Housing recovery still ‘uncertain’

IRISH house-building group McInerney Holdings, has said that it has seen signs of stabilisation in its British operations in the last couple of months, but that conditions in the Irish market remain extremely uncertain.

The group’s management met with shareholders to update on the measures it is taking to steady its finances following the posting of a heavy first-half pre-tax loss, earlier this month, the announcement of a €156m impairment charge and the halving in value of its Irish land bank (the value of its British land bank was reduced by 40%).

Group chairman Ned Sullivan said that house sales in Britain have remained stable during September, “albeit at a very low level”. He said the previously announced write-down in the value of its main two land banks was “a very conservative view”, but a realistic view given the current market conditions.

Regarding the impairment charge, Mr Sullivan added: “It is fair to say that a recovery in our housing markets would open up the opportunity to earn back a significant proportion of the impairment charge that the company has taken.

“However, it is not possible to forecast when this will happen. This is the situation which has led to the substantial deterioration in the group’s reported net assets today.”

Mr Sullivan said that the board had no plans for a rights issue, but said it expected the group’s loans to end up in the hands of the proposed National Asset Management Agency (NAMA). This, he said, wouldn’t have too much significance for McInerney but if NAMA improves liquidity and lending from the banks and results in more people getting mortgages, it would benefit the company in the long-term.

At the beginning of this month, McInerney reported a pre-tax loss of €12.8m (before exceptional items) for the first half of this year on the back of lowering mortgage availability and falling consumer sentiment.

Shareholders were told, yesterday, that negotiations with the group’s discussions with its lenders to revise its banking and funding terms were ongoing and “proceeding constructively”.

“While we don’t anticipate an early conclusion to these funding negotiations... we do anticipate an overall positive conclusion being achieved prior to the release of the 2009 results next March,” he added.