts are seen as thoroughly independent and quite prepared to find against local interests, including the State, should the law and the facts point in that direction.

But progress has been slow under several headings. Four years after the emergence of the banking crisis, and given clear evidence of malpractice in some banks, there has been no definitive inquiry into their governance and behaviour, in particular no review of bank-by-bank lending policies in the years when the damage was done. Despite evidence in the public domain of insider lending, balance sheet window-dressing and share-support operations in some banks, no prosecutorial actions have been taken.

The referendum on restoring investigative powers to the Oireachtas was lost through a weak government campaign, but a parliamentary inquiry is nonetheless desirable. It should cover the Quinn Insurance affair as well as the banking collapse and should delve further into the failures of regulators and the mistakes made in the policy response. A well-resourced inquiry should be seen as helping to restore the country’s reputation.

By Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

70 replies on “Colm McCarthy: State’s gigantic portfolio of property and bank loans will be a tough sale”

@ Stephen

To be honest, I’d suggest they’re more worried about the non payment of the household charge, and the idiotic political support of that non payment from some quarters, than they are about how Nama goes about selling off its portfolio. The quest for transperency on that is an almost uniquely Irish pre-occupation.

Increasing taxes on a declining money supply is a debt end.
The money/credit supply must always be positive.
We have had a declining M3 for nearly 4 years and now even M1 is going into the pit.
The state is losing its legitimacy as it is clearly in the Euro banks pocket.
The Exchequer is a Bank Bitch.
A Bank debt collector.
We don’t have a goverment fiat system operating here , the money supply is being constrained by dead bank double entry “assets”

Colm’s wish to see substantial foreign investment might go unrequited.

Last year, over on NWL, there was a blogpost on the mysterious absence of foreign investors in Irish commercial property. This was part 1.’t-international-investors-buy-irish-property-part-1-of-2/

Part 2 was intended to explore the reasons why Ireland, a country with an evolved democracy, a perceived low corruption and honest and open economy never, NEVER attracted substantial international investment, unlike most other countries where trans-national investment is commonplace.

The reason Part 2 was never published was that no international investor was willing to comment on the record – mostly because they’re all running the rule over Irish property at present, particularly with NAMA -but the general view seemed to be that Ireland suffered from a property sector – domestic investors, landbank owners, property companies, public records, associated professional services, banking, planning, media, political clientelism – which was impenetrable to outsiders, or at least expensive to compete with.

And that planning in Ireland was particularly capricious, and this from people who would be familiar with the murkiness of Spanish, Polish, Hungarian, Bulgarian, Italian and even British and American planning. Good to see we’re world leaders at something!

But if we have been unable to attract substantial foreign investment in the depressed punt-era 1980s, the nascent Celtic Tiger 1990s, the euro-era 2000s with the crazy boom, then why do we think we can attract it into property now? Unless we’re willing to sell it for a song.

@ Jag

Part II was intended to explore the reasons “why Ireland, a country with an evolved democracy, a perceived low corruption and honest and open economy never, NEVER attracted substantial international investment,”

Must not be living in the same country! I always said the reason the Italian mafia never came to Ireland is because they could never hope to compete. I used to say it as a joke but now I actually believe it!

I have just been dipping into a few of the sunday papers and they read like prep notes for further enquiries. The whole country is positively sleazy and a walk across the city I encounter at least 20 teenagers out of their heads on drugs anyone any economic indicators for that particular problem.

The 1990s was the Euro Era also -it just that we poor souls did not Know it at the time.
THe Euro is the Heart of Darkness.
Now is merely the end of the river.

MS”They told me that you gone totally insane and they your methods were…… unsound”
MB “Are my methods unsound”
MS “I don’t see any method at all, sir”

This is the kind of unbalanced discourse that the representative of the exchequer had with the monopoly banks back in the summer of 2008 I imagine.

Burglary rates have gone up substantially , published recently on a CSO crime statistics thingy.
A country that cannot now “afford” to train a local police force is not a serious place.
Its the most extreme manifestation of a country in a non optimal currency area , we have been in this Wage Deflationary Boat for a long long long time.

“The referendum on restoring investigative powers to the Oireachtas was lost through a weak government campaign”

These things can of course be deliberately so.

A well resourced inquiry…when is the last time ireland had one of those that got to the facts for a reasonable cost on something that mattered? Anyone looking in can read nyberg or the mahon tribunal for past form. Probably more relevant than the 100 euro charge….

An Oireachtas committee plans a “banking enquiry”. The Terms of Reference (“TOR”) are to be settled by the end of this month, Paschal Donohoe told me.

Suggestions needed urgently, IMHO.

Agree with colm but we need to chsnge the objective from keeping international investors happy to not needing them at all. As long as we need them there will be no democracy.

A foreigner contemplating investing in Irish property would proceed in the same way that an Irish investor would proceed to invest in Argentinian property.

First do one’s homework on the macroeconomic situation then get down to the specifics on the type of property investment. Retain a reputable lawyer, use the embassy/consulate and make a sizable deposit in one of the big three banks and discuss your investment and borrowing plans with them along with their preferred lawyers and other items of mutual interest. There are shysters in every country, Ireland is not unique in that respect. If politicians or officials need their palms greased do not attempt to do it yourself, simply authorise your lawyer to take care of the business of doing in Rome what Romans do.

At this point Ireland does not have a reputation other than as a country that blew a property bubble, burst a property bubble and unbelievably, unreservedly propped up the banks as they failed, at taxpayer expense. The minutiae they get from ECB, EC, IMF, OECD. They would have no idea that we are as convoluted as Calabrians or even Sicilians.

Clearly there will be money to be made near the bottom and the country’s reputation will not be relevant. Discerning the bottom of a property value collapse is notoriously difficult and forecasting the trajectory off the bottom is even more difficult. However hope springs eternal in the human breast and people will enter the market rationalising it on the basis that it is better to be three years early than three months late.

Is Colm McCarhty being facetious?

“The scale of the required sales is enormous.”

A requirement to sell €100 billion into a market that at best is able to absorb €2 billion annually.

“Integrity requires that the disposal process is seen to be transparent, fair and above board. ”

In the context of the above figures that is a naive statement. The only integrity required in the face of such a demand for deleveraging is the integrity to sell the assets to the fire sale scavengers for nothing and to impoverish the country.

Who stands to benefit from this deleveraging?
Who stands to lose from this deleveraging?
Why and to whose benefit must assets be disposed of at fire sale prices?

Ireland needs to say no to this nonsense.
A primary school pupil could infer the nonsense of this ‘asset’ disposal policy based on the figures supplied by Colm McCarthy.

@ Joseph Ryan

Yes, Colm is being faecetious. While Orish banks had to deleveraging by 100bn, not all of this is in Ireland, and not all of it requires asset disposal (ie amortisation and debt write down)

@Bond. Eoin Bond.

I hope you saw my most humble apology regarding the PN interest rate.
You were right. I was wrong. I did not see that the ELA money repaid was being replaced by other ECB/ICB money coming through BOI.

On the current topic of asset sales, I did not read Colm McCarthy’s tone as being facetious.
I note your point about deleveraging not all being asset disposal.

But I suspect a lot of the deleveraging will be asset disposal. Certainly all the NAMA and most of the IBRC is intended to be.
In any case whether asset disposal or loan reduction the result will be as follows:
Significant losses through fire sales on what is now in the main State property (via bad loans) and the starving of Irish borrowers of the funds to avail of the fire sale prices as the ‘Irish’ banks or indeed any other European banks will not be lending in the foreseeable future. In addition those involved in loan reduction programs will not have the funds for anything else except to survive.
[Note. Some will manage to cruise the Caribbean no doubt].

The only possible purchasers would be large international funds not dependent on local commercial bank credit.
In addition, because of the intertwining of SMEs in the failed property burst, SMEs are being starved of funds though the requirement of their shareholders to deleverage property loans.

However the most striking part of the article was the sheer impossibility of the targets, unless the sales are at fires sale prices.

When targets demand measures that will lead to utterly destructive consequences to an entire economy, then it is not only the targets than are wrong but the policy that underlies those targets.

@Fergus O’Rourke

When you’re next speaking to Pascal you might ask him to explain why it has taken nearly 3 years to investigate the Anglo Directors through the ODCE. Yes I know it hard to believe but its close to three years when we first learnt that 15 staff of the ODCEs office were working full time investigating this case. I mean how difficult can this be?

When that investigation has concluded then perhaps the State could afford to go down the inevitable blind alley that another banking equiry will no doubt be.

The reasons as far as I can see that the Govt is quite willing to have the ODCE drag their heels on the Anglo investigation is because they’re afraid they will win the case. No that’s not a mis print. The State through the ODCE can’t afford to win the case (which they know they will win).

The Govt are allowing the ODCE to prolong the sham that is their investigation because a win for the Govt/ODCE would be an unmitigated disaster for the State in potentially many ways but three of which immediately spring to mind.

Namely 1.Think about this logically. The Directors of Anglo being convicted of a share support scheme and deliberate mis representation of Finanacial Accounts for financial years ending Sept 2007 & 2008 most notably, causes all sorts of issues for the Govt. The entire PN disaster takes a new twist – here we would have a company whose Directors having being convicted of fraud amongst other things with its bond financiers having being repaid 100% of their investment and that debt now being loaded on the backs of the citizens. Bad enough the citizens having to pay for the mess of a badly run buisness, but a fraudulent one. Methinks this would be a step too far, even for the most moderate of bailout fans.

2. The likely class actions from equity shareholders would no doubt have the lawyers licking their lips because it would seem something of a home run for those investors who could rightly claim compensation (from the State because of the Nationalisation) for their reliance on mis represented financial statements for the years in question – and they’d win every day ot the week .

Thirdly, and most bizzarely, the Quinn family case would have to be a losing one for Anglo/State. The State couldn’t logically convict the Anglo Directors of a fraudulent share support scheme in Court 1 of the High Court and continue to argue the opposite in Court 2. The dumbiest lawyer would see that as a crazy litigational strategy. In simple terms if the State proceeds and wins its ODCE case and convicts the Anglo Directors, the Quinn family simply have to win theirs – there is no other logical outcome.

For the reasons above the State through the ODCE have zero intention of bringing this case to Court and the sham that was the extension of Mr Applebys contract is just that – a complete sham.

When Pascal has had the opportunity to digest and respond to the above then by all means let the Politicians have their debate.

Colm was on the radio saying the US had jailed 50 odd people referencing Raj Rajaratnam’s arrest, but the SEC has been hopeless on the GFC debacle:

MF Global is the most blatant example of the rule of law in the US being subverted by crony capitalism:

Only Iceland has started to truly prosecuted the guilty.

In Ireland, we have a once-in-a-lifetime chance to break the golden circles, punish the guilty and start anew.

This is being squandered.

Guess it’s another reason “we’re not Iceland!”

So much seems to happen in slow-motion and so many are apparently bored with the issue of process.

Change if at all comes ever so slowly – – at the speed of a glacier.

It’s indeed strange that investigations go on for years and at least the process could not begin with a charge of reckless breach of duty to shareholders or simply the IL&P-Anglo Sept 30, 2008 deposit arrangement.

Surely it’s not necessary to de-encrypt e-mail files to get prima facie evidence?

Jamie Smyth of the FT reported on the Siteserv deal on Friday:

“Asked about Arthurs Cox’s appointment as legal adviser to Siteserv and Millington (purchaser of Siteserv) regarding the deal, Mr Cooney (Hugh Cooney, chartered accountant, the chairman of Siteserv) said this was ‘not totally unusual’ and the board was satisfied by assurances provided by the law firm that there was no conflict of interest.”

I have often said that the issue of ‘conflict of interest’ is a strange concept in Ireland.

‘not totally unusual’ indeed. Well said!

How little has really changed — and for once Angela Merkel cannot be blamed.

Colm comes across as just being cranky sometimes. He holds markets and foreign investors in a kind of exalted morally superior position to us. Corruption and lack of transparency doesn’t put them off. They like it when they can use it to their advantage.
Most likely the OReillys have some gripe with NAMA.

@Robert Browne

This is Transparency Intl’s 2011 index which shows Ireland at position 19 above the US and France, for example.

We can all moan about indices, but what general evidence have you relative to other countries which would deviate from the index? The Tribunals have been going on for more than a decade, our media is now bolstered by new media which is not owned by Denis O’Brien or the O’Reilly clan or the Crosbies, and we still have a judiciary which will set itself against the State (eg NAMA/Paddy McKillen at the Supreme Court). We no longer have a Garda “Heavy Gang”, we can now see and read what our politicians do in the Dail, thanks to the EU we have rules on procurement which are designed to bolster competition and we have the EC overseeing competition in banking and NAMA. And unlike Greece, you can’t buy a jump to the hospital waiting list, a pass in your driving test, a job or grades in your school exams. We’re not perfect but c’mon, we not Calabria either.

By the way, we are slipping in TI’s index, from 8.0 to 7.5 in just one year and in 2010 we were perceived as more honest than the UK and Germany, not any more.

@ Bundesboy

Nothing wrong with transperency at all, and im very much in favour of a banking enquiry that doesnt evolve into a witch hunt, it’s just where these lie on my list of priorities or importance that we probably differ, and ditto for foreign investors. People paying their taxes and Nama/the banks managing to get good prices for their assets are what they’ll be looking at. Some full closure, one way or the other, in the upward only rent review issue would also be helpful – investors are more worried about inconsistent or unpredictable policy formation than with inquiries dealing with events taking place 5-10 years ago (and almost 20yrs ago in the case of Mahon).

@ JR

Yes, saw your apology, no worries, just glad we got through to you in the end!!

On the banks deleveraging – AIB have disposed of 62% and BOI 89% of end-2013 asset sales targets thus far. IBRC reduced the size of it’s balance sheet by around 25% in 2011 alone. Nama likewise looks on track per its aggressive sales targets. Obviously a lot of these asset sales have focused on the easier ‘foreign’ assets, but for AIB/BOI that was always the focus anyway. Nama will have more difficulty given the huge amount of domestic properties, hence why they are looking at structures like REITs to package up and sell off in blocks. It’s difficult but not impossible.

When selling assets into an international market the key ratio is not domestic assets supplied for sale/total domestic assets but rather domestic assets supplied for sale/international demand for those assets. Ireland is quite small in an international context so there is no reason that the price impact of a big Irish commercial sale would have to be enormous. I agree with Colm’s article and thought it was an excellent analysis of the current situation, but I think some commentators are making misleading forecasts when they ignore how big the international property investment market is relative to Irish supply of property assets for sale. Ireland is too small to flood that market.

@ Joseph Ryan

“I hope you saw my most humble apology regarding the PN interest rate.
You were right. I was wrong. I did not see that the ELA money repaid was being replaced by other ECB/ICB money coming through BOI.”

I did also and I thought it one of the most elegant and decent apologies on the blog.

I also thought it was a useful argument as it helped clear up and clarify a couple of issues.

Colm’s tone in that article is rather different to that in his comments on comments made by international observers
fifteen months ago in a Gregory Connor post this on the blog

I think Paul Krugman could actually have ladled the realities of the negative impression given much thicker than he did. It is progress that Irish commentators with a local following move away from the standard Irish establishment reaction to outside criticism which is too often to try to find a narrow way to interpret it as ‘unfair’.

@ All

In today’s Irish Times

“Nama reduced rents in 99% of 2011 applications”

‘Mr Noonan said the [guidance] note covered situations where tenants of Nama debtors could show the rents they were paying were in excess of current market levels and, as a result, the viability of their businesses was threatened.

‘“In such circumstances, tenants were given an opportunity to seek Nama’s approval for rent reductions,” said the Minister.

‘In a written Dáil response to Fianna Fáil’s finance spokesman Michael McGrath, Mr Noonan said: “Nama points out that, prior to issuing the guidance note, it had received and approved a substantial number of applications for rent abatements which it had processed on an informal basis.

‘“I am advised by Nama that, in 2011 prior to the issuing of the guidance note, it received 114 direct applications for rent abatement. Nama states that 113 of these applications were approved and one was refused.”’

I must admit to beign a bit confused now as to the purpose and functioning of NAMA.

This selling of land debacle tells us how far we have fallen.

There is no concept of a national economy amongest our planners ………. indeed the euros structure makes it completly impossible.

For the economy to grow it needs mindless internal commercial bank credit growth which by its very nature destroys surpluses or external buyers with credit deposits.

Rational Production is now a meaningless concept withen the Eurozone.

We were a Fois Gras creation and are now being eaten alive.

People must try to get their heads around this subject , we are not even slaves in the tradional sense that have value – we are conduit for international capital flows – valueless.

A truely broken people.
Look at the faces of these people when they are told the truth….
The reality of the situation on the ground.

And then we have this sad creature whoring for mobile international capital flows.

People will need to understand this process.
The core of this darkness lies in Europe , not America.
When Treasuries are unable or unwilling to produce their own money the internal capital potential of a country dies.
This Market state phenomena we have lived under from a world perspective since the late 60s /early 70s and from a more intense Irish perspective since 1987 is the most inherently evil anti human capital engine ever created.


Agreed. I think it has suited the local property industry (nicely listed above by Jagdip) to encourage the idea that the traditional local players are the only real potential customers. We have seen this in arguments about the definition of ‘fire sales’ where the lack of finance for the local players (obviously because they have blown their own dough, their banks’ dough, and er, their country’s dough) means that the sale of almost any Irish property cannot currently be to a “natural purchaser” to whom the property will have the highest value – therefore as little as possible must be sold. Meanwhile the price declines.

The same argument has been wheeled out over property backed loan books, where the highest price “natural buyers” are (er, “are”?!) Irish banks.

Without Troika involvement Nama’s “speculative hoarding of property assets” might be absolute.

Breakfast with Anglo page 202
Simon Kelly writes” I cannot remember a single instance during twenty years in the business when I encountered a foreign investor in the Irish property market.”

@Gavin Kostick

Minister Shatter has mentioned there is a threat to the continued viability of the state, unemployment levels are at 15% and continue to escalate. This is an economic emergency. Sustainable Irish business and jobs are been lost daily because of businesses been forced to pay multiples of the market rent, which have been inflicted on them by poisonous lease law that no third world country allows. Hundreds of thousands of jobs are at risk.

Why, in an economic emergency, and a jobs crisis, with thousands of our citizens emigrating,are market rents for shops, offices warehouses and factories considered undesirable?. Commercial property is a service to enterprise ,trade and jobs.

In all other eurozone countries you value commercial property on the quality of the property. In Ireland because of our notorious lease law ,you value commercial property on the quality of your tenant.

Consider the effect on Irish commercial property values if we continue to destroy thousands of sustainable Irish businesses because of massive overrenting?.

@Mickey Hickey
You missed the last step “walk away and put your money somewhere you are likely to get it back…”

Ref corruption

The Irish commercial property industry is an organised cartel, the commercial rent arbitration process is systemically corrupt, with the use of secret agreements ,side agreements confidentiality agreements and other trickery rampant. In the past there were UK property companies operating in Ireland eg British Land and MEPC. One of the MDs of these companies is on the record as saying the “reason they were leaving is corruption”
I refer you the findinds of the Mahon Tribunal “Political corruption is systemic and endemic”

Perhaps Mr Corcoran would answer the following
*can he provide a link to the actual quote by the MD of a blue chip UK property company?
*can he rationalise his view of corruption with that of JS link?
*what does he think of today’s newspaper article claiming that NAMa reduced rents in 99% of applications?

@ Tull
Article on NAMA interesting – would be nice to see:
% age rent decrease, time to rent decrease and percentage of companies that went out of business after the changes etc.

Not sure which question you answered.

There is probably a degree of spin by NAMA/DOF. The info sought by you would be reasonable. Expect NAMAwinelake to get crunching.


I refer you to prevous thread on Irish Economy Blog March 2nd by Karl Whelan “Myhome/Irish Mortgage Brokers Report”
The evidence of the systemic corruption of the arbitration system can be obtained on the Dail record “Oireachtas Joint Committee on Enterprise Trade and Employment” met on 30th March 2010 to discuss ” The Terms and Conditions of Commercial Rental Leases and their Effect on Trade and Empoloyment” It is on the Dail record.

This distinguished political committee never produced a report. I can forward on a DVD and transcripts if you require the evidence.

@ John Corcoran, at 10.29am

Don’t get me wrong, your persistent focussing on the upward only rent issue and jobs for medium and small enterprises – which seems, to me at least, at home in this thread – is wlecome.

On the front page of the NAMA website it says:

“The Agency has acquired loans (land and development and associated loans) with a nominal value of €74 billion from participating financial institutions. Its objective is to obtain the best achievable financial return for the State on this portfolio over an expected lifetime of up to 10 years.”

I understand that.

What I’m finding worrying is that the government seems to be attempting to use NAMA for distinct instrumental aims, particularly where policy isn’t working elsewhere.

Reducing rent is not inconsistent with maximising value if it keeps a tenant in situ. Better a reduced rent than no rent.
One of Mr C’s contention us that this is not happening but others will tell you that landlords are cutting all sorts of deals with tenants.

@Gavin Kostick

I dont just post on upward-only rent reviews
What you must understand is –no tenant will ever get a rent reduction unless the tenant proves they are bust. Language is important here–the tenant is not allowed market rents–the tenant gets a rent reduction and is likely still massively over-rented.

So NAMA’s interest is best served by over-renting the almost bust tenant -otherwise no rents. NAMA is run by esteate agents/auctioneers who organised, the absurd valuations, the ruinous commercial lease law, the corrupt arbitration system and the media property propaganda. The exact crew who bankrupted the country.

Remember the greatest property crash in the history of mankind. In 1999 David McWilliams stated Ireland had a massive property bubble and he was vilified by the same distinguished property professionals who now run NAMA.

Guess what happened to the retail tenants listed below, merely a sample of the devastation so far caused by our ruinous commercial lease law;

Adams Childrens wear
Alan shoes
Celtic Bookmakers
Forrmes maternity
Golden Discs
Henry Jermyn
Harvest pub chain Galway
Jay Bourke’s restaurnts
Mao restaurants
Mermaid restaurant
Barratts shoes
La Senza
Monica Johns
Moton Picture boutiques
O’Briens Sandwiches
Pia Bang
peats Electronics
Pepe Jeans
4 Star Piazza
Tie Rack
Toni&Guy hairdressers
Vero Moda
Waretstones book shops
Zavvi Records
Zerep shoes
Zumo Juice Bars

And thousands of other small independent family retail tenants

Good article by Colm McC. But really its a skimming of the surface. There is an accumulation of evidence for a case that the state has failed. In my view, there is a weight of evidence that default is inevitable.

The real problem is the corruption that still extends its tentacles across the land manifesting in the lack of Garda prosecutions re Anglo; the lack of action on dezoning; the debacle of NAMA that like a Grendel from Gilgamesh still stalks and pillages with a bonus culture matching that of the banks, unconscionable support of developers who’ve made grave errors costing the state billions.

The term ‘crony capitalism’ sums it all up. Its ironic that ‘crony capitalism’ is first at the trough of crony socialism for the banks.

It would appear the only thriving part of the economy, the legal profession, is its vulture side stemming from those who got us into difficulty in the first place.
At its core is the ongoing political support of the financial institutions headed by the banks. There is also the damning extent of uneven distribution of the consequences of the meltdown born in vast proportion by the poorest section of society, followed by the middle class, and least felt by the wealthy.

Good to see Colm McC look these problems in the eye instead of ignoring them in the quest for the Shangri La of growth to hide them. The ship holed below the waterline that has yet to be sent to dry dock for repair is not seaworthy. It remains to be seen for how long it can struggle on before eventual default 🙂

It us your contention that rent reductions would have saved each and every one of the businesses on your list?

@tull whoever you are

Irish commercial tenants are merely serfs, no tenants in the world have had to endure what this cartel organised for them.
This list is merely the tip of an iceberg. What all commercial tenants want is market rents and to be treated like any other commercial tenants in the world.
The Irish government were informed in 1999 that there was a massive property bubble. In 2009 they have been informed that there is a cartel running the Irish commercial property business. This cartel could only operate with the state’s collusion.

I got hand it to you. Irrespective of the question posed you still come back with the same response. Btw, some if the victims on your list are trading again- no doubt after restructuring. Some would have failed irrespective of rent because the end Market they sever has changed.

Congratulations to Colm McCarthy on a timely piece. Only got to read it now. It might counter some of the spin emanating from official quarters. The really worrying aspect on the asset disposals is recently reported discounts by NAMA (Examiner) where 70% discounts on loans were reportedly given to a large American investment bank. Little or no comment followed this report. This is on the segment of the portfolio that was supposedly the better portion.
I also noticed someone suggesting that NAMA will lose Some 6.7 billion. I wouldn’t be surprised if this turns out to be accurate.


No disrespect but your question to JC above is a brainless one.

How in Gods name is JC able to make any stab at the reasons those buisnesses became unviable? I believe the basic tenet of his argument is that market rents should apply regardless of the economic situation. Without the ability to renegotiate with existing landlords is causing enormous stress and placing many businesses in serious difficulty.

I am sorry if I do not meet your standard of intelligence, I must try harder.
However, JC wrote “merely a sample of the devastation so far caused by our ruinous commercial lease law” and then listed some “business failures”
I merely asked was there another reason other than rent that caused failure.
I would also not that some of these businesses on the list are still trading. Mao does an excellent and reaonably priced lunch and there is an O’Briens sandwich bar across the road from me. Might these and others already have secured downward reviews.
You state “without the ability to renegotiate….serious difficulty.” I ask is ther not some negotiating already going on?

The FF led government of the previous fourteen years implemented the policies of the Irish property industry and destroyed the entire economy.

This same property industry now claim that the “abolition of the upward only rent review clause in commercial leases will lead to an average of 20-30% decline in Irish commercial property prices.

Commercial property should be a service to enterprise,trade and employment. Irish commercial lease law i.e UORRs tied to long leases, destroyed all three.

In a democracy power comes from the ballot box. The Irish people have spoken. Over 80% of the Dail were elected on a manifesto that included the abolition of the UORR lease clause and an open market rent review for all commercial tenants this year. Minister Shatter has stated on live TV and restated twice in the written media “that he is consulting with the AG on this legacy UORR issue and he will bring legislation to the Dail as expeditiously as possible“ The Irish government have spoken.

@ Tull

You have asked that question to JC before. What’s your take on it? Top 5 causes of retail business collapse in Ireland and rough percentages. Are they all down to thinternet? Nothing to do with feeding the dead banks ? I’d like to see your numbers.

I have no numbers- hence the question. But the causes might be falling demand, changes in demand, inflexibility of cost including rents, rates, utilities (rising) wages, lack of working capital. Then add in management i.e. Why did Celtic Bookies fail & Paddy Power thrive. Why did some sign UUOR leases and others not.
I bet it is more complex than all sides tell us.

@john corcoran

I agree upward rent ‘reviews’ make little commercial sense. However, the other side, is that some companies/principals haven’t been rushing for the cheque book to pay suppliers for several years. amidst the black and white there are shades of grey.


Where’s the cash coming from? It is very difficult, as you must be aware, to raise cash in domestic market. International markets are variable but yields on certain classes of retail property are still good if you have the cash or revenue stream to buy into them. The point is those classes are dwindling membership wise.

Many investors realise that Spain is becoming the new Greece and after that Italy,very rapidly, and then France. I wonder has the Irish government focused at any length on how best to position itself when the sky drops much closer. Ireland is still for some high in the hog, and the government still hasn’t grasped that it can’t collapse wages with having a debt write off scheme in place.

When I was a student in UCD in the mid 70s I would frequently tour around the leafy suburbs of Dartry, Palmerstown, and the greater Rathmines and Rathgar. I was astonished and remain so to this day, when I was told that such and such a very grand red brick house was owned by a university professor. How on earth could they afford it Ipoh up public sector salaries, I asked myself. That naïveté for you.

Reform, only during blue moon months.

@ Alchemist

The fifth highest retail rents in the world, the most anti-tenant commercial lease law in the world ,a corrupt arbitration system, all run by a cartel.

Name any other country that’s worse. No commercial tenants in the world are treated like this– Irish commercial tenants are serfs. How quickly we forget the famine landlords.

@ Gavin Kostick at 9.46 am

” NAMA reduced rents in 99% of 2011 applications”

Below is a posting on Namawinelake dated January 12th 2012. The Thread’s heading is;
“Competitiveness body says Irish commercial property is steill overpriced”

14 Responses
on January 12, 2012 at 8:35 pm | Reply Will Baxter
1. The mass slaughter of serfs will commence immediately. No mercy will be shown. We will never allow these serfs market rents.
2. The Fine Gael and the Labour Party will be looked after in the usual way. We are indebited to the Fine Gael Landlords Association/PII.
3. The surveyors will continue to produce statistics showing 99.99% of landlords are granting 75% reductions. These figures will be audited by Ernst&Young.
4. The surveyors will continue to lobby to reintroduce the old arbitration system, of secret agreements,side agreements,straw tenants ,bungs,kickbacks, etc etc.
5. Our rentboys in the broadsheet media will continue to publish our puff pieces and the usual propaganda. Otherwise we will withdraw all advertisements and set up our own free internet property portal.
6. The surveyors will continue to lobby to reintroduce the upward-only rent reviews in all future commercial leases.

7. We are indebited to our independent property academics. They will be looked after in the usual way.
8 We will continue to distribute the serfs private and confidential information to cartel members and leak selected bits to our rentboys in
the broadsheet media.

9 Market rents must never be allowed in Ireland.

T O’Neill
The Cartel

@Alchemist – Was Palmerstown a leafy suburb back then? I do not know that area well but thought of it as striving but not wealthy area out by Lucan.

I can understand your pessimistic forecast in terms of a Euro-area domino effect, Spain then Italy then France, and agree that Ireland should steel itself for that possibility. I am more uncertain — it could go the other way with growth possibly picking up slightly and the Eurozone muddling through? Who can tell, but you are correct that Ireland should prepare for the worst and hope for the best in economically very dangerous times.

Meanwhile the Institute of Chartered Accountants in Ireland is waiting for the completion of the Garda investigation before taking action against the audit firms that signed off the accounts of Anglo et al


“Was Palmerstown a leafy suburb back then? I do not know that area well but thought of it as striving but not wealthy area out by Lucan.”

My misspelling – Palmerston Park, etc. in Rathmines.

I agree Ireland should prepare for the worst, but instead a gale of Official blather about recovery and massive growth next year is hurried along by the media.

According to Bloomberg this morning the Spanish Finance Minister is less certain about Spain avoiding a bailout. Just before the weekend, the Italian Central Bank released figures on loans, deposits and ECB support all of which herald dire news now and more to come. When these ‘major’ economies rush for the rip chord, ireland’s talking up recovery will come back to haunt it.

@PR Guy

The state colluded with the cartel. Many of the landlords are politicians families.buddies and bagmen. Remember the Mahon Tribunal report “Political corruption was systemic and endemic”.

@ John Corcoran

Just to be clear, and I’m not trying to be argumentative here, are you saying that the ” NAMA reduced rents in 99% of 2011 applications” article is misleading?

@ Gavin Kostick

Retail Excellent Ireland produced stats from their members showing 4% who sought reductions got them. The surveyors produce stats saying 65% who sought rent reductions got them. Minister Noonan produces stats saying NAMA has reduced 99% of tenants rents who sought reductions.

My direct experience is nobody gets reductions unless they have bled you dry and you are bust. The cartel collude and never ever allow any tenants market rents –never. The state collude with the cartel, the cartel could never have existed without the state’s colllusion. You are an adult I assume –you are entitled to believe Minister Noonan but please dont expect me to believe this propaganda.

@John Corcoran
Perhaps the withdrawal of a prominent leaseholder from a number of so-called top shopping destination sites might shake things up?

The cartel and the Fine Gael landlords Asssociation are in firm control of the cabinet and NAMA. They run the country and you know what the Mahon report said of our politics “Political corruption was systemic and endemic”

I love it, systemic and endemic since time immemorial.

I would not put too much blame on FG, FF also lived off the avails.

Landowners play a constructive role in discussions with tenant farmers
Published on 12 April 2012

Andy Wightman is, I believe, mistaken in his view that landowners are an impediment to reaching consensus within the Tenant Farmer Forum, or TFF (“Scottish Government must tackle tenancy problems”, The Herald, April 10).

As a TFF representative for Scottish Land & Estates, I can assure Mr Wightman that we play a constructive role in all discussions and have been party to a number of decisions made for the benefit of tenants.

I would point to the prohibition of upwardly only rent reviews and the addition of grandchildren to the class of beneficiaries as two examples.

A vibrant tenanted sector requires the agreement of all parties within the TFF, which exists to provide improvements for the sector as a whole as opposed to undertaking unilateral action solely for the benefit of tenant farmers or any other group.

In a recent important court ruling, it was in fact the landlord’s human rights that may have been breached. The concept of rights should surely apply to both parties.

Mr Wightman champions a policy that would force landlords to sell agricultural property which they let as part of their business, almost at any cost.

Every industry must evolve and improve; surely the most sensible way to achieve those collective goals is through cross-industry dialogue.

Andrew Howard,

Scottish Land & Estates,

Stuart Mills House,


Not a lot has changed since 2009.

The downward pressure on prices has been steady since NAMA was founded and wherever the “correct” price level is at will be discovered through market processes – hopefully as public and open as possible.

Non-transparent processes, in Ireland at least, have a habit of screwing the general public and enriching the insiders.

I very much agree with Darragh (commenting above). We should change our focus from keeping investors happy and instead focus on not needing them/focusing on something else than money.

Just look at the many recent bank scandals and I’m sure you will agree with me about this.

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