ANALYSIS: ON JANUARY 9th, the National Asset Management Agency told property developer Treasury Holdings that it would be enforcing its securities on loans that had been transferred to the agency in 2010.

After two years of talking, Nama had finally lost patience with Treasury’s owners, Johnny Ronan and Richard Barrett, and had decided to appoint receivers to manage the assets and ultimately sell them to recover funds for the exchequer.

It was Nama’s most decisive move to date against a debtor.

Treasury is believed to have been shocked by the move. Some frantic tick-tacking ensued and a two-week standstill agreement was reached on January 12th to allow Treasury bring forward some investment proposals.

The deadline for that standstill arrangement expired on Wednesday at 4pm.

Two proposals were tabled by Treasury. These involved the Australian investment bank Macquarie and US real estate group Hines. The idea was that one of these parties would acquire the loan portfolio from Nama.

Details of the proposals have not been made public but it is understood that the sums involved represented between 20 and 40 per cent of the €900 million that Nama paid to the banks who had loaned funds to Treasury.

The face value of the loans is put at just shy of €2 billion by Nama. Treasury puts the figure at close to €1.5 billion, arguing that the balance relates to companies connected to Johnny Ronan rather than Treasury.

Whatever about the face value of the borrowings, it has been suggested that Nama was being offered between €200 million and €400 million by the investors for loans that it paid €900 million for in 2010.

It is understood that other conditions were attached and that Treasury would have had an involvement in the investments going forward, something that might not be acceptable to Nama.

Treasury sources have indicated that the investors were willing to pay more than €900 million for the loans.

All Nama will say is that it analysed the two proposals and decided that they were “not commercially acceptable”. However, it has not ruled out further negotiations with the investors at a future date.

On Wednesday, the board of Nama decided to call in its loans and to press the button on appointing receivers. This provoked an immediate reaction from Treasury, which dashed to the High Court seeking an injunction.

Yesterday, it was agreed that PricewaterhouseCoopers and Ernst Young would be appointed as joint receivers while the judge set February 21st as the date for a full hearing of Treasury’s case.

Treasury claims that Nama has acted unreasonably and disproportionately and is in breach of its statutory duty. Until the case is heard and a decision reached, the receivers will sit tight.

About 35 sites or properties controlled by Treasury or connected entities were affected by Nama’s move on Wednesday. It is understood that others could follow.

Why did Nama lose patience with Treasury? There’s no immediately obvious answer to that question. It seems that Nama decided that, after two years of talking and little action, its interests were best served by taking charge of the assets and appointing receivers. The receivers would be expected to liquidate the assets over time with a view to retrieving at least the €900 million that the agency paid for the loans.

Treasury would argue that significant progress had taken place in what is a very complex set of negotiations, given the number of properties affected and the convoluted corporate structure it employed to manage its assets and loans. For example, the Montevetro building on Barrow Street was sold to US search engine giant Google.

In 2010, Treasury agreed a business plan with Nama and signed a memorandum of understanding with the agency. Treasury would also argue that it was best placed to generate a return for the exchequer. This is debatable.

As one of Nama’s 10 biggest debtors, Treasury was a key client.

The loans included the high-profile Battersea Power Station in London. Once considered the jewel in the crown for Treasury, a €1.5 billion redevelopment had been planned for the site. But the global financial crash effectively scuppered Treasury’s chances of funding a redevelopment of the landmark site. Its stake was held through Real Estate Holdings, a UK-listed company in which it holds a majority stake.

REO’s control on Battersea began to slip in 2011. A refinancing took place and, in December, with Lloyds Bank and Nama moving against the company and appointing Ernst Young as administrators. Last week, real estate group Savills was appointed to market the property.

Losing Battersea was a significant blow to Treasury and REO, both financially and from a prestige point of view.

Treasury’s case against Nama will be heard on February 21st, with four days set aside for arguments. Whatever ruling Justice Nicholas Kearns hands down, there’s every chance of an appeal.

There is a lot at stake for both sides. Barrett and Ronan face losing control of a portfolio of assets that they spent years putting together. For Nama, it’s a crucial marker both in terms of its relationship with other debtors and its credibility with taxpayers and its political masters.

N PLAY: TREASURY PROPERTIES LIKELY TO BE AFFECTED BY NAMA

1. Tedcastles: North Docks

2. Undeveloped site: Spencer Dock

3. Residential units and retail: Spencer Dock

4. Block C1-3 (PricewaterhouseCoopers office): Spencer Dock

5. Block R: Spencer Dock

6. 99 St Stephen's Green

7. 98 St Stephen's Green

8. 95 St Stephen's Green apartments

9. Rear of 22 St Stephen's Green

10. 32A Dawson Street

11. Durrow Mews

12. 22 Flemings Place

13. Lad Lane apartments

14. 35 Barrow Street

15. 36 Barrow Street

16. Network House: Barrow Street

17. Alto Vetro: Grand Canal Dock

18. M1 Business Park: Junction 5, M1 motorway

19. Milverton: site near Skerries

20. Kinsealy: site on former Haughey lands

21. Spring Cross: Ballymun town centre

22. Collinstown: site near Leixlip, Dublin

23. Clonburris: site near Clondalkin

24. Leisureplex: Stillorgan, Dublin

25. 72 Laurence's Park: Stillorgan, Dublin

26. Stillorgan Houses: Stillorgan, Dublin

27. Central Park – Investment properties and site: Leopardstown, Dublin

28. Central Park block G:Leopardstown, Dublin

29. Glendruid: proposed development close to Lehaunstown Luas stop, south Dublin

30. Enniskerry: site close to village,Enniskerry, Co Wicklow

31. Ritz Carlton Hotel: outside Enniskerry, Co Wicklow

OTHER SITES

Roundwood: site at part of former President Seán T Ó Ceallaigh estate

Burleigh Court

Rowan Court

Willow House

Sycamore House

Cedar House

Sligo Nazareth: 12-acre site close to Nazareth House

Sligo town centre: planned shopping centre, Sligo


ORIENTAL AMBITION: TREASURY'S INTERESTS IN CHINA

WHILE TREASURY Holdings' difficulties in Ireland are well documented, China remains a positive element in the Treasury universe through its Treasury China Trust (TCT) unit.

TCT, which listed in Singapore in June 2010 and in which Treasury holds a 40 per cent stake, reported gross revenue of 127.3 million yuan (€15.8 million) in the third quarter of last year, a rise of 34.3 per cent on the same quarter a year earlier.

The company has a property portfolio of approximately 800,000sq m, which includes retail, office and logistics properties, in big cities such as Shanghai, Beijing and Qingdao. Its total assets under management are more than 12.5 billion yuan (€1.55 billion).

While the Chinese real estate market has been looking toppy, and even bubbly in some sectors, the focus of government tightening has been on residential property investment, especially people flipping properties.

China's big cities are still undergoing massive urbanisation and there is still strong economic growth, especially in the consumer sector, which has meant commercial real estate has not been affected by the slower growth.

This is reflected in TCT's core portfolio occupancy, which rose to 97.57 per cent by the end of September last year, up from 90.9 per cent at the beginning of 2011. And TCT's rent roll also has some big names, including global retail group Marks Spencer, which is down to take a flagship store at its City Center property in Shanghai which will be one of the city's biggest shopping malls.

Chairman Richard Barrett stresses the importance of commitment when he talks about how to deal with the China market and at one point, it seemed like half of the management board was living in China.

It's not always been easy for Treasury in China. The company got a real kick in the teeth back in 2006, when it negotiated a deal to buy a shopping centre in Xidan, a prime shopping area in downtown Beijing, for initially €362 million – China's biggest ever property deal at the time. The deal collapsed and was a major setback. But Treasury bounced back well.

There are puzzling elements, such as the gap between net asset value per unit at Singapore $4.41 (€2.69), and the trading price of the listed unit, which was $1.47 on Wednesday. A statement in December revealed Goldman Sachs had been named as financial adviser to the listed vehicle to undertake a strategic review and recommend how to close this particular gap. - CLIFFORD COONAN