A 3Ha (7.5 acre ) site on the outskirts of Athlone bought for €17.5m in 2004 and valued at €31m two years later, is now only worth €600,000, the Commercial Court was told last week.
Repesentatives of the Bank of Ireland were in court in a dispute over unpaid loans and were rejecting arguments by developer Pearse Gately of Sallins, Co Kildare that the sale of these and other lands offered reasonable potential for the bank to recover €17.4 million from the developer under loan guarantees he had given.
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.
Mr Justice Peter Kelly said his view from the Commercial Court was the discount was likely 70-80 per cent but that the €600,000 figure was “even more alarming” and put “into a cocked hat” his own view, from his experience in recent years, that land values had fallen to this extent.
John Hennessy, for the bank said as well as obtaining the €600,000 valuation for the Athlone lands, the bank had also received a valuation of €4m for development lands at Sallins previously given a peak value of €17.5m.
Given such figures, the bank considered it was “not in any way likely” it would recover its loans from sales of the lands in the foreseeable future.
The judge ruled the bank was entitled to judgment for €17.4m against Mr Gately under personal guarantees provided by him over loans to three of his companies.
Gately and others had executed guarantees over loans made on dates in 2004, 2006 and 2007 to three of his companies.
The loans included a €13 million loan to purchase a 7.5-acre site at Monksland, plus loans of some €26 million to refinance existing loans and to fund the completion of the recently flooded development at The Waterways, Sallins.
The bank claimed the final repayment date for the loans was December 2008 and when the loans were not repaid, it appointed Kieran Wallace as receiver over all three companies in May and sought judgment for €17.4m from Gately under his personal guarantees.
