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Vulture Fund Selling Farm

liam7831

https://www.ifa.ie/ifa-opposes-land-sale-in-co-meath-by-vulture-funds/#.W5lblHrTU0M

Looks like the bank really screwed these two brothers

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Keepgrowing

schmittel wrote: »

Yes the taxpayer rescued the banks, but in the process the owners of the banks - i.e the shareholders - got wiped out.

There seems to be a widely accepted belief that the nobody paid for the lending mistakes banks made, so the borrowers should not have to either.

It is simply not true. The shareholders lost everything. And the shareholders were not just faceless institutions; we're talking about ordinary everyday folk, widows pensions etc. Bank shares where seen as a safe investment; i.e for the sort of people who did not go nuts buying apartments off plan in Bulgaria or land at 50k an acre in Leitrim.

It seems to have been forgotten that the people who lost the most in the crash, were the people who made what were traditionally viewed as conservative investments.

Anybody who has walked a mile in the shoes of someone who lost their entire life savings when the bank shares collapsed would think twice before giving land speculators yet another chance to string out their bad loans.

Certainly accept that as a very fair comment. My point is that if a deal can be done whether that be 100% asset disposals or partial with restructuring it should be fully explored. I’m not familiar with the detail of this case, perhaps all avenues have been explored but reading between the lines they don’t seem to have been.

hometruths

Keepgrowing wrote: »

The banks got their deal financed by the taxpayer, the borrowers should be afforded some thing similar.

Don’t get me wrong, messers, non cooperative borrowers etc can’t be afforded the same deals.

If any of you have walked a mile in the shoes of a family farm in financial difficulty, you’d certainly temper your remarks.

Yes the taxpayer rescued the banks, but in the process the owners of the banks - i.e the shareholders - got wiped out.

There seems to be a widely accepted belief that the nobody paid for the lending mistakes banks made, so the borrowers should not have to either.

It is simply not true. The shareholders lost everything. And the shareholders were not just faceless institutions; we're talking about ordinary everyday folk, widows pensions etc. Bank shares where seen as a safe investment; i.e for the sort of people who did not go nuts buying apartments off plan in Bulgaria or land at 50k an acre in Leitrim.

It seems to have been forgotten that the people who lost the most in the crash, were the people who made what were traditionally viewed as conservative investments.

Anybody who has walked a mile in the shoes of someone who lost their entire life savings when the bank shares collapsed would think twice before giving land speculators yet another chance to string out their bad loans.

Keepgrowing

There are some posters here and I sincerely hope you never have a deep financial problem.

It can be caused by many things and I’ll tell you this it’s the most soul destroying and stressful thing any family can go through. At least in the ‘80’s there was no post on Saturday and Sunday, that was some relief. These days with emails, smartphones etc it must be relentless.

Things go wrong, mistakes get made and with cool heads things can be sorted. I’m not familiar with this case but the IFA wouldn’t be involved if there wasn’t a solution. That may well be an asset disposal and deal. The banks got their deal financed by the taxpayer, the borrowers should be afforded some thing similar.

Don’t get me wrong, messers, non cooperative borrowers etc can’t be afforded the same deals.

If any of you have walked a mile in the shoes of a family farm in financial difficulty, you’d certainly temper your remarks.

54and56

gerryirl wrote: »

38K an acre though .. I mean WTF. All sides have to take responsibility. Anyone that would give that for land and the people that gave them the money for it too.

As long as the lenders have sufficient collateral i.e. the actual land being purchased (at a crazy valuation) plus family homes etc and the borrowers are compos mentis (albeit greedy/stupid) then the lender shouldn't carry any of the blame and I say that as someone who is a strong advocate of banking reform to avoid the kind of systemic mess we ended up in in 2008/09.

If I pledge all my assets in order to borrow money to invest/speculate in an asset called "Tesla Shares" and they tank in 6 months time resulting in the lender calling in the collateral I pledged I don't see anyone protesting when those assets are auctioned off.

Why, if I change the name of the asset from "Tesla Shares" to "150 acres of land", should the borrower be treated any differently?

wrangler

Interesting story from the credit crisis of the 80s

http://www.localcampus.com/Regions/Europe/Countries/Ireland/westcork/West_Cork_Library_files/Ross%20History%20School%20Report%20On%20Farming%20Financial%20Crisis%20In%201980s.pdf

54and56

wrangler wrote: »

It'll be harder now as those vulture funds are faceless

Which paradoxically might be a good thing long term for the farming community as it might temper such reckless borrowing going forward.

wrangler

gerryirl wrote: »

I feel for the people that could lose there land and property no one wants to see that but we have all borrowed money with the intention of paying it back. We have all put assets against big loans knowing what will happen if you dont pay the money back . Thats how you get big loans in the first place.. 38K an acre though .. I mean WTF. All sides have to take responsibility. Anyone that would give that for land and the people that gave them the money for it too.

So the IFA are fighting hard for this case. Have they happened to notice that the beef industry is fooked big time and gonna get worse. Pity they couldnt fight a bit harder for that

Have you any ideas how to fight harder apart from not throwing cattle at the processors, time to cop on, price is the same this time every year. People can't keep doing the same thing every year and expect a different result and then blame someone else if they don't get it.....time to treat it as a business now not a hobby
Plenty of opportunities out there apart from feeding beef

gerryirl

I feel for the people that could lose there land and property no one wants to see that but we have all borrowed money with the intention of paying it back. We have all put assets against big loans knowing what will happen if you dont pay the money back . Thats how you get big loans in the first place.. 38K an acre though .. I mean WTF. All sides have to take responsibility. Anyone that would give that for land and the people that gave them the money for it too.

So the IFA are fighting hard for this case. Have they happened to notice that the beef industry is fooked big time and gonna get worse. Pity they couldnt fight a bit harder for that

wrangler

Loves_lorries wrote: »

I'd never air my views in public but I can't really understand the ifa position on this, it's bull mc cabe stuff, as far as I'm concerned, if you invest in risk assets ( which includes property), there is a chance you may loose.

Like I said though, I keep those views private.

There have been a lot of deals done over the years for farmer that got farms back on track. .....Not exactly Bull Mc Cabe stuff either
IFA won't be wasting time on hopeless cases.
A solution such as a farmer sell some land and the bank write off some of the loan and then restructure the remainder of the loan is fair more preferable for everyone than an eviction. Loads of these were done in the eighties
It'll be harder now as those vulture funds are faceless

lalababa

The set up of the loan doesn't make sense. 1.05 million for 40 acres to milk goats? With 800k loan? WTF? And something about remorgaging 3 homes to match repayments? and losing one already?
26k ish per acre to milk goats ? And then pay more I assume for speciaised housing and milking parlour? In what world would that make sense?
Would have liked to see the business plan submitted to the bank. If there was one.
The whole thing makes no sense , the loan, the banks to sell it ( probably well below market value to the fund) , the IFA position.
Do and if the farmers have a recourse to keep the loan from foreclosure can and why not go in front of a judge and let them decide if they can make payments?

Loves_lorries

I'd never air my views in public but I can't really understand the ifa position on this, it's bull mc cabe stuff, as far as I'm concerned, if you invest in risk assets ( which includes property), there is a chance you may loose.

Like I said though, I keep those views private.

54and56

the_syco wrote: »

If the bank can't get it's money back when you default, it won't lend. I'm sure the requirements for getting any sort of farm related loan will be a lot tougher shortly due to this.

Which would probably be a god thing, a bit like banning drugs to protect those who don't have the capacity to stay away from them!!!

Sad really.

the_syco

https://www.beat102103.com/news/removal-of-family-farm-from-online-auction-welcomed/

IFA Farm Business Chairman Martin Stapleton says farmers have to be given a fairer period of time to repay their debts.

“Inside in the banks now, the attitude is to sell these bad loans and you end up dealing with what we all know as vulture funds.

If the bank can't get it's money back when you default, it won't lend. I'm sure the requirements for getting any sort of farm related loan will be a lot tougher shortly due to this.

hometruths

Headlines in Farming Independent:

Maybe if a few folk spent as much time worrying about the consequences of using land as collateral as they do about gold diggers chasing their offspring there would be a few less farm repossessions!

54and56

whelan2 wrote: »

I think the farm has been withdrawn from the Internet auction

Does that mean Promontoria have decided not to sell the farm to recover the money that's overdue or just that they have (belatedly) copped on that doing so in such a public manner is counter productive and after the dust settles they'll conduct a private sale?

Attie

whelan2 wrote: »

I think the farm has been withdrawn from the Internet auction

https://www.lmfm.ie/news/ifa-welcomes-removal-of-local-family-farm-from-auc/#.W59WQuxSmiU.facebook

Good news wish them well.

whelan2

I think the farm has been withdrawn from the Internet auction

54and56

Grueller wrote: »

A lot of that is luck too. I was lucky enough to be turned down a loan on a piece of dear land in 2006. I ran it to €18k an acre and had I got the finance I would have pushed to €20k and been crippled since. In the recession I bought land at less than half of that €20k/ac. Not cuteness or being shrewd, just blessed with luck.

Always remember, bad loans get made in good times!!

Warren Buffett once famously said, “The difference between successful people and really successful people is that really successful people say no to almost everything.”

Grueller

Starchasers wrote: »

My sister who is a financial advisor gave me the following advice for free- “Get in now, the earlier you get in the more money you make, every fool can make money”. Obviously being the natural cynic I am I didn’t, I kept my head above water and have 50% equity in the house now. If I took her advice I would be out on the street now, unfortunately these people took similar bad advice and it turned out badly

A lot of that is luck too. I was lucky enough to be turned down a loan on a piece of dear land in 2006. I ran it to €18k an acre and had I got the finance I would have pushed to €20k and been crippled since. In the recession I bought land at less than half of that €20k/ac. Not cuteness or being shrewd, just blessed with luck.

Starchasers

My sister who is a financial advisor gave me the following advice for free- “Get in now, the earlier you get in the more money you make, every fool can make money”. Obviously being the natural cynic I am I didn’t, I kept my head above water and have 50% equity in the house now. If I took her advice I would be out on the street now, unfortunately these people took similar bad advice and it turned out badly

lalababa

_Brian wrote: »

Is tue Labour charge what the farmer earns or external labour??

As far as I surmise these figures are net profit, ie income minus expenditure. External labour (contractor/helpers etc.) Would be expenditure.
A farmers own labour/wage is not accounted for. So the farmer would have to pay themselfs out of net profit figure.

Most farmers especially the older crowd wouldn't really think of profit in relation to hourly wage. They would do the work that is needed to be done and look at their end of year profit, then make decisions whether to change things up to either raise profit or cut back on work/intensity if they think it's not worth the work/hassel.
Rember these figures do not include BPS or scheme payments!
For Example: A farmer such as a relatively intensive suckler setup may be making a loss of E20 per acre. With an average of 15hrs of weekly labour. But with an average of E15,000 in payments.
They may decide to change their system to extensive dry cattle with a average 4 hrs of weekly labour. With no or little change to profit or loss. Now they have the 15,000 but with an extra 11hrs weekly to earn money elsewhere.

_Brian

lalababa wrote: »

Bugger they disappeared! Well here they are again
From an teagasc. Average Net profit per acre Including labour! Not including any payments such as SFP/BPS/glas etc.
Dairy (alot of labour) :385
Single suckler : -38
Cattle Finnish: -21
Sheep:50
Spring barley:53
Winter wheat:127
These are from a few years ago so beef would be worse, tillage alot worst, and dairy slightly better.

Is tue Labour charge what the farmer earns or external labour??

lalababa

lalababa wrote: »

PS I put figures in the middle of your post be accident.

Bugger they disappeared! Well here they are again
From an teagasc. Average Net profit per acre Including labour! Not including any payments such as SFP/BPS/glas etc.
Dairy (alot of labour) :385
Single suckler : -38
Cattle Finnish: -21
Sheep:50
Spring barley:53
Winter wheat:127
These are from a few years ago so beef would be worse, tillage alot worst, and dairy slightly better.

lalababa

Je_suis_Jean wrote: »

Can I ask (as a completely ignorant city dweller) what profit an acre of land actually produces on average after all costs (labour, materials etc) are paid? I know there are different crops and options such as dairy farming etc so I'd be interested to see what the average historical profit per acre is for the most popular options:-

- Growing wheat/corn
- Dairy farming
- Rearing dry/beef stock (showing my ignorance of terminology here!!)
- Rearing sheep
- Etc etc

PS I put figures in the middle of your post be accident.

20silkcut

Je_suis_Jean wrote: »

I was being sarcastic!!

Am..... ok sound

54and56

20silkcut wrote: »

Communism has been proved in many examples around the world to lead to the most abject of poverty and piled dead bodies higher than any other political system.

I was being sarcastic!!

20silkcut

Je_suis_Jean wrote: »

Apparently changes have been made to reduce the risk of future bank collapses that will require public intervention to rescue them but only time will tell. The longer we go without a rescue the better the changes are working I guess. Isn't it over 10 years since a bank had to be rescued with public money?

I'm not an expert but I think the new bank capital requirements were implemented to prevent big banks from becoming overly leveraged and thus overly risky.

Regulations may flip flop as governments of different flavours win elections but that's the way we choose to organise ourselves. If there is a better option which most people would support (communism? dictatorship?) then why aren't we all clambering for it? Is democracy perfect? Absolutely not.

Sounds like you have a platform to get yourself elected so you can go change the system!!

Communism has been proved in many examples around the world to lead to the most abject of poverty and piled dead bodies higher than any other political system.

greysides

I've endeavoured to split this thread into it's original discussion and the extraneous IFA-Beef discussion, which you can find here.
Please stay on topic now.

coolshannagh28

The return on capital in farming outside of dairying is very low.
The vulture funds are essentially doing what they were brought in to do by Michael Noonan ie purchase large tranches of distressed assets from banks at steep discounts and sell them at a small profit generally while doing some sort of deal with the borrower thereby removing the banks from the messy issue of moral hazard.
This model does not favour businesses which wish to hold onto the asset.

54and56

Je_suis_Jean wrote: »

Can I ask (as a completely ignorant city dweller) what profit an acre of land actually produces on average after all costs (labour, materials etc) are paid? I know there are different crops and options such as dairy farming etc so I'd be interested to see what the average historical profit per acre is for the most popular options:-

- Growing wheat/corn
- Dairy farming
- Rearing dry/beef stock (showing my ignorance of terminology here!!)
- Rearing sheep
- Etc etc

In the absence of any answers I called a family member who has a farm in the midlands and quizzed him. He reckons that on average (he has some sheep, some tillage etc) he earns about €200 an acre after all his operating costs and allowing a wage for himself of €32,000 or so to reflect what he'd have to pay someone else to work the same time he does on the farm.

I don't know how close to the average €200 an acre is but I do know one thing, it doesn't justify paying anywhere near €20,000 (nevermind €30,000) an acre. How can a 1% yield justify such an investment in any business plan? It would take 100 years of profits just to repay the principle and that ignores interest and the time value of money etc.

Borrowing €20,000 over 10 years at 6.95% interest rate would require repayments of €232 per month i.e. €2,784 per annum.

How can you gillie gillie up €2,784 per annum when you're only producing €200 in cashflow per annum to make repayments with????

How are farmers justifying this sort of mad economics to themselves?

The certain beef baron must be laughing his <snip> off at the fact he gets to make all the profits while farmers outbid themselves to get into positions where they can't possibly make any money.

Mad Ted.