To my mind the biggest market news today, apart from the nearly unaminous passing by the German parliament of extra flexibility provisions to the EFSF agency, is the the fact the Barclay brothers (no relation to Barclays bank but incidentally owners of the Daily Telegraph) are taking direct control of the Maybourne Hotel Group; whose assets are worth some £800mn and include the prestigious Claridges, the Savoy, the Connaught hotel & the Berkeley Hotels.
There is a potential court action being launched by the erstwhile owner of the Maybourne consortium, northern Irish tycoon Paddy McKillen, however control of the loans and the 25% stake of the Barclay brothers in the Maybourne groups means that as sole lenders and partial equity holders they are effective owners of the entire group.
What particularly stood out is that the Barclay brothers "bought back" their loans from the National Asset Management Agency (short for NAMA), which is Ireland's bad bank in effect. NAMA had announced that it would be delevering its prime portfolio assets in the UK in early summer however this would be NAMA's largest transaction to date, the previous being the sale of Dublin's tallest tower to Google group for 100mm Euro earlier this year.
NAMA is one of the largest and key landlords of the London property market with more than £16bn of assets including the Leceister Square Odeon, Citigroup tower in Canary Wharf and Saville Row properties. At the moment the Irish sovereign crisis (the most muted in the "PIIGS" sovereign crisis; the rest being Portugal, Italy, Greece & Spain) has been managed in an orderly and structured fashion; no doubt because the Irish economy, containing the population just under that of Barcelona, doesn't factor in the same scale as the others.
I thought I would excerpt a passage on the extant and quality of Nama's holdings in London and an illustration of how it got them:
Nama bought the properties at a discounted price of about €9bn and has recouped €3.3bn from sale or refinancing deals that include Claridge's hotel and Battersea power station which was refinanced this month in a debt-for-equity swap. Much of the property was bought on the back of cheap credit from Irish banks, and now the property developers and investors who once enjoyed a high life of private jets, helicopters and second, third and fourth homes are under pressure.
Nama refuses to specify which properties it has but it is understood that the owner of the block housing Louis Vuitton is David Daly, a low-profile Dublin developer. David Daly. David Arnold, another Dubliner, has also had his business, D2 Private, absorbed into Nama. It is behind four prize London assets including 23 Savile Row, Paddington Waterside, Woolgate Exchange in the East End and 12 St James's Square.
The developer who took the most spectacular fall is the tax inspector turned property investor Derek Quinlan. He was forced to sell the "style mile" of shop space between Harrods and Harvey Nichols in Knightsbridge, which houses several top fashion chains. Elsewhere, he has also been forced to put his Citigroup tower in Canary Wharf up for sale with a £1bn price tag . Another high-profile Nama developer is Ray Grehan, who this month saw his London portfolio put into administration. The for-sale sign will go up on his assets, which include the 196-bed Crowne Plaza hotel in Shoreditch and two developments in the Docklands including a 128-flat block called the Forge in Canary Wharf and a proposed 62-storey residential and hotel tower, designed by Foster & Partners on the site of the City Pride pub near South Quay. Another property owned by Grehanis Ealing Arcadia, a retail park in Ealing Broadway.
As a short summation (for now) NAMA is proceeding on the correct trajectory begin an optimal and careful disposal of prime London property markets (it has to be an orderly liquidation to avoid "spooking" the London market, which while robust is still subject to a slow down in the larget global and financial markets) while retaining its stakes and "protecting" its Irish assets, which are undoubtedly weaker and slack over-supply, by doing a very careful and long-term disposal program (which of course would still adhere to the standards set by the IMF and ECB).
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