Land valued at €31m worth just €0.6m now
DEVELOPMENT LANDS in Athlone, Co Westmeath, valued in 2006 at €31 million have a current value of €600,000, Bank of Ireland told the Commercial Court yesterday in a dispute with a developer over unpaid loans.
The bank was rejecting arguments by Pearse Gately that the sale of these and other lands offered reasonable potential for the bank to recover €17.4 million from the developer under his guarantees of loans.
Mr Justice Peter Kelly said the €600,000 figure was “even more alarming” and put “into a cocked hat” the judge’s own view, from his experience in the Commercial Court in recent years, land values had fallen between 70-80 per cent.
John Hennessy, for B of I, said as well as obtaining the €600,000 valuation for the Athlone lands, the bank had also received a valuation of €4 million for development lands at Sallins, Co Kildare, previously with a peak value of some €17.5 million.
Given such figures, the bank considered it was “not in any way likely” that it would recover its loans from sales of the lands in the foreseeable future, counsel said.
John McCarroll, for Mr Gately, said that, given such valuations, it “might be timely” to remind the bank of its duties to mortgagees.
The judge ruled the bank was entitled to judgment for €17.4 million against Mr Gately under personal guarantees provided by him over loans to three of his companies.
Mr Gately, Millicent South, Sallins, Co Kildare, and others had executed guarantees over loans made on dates in 2004, 2006 and 2007 to his companies, Gateway Properties Ltd (formerly RRI Developments Ltd), G K Building Company Ltd and Ichleigh Developments Ltd.
The loans included a €13 million loan to purchase a 7.5-acre site at Monksland, Athlone, Co Westmeath, plus loans of some €26 million to refinance existing loans and to fund the completion of a development at The Waterways, Sallins.
The bank claimed the final repayment dates for the loans were December 2006 for Ichleigh, December 2007 for GK and December 2008 for Gateway. When the loans were not repaid, it appointed Kieran Wallace as receiver over all three companies in May and sought judgment for €17.4 million from Mr Gately under his personal guarantees.
Yesterday, Mr McCarroll, for Mr Gately, said the Athlone lands were valued in 2006 at €31 million. He was not saying that 2006 value had any reality now but, even applying the “generous” Nama discount of 50 per cent, there was still a residual value in those lands to the bank.
The judge said his view from the Commercial Court was the discount was likely 70-80 per cent.