NAMA takes over Smyth's art collection to pay debts
Developer spent a lifetime collecting pieces, now bad bank will use them as downpayment
Published 27/10/2011 | 05:00
NAMA has taken possession of the entire art collection built up over a lifetime by developer Noel Smyth, the Irish Independent has learned.
The collection is made up of almost 400 pieces, with many of the paintings previously displayed in the Tate Gallery in London and the Irish Museum of Modern Art.
Mr Smyth, whose largest asset is the Square in Tallaght, said last night he was sad to say goodbye to the collection but he was happy to work with NAMA on the transaction.
The collection has been pledged to NAMA and it is now up to the agency what happens to it.
Mr Smyth said the pledge of the collection was a form of downpayment covering debts built up by his company Alburn. Among Mr Smyth's paintings were works originally collected by George and Maura McClelland. It is understood NAMA has taken charges over other assets belonging to Mr Smyth.
Following the sale of art once belonging to developer Derek Quinlan, NAMA continued to see art as a way to pay down debts, but Quinlan's and Smyth's were two of the largest collections ever assembled by Irish developers.
NAMA chief executive Brendan McDonagh said yesterday that other developers had been forced to put their pension assets up as security, particularly ARFs.
Asked how common this was Mr McDonagh said: "Very, that's why they don't like it.'' .
Mr McDonagh told the Public Accounts Committee that developers were now living in more modest houses, but there was no "pot of gold'' available from developers.
He said transfers between developers and wives/children came to about €400m at most. He said these were mainly family homes and apartments and cash transfers between developers and their spouses were rare.
"Transfers are not as widespread as people think,'' said Mr McDonagh.
Mr McDonagh also revealed that the negative equity mortgage product NAMA is proposing will not now come on to the market until early next year.
He said NAMA was talking to "several government departments'' about the idea.
Mr McDonagh said the Dublin property market was starting to bottom out, but the risks were to the downside in relation to properties outside Dublin. Mr McDonagh said NAMA was offering its first ever staple finance deal where it provides a loan finance deal to a buyer.
A property at Warringston Place in Dublin would be the first of these deals, he said. Up to 30 expressions of interest were already submitted on this.
Mr McDonagh warned that there was some "dumping'' of assets into the Irish property market, using cut-price auctions. Some of the prices at these auctions, he said, were actually below the price of re-building a house.
He said plans by RBS and Lloyds to deleverage and sell assets were being closely watched by NAMA.
He said there was no sign so far that the big UK lenders were using cut-price auctions in the main, and his sense was that subprime lenders were using them more often.
Mr McDonagh said the agency was strongly opposed to changing the rules on upward-only rent reviews and had made its views known to the Finance Minister Michael Noonan.