UUP answers finance questions posed by bobballs readers!

29 08 2009
Now... you show me yours!

Now... you show me yours!

WILL THE OTHER PARTIES NOW FOLLOW SUIT?

(Sorry, have been away for a couple of days.) My thanks to the UUP Treasurer and all those who contributed to a discussion below on the Electoral Commission and party finances in NI.

But in particular, many thanks to Mark Cosgrove – I think he’s done alot of credit for the UUP by taking the effort to engage on some of the issues raised here. I know of no other Party treasurer who would offer information so freely and completely. Many thanks again! For me, his comments contained one of the most complete answers to UUP financial matters that I’ve come across in a while.

Mark’s full response, set in its context, can be accessed here. (I am going to paraphrase that response for the purposes of the post – but out of fairness to Mark I would also urge anyone reading this to read his words as they stand.)

In an earlier comment, cublue had said re. Cunningham House that:

The strange thing is the buiding is still used as security for the UUP’s debts a very generous partner indeed who overpaid for their share and then allowed their share to be used for security for the UUP debts. If the buiding was revalued to current values what would the balance sheet show now? If a 40% reduction was used probably very little. Who is the generous partner and what do they get out of it?

Mark replied that:

  • The UUP owns 80% of a Limited Liability Partnership. Its main asset is Cunningham House. Therefore Cunningham House has not been sold but a 20% stake in it has. The UUP sold 20% of the LLP shares to a third party in December 2008. Does anyone seriously think that PWC would have permitted an over valuation (of course not).

He went on to say that:

  • The potential devaluation of Cunningham House is a non issue as this transaction took place at the end of 2008 making the valuation completely up to date. Cunningham House Balance Sheet value was not done in 2007 and was certainly not done at the height of the market.

It’s worth noting that in a follow up comment, cublue contended that:

  • The valuation was done on the 11th December 2007 by Myles Danker(UUP accounts 2007) close enough to the height of the market I would have thought, and certainly much higher than a December 2008 open sale valuation.

Mark has signalled that his correspondence is at an end. But cublue is correct to say that Myles Danker valued the property on 11.12.07 (see page 16). Also the UU housing market survey would seem to reinforce cublue’s opinion re open sale valuation.

This is a difficult proposition to get one’s head around, as cublue suggests the really interesting questions are not for the UUP but the third party. I can understand why the UUP would sell a stake in this asset, but who would enter into such an arrangement? The value of this asset was tumbling and would likely continue to fall further. Mark says the transaction occurred in December 2008 in the depths of recession – perhaps the buyer felt they got a knock down price?

The current occupant of Cunningham House is local AV company The Picture House (their signage is clearly visible from Parkway). Are they the third party investor, or merely tenant?

The 80%value of the LLP is £1,650,000, which surely means the investor paid the UUP around £415k for its stake (my maths is awful, but I think that’s right).   The investor will have known the property market was falling, so – a cublue says – they will have taken a long term view about realising returns (or the price at which they bought did not reflect the true market rate, which Mark categorically rejects).

Many of us remember the UUP for being less than frank over finance matters – to the extent that the PSNI were called in to investigate secret/undeclared bank accounts. Mark has demonstrated why it is better to engage in an open and constructive manner as opposed to the old approach which, to be fair, most of us are used to. The UUP is clearly intent on making a virtue of openness – thereby showing all that cute hoorism is firmly in the past; and that it is now modern and professional. It all adds to the rebranding I guess.

Mark has been open, honest and very helpful – as I said, the really interesting stuff as to why someone would invest £400k in a run-down UUP building during a collapsing market with little prospect of major return is probably one for the third party investor to answer.

And in view of Mark’s assistance in tying up some questions put by readers here, I wonder whether the other main parties might follow suit? If you have any finance questions for the main parties email me a staffatbobballs at googlemail dot com…

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2 responses

29 08 2009
Chekov

And who bought the 20% stake in Cunningham House? Because that party is now effectively a partner.

30 08 2009
cublue

BB indeed you have a problem with maths, the vaulation remains at £1,650,000 with the investment by the 3rd party being £330,000 which is probably £100,000 over the odds. I would suggest an open sale vaultion for the 80% today would be closer to £800,000 or over £500,000 less that the figure of the balance sheet.

This would leave the debts to be repaid very close to the value of the building. Of course if the assets in our constituencies were included then it would make a big difference.

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