The High Court heard a case between AIB and a firm of solicitors. In the case the value of a residential development site in wexford was discussed.
The site bought in 2007, is now worth 31% of what they paid. And this value continues to fall.
courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/a0c24e7369dadcf98025762d004c7e69?OpenDocument Wexford is a large provisional town. If this development land is only worth 31% of its value, how can NAMA contemplate paying anything above 50% of the loan value for such a piece of land Background to the case
Essentially a solicitor for a Wexford couple used a refinancing loan of €2,000,000 which should have discharged a mortgage on a property in Wexford, instead used the money to pay a deposit of €2m on a property in Dalkey, with a value of €20m. So they have totally leveraged up their losses, as I could imagine what the Dalkey site is now worth.
Let me get this right, AIB advanced a loan of 3 mn for a site with a value of 2mn (150% LTV) which is now worth 620k (483% LTV) secured only on the land? Am I reading it right? (Forgetting about the 2 mn siphoned off by the solicitors).
"He also draws attention to the fact that the plaintiff bank accepted at face value the valuation of CBRE for the purpose of sanctioning this loan, and that there has been evidence from Mr Larry Kelly of Thorntons, Chartered Surveyors which indicates in his view that **the CBRE valuation of €3,900,000 made in 2007 “is based on assumptions which do not appear to be backed up by a town planning report and which did not have a planning permission in place at time of valuation. This valuation would have been subject to planning permission being obtained as outlined in the report”. **
He goes on to state that “it would have been reasonable to assume that some development would be allowed on the site and it may not have been clear that Moongate House could not be demolished”.
By way of conclusion **he expresses his opinion that in 2007 the market value of the Moongate property without the benefit of planning permission would have been “in the region of €2,000,000”, and that by the time that the plaintiff called in this loan in January 2009 “there would have been a significant diminution in value by that date…”. As I have said, CBRE have stated that the value as at January 2009 was €650,000 and that it **by the present date €620,000.****present date = July 2009 latest , it has of course dropped since."
It may have been worth a lot more than €2m in 2006