Friday 19 January 2018

The right moves: Westport House stroke cuts to issues for Nama

Westport house
Westport house

Paul McNeive

The Government intervention which has seen Nama withdraw 380 acres of land surrounding Westport House in Co Mayo from its latest loan portfolio sale, is a classic political stroke.

The government intervened on the grounds that Westport House is a tourist attraction of national interest and should not be sold to a purchaser who might not support that use.

The loan (approximately €9m) had been included in Nama's "Project Arrow" sale of 1,532 property loans. The government may well be doing the right thing in moving to secure the future of Westport House. However problems arise when one considers all of the other loans and properties around the country which have been sold and where the state made no move "in the public interest."

A campaign to get the government to protect the future of The Bord Gais Energy Theatre fell on deaf ears. Indeed, there could hardly have been a better example of an asset that should have been saved by the state than Clerys Department Store.

In a political culture with more political strokes than a Federer-Djokovic five setter, there is no doubt that this intervention happened because Westport House is in the constituency of both the Taoiseach and the Tourism Minister. The state's action puts Nama in a tricky position, as they are charged with securing the best possible price for the taxpayer. Withdrawing the property from sale and dealing only with one party (Mayo Co. Council) is the last way to maximise the price.

It's similar to the situation where a property is offered for sale by tender or auction and a strong offer is received before the tender date. The vendor has to compare the offer made with his agents valuation but if he takes the property off the market early, he foregoes the opportunity of some bidder paying a higher price. Therefore, buyers taking a property off the market early, usually have to pay a strong premium price.

It's true that Nama works with government and local authorities for sites for schools, the HSE, and the like, but special deals involving a tourist attraction like this have been few and far between.

In this case, Mayo County Council is a "special purchaser", that is, the property should be worth more to it than anyone else. Nama should have this loan revalued, to include a view on the value of the land with vacant possession, and ensure that a good premium over the open market value is secured. Whilst on one hand it's money moving from one arm of the state to another, in this age of apparent transparency, we should be able to see that taxes have not been diverted to one project on an unfair basis.

It will be no solace to the former Clerys staff that the Gordon Gekko style filleting of Clerys by the purchaser was probably what saved Westport House.

The occasion was a glitzy property awards ceremony in a packed London ballroom. As a sponsor, I was on stage to present an award and Graham Norton was the MC. A few minutes earlier I had been on stage to accept an award on behalf of my firm. Therein lies the challenge to the credibility of industry award schemes-there is too much overlap between sponsors and the winners.

When this newspaper asked my views on launching a new scheme of property awards, "credibility" was the first priority I raised. I am delighted to see that after consulting with industry stakeholders, the Irish Independent Property Industry Excellence Awards are a radical departure from the formula of the past. The Awards are designed to promote the highest standards of excellence and innovation in the industry, and for a start, a sponsor can't win anything.

Profits from the programme are being reinvested in the property sector and a highlight for me is the innovative establishment of the DIT Doctorate in Property Research, which will promote Irish property academics globally.

There are obvious categories such as "Commercial Agency of the Year" and less obvious ones like "Community Benefit Project of the Year," and "Design Project of the Year."

The Awards Dinner takes place at the Convention Centre Dublin on the November 12 and I'm honoured to be acting as the MC. I wonder if Graham Norton can lend me a jacket?

Indo Business

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