Art & Finance Newsletter #17 - End of the Art year
Art Basel Miami, one of the largest art fairs every year, wrapped up yesterday marking the end of the 2018 art season. Unless you're an art dealer and then you are now frantically following up with collectors to seal the deal on end of year sales.
Recently my phone has been ringing with art-secured financing requests or discussions on the minutiae supporting an art loan. Georgina Adam (art journalist - Financial Times & The Art Newspaper) recently released her long expected article on the art-secured financing industry. It is an excellent primer for those of you that are unfamiliar with art loans.
Quick comment on the largest issue facing art loans in Asia: lack of documentation supporting ownership. It is extremely difficult (if not impossible) to get lenders comfortable with the assets if you cannot prove ownership.
If you have clients buying art make sure they document the purchase, even if it's a simple invoice...anything...or they will be sorely disappointed when they attempt to monetize later on.
On to the art market...
Rise of Art-Secured Financing
Warhol or a Wool hanging on your wall may give you great pleasure, but it used to be that art gave you no monetary return—unless you sold it.
No longer. Today that work of art can remain on your wall and at the same time give you cash in hand, allowing you to buy more art, inject some money into your business, cover a guarantee at auction or pay off an urgent tax demand.
Borrowing against art poses specific problems because of its portability, its heterogeneous nature and difficulty in establishing a reliable price. And yet, according to a report published last year by Deloitte and ArtTactic, in 2017 the global total of loans outstanding against art was eye-popping: between $17bn and $20bn.
“Perhaps the biggest driver of growth in this field has been a mindset shift by collectors who once viewed their art purely as a hobby or aesthetic pursuit and now view it as a strategic asset,” writes Evan Beard, a national art services executive at US Trust, in the first Tefaf Art Finance Report, published earlier this year. US Trust has a stunning $6.7bn out in loans secured against art, and other private banks such as Citi or JP Morgan have loan books that also run into the billions of dollars.
“You will probably find that many of the US-based names in Artnews’s top 200 collectors list have borrowed against their art holdings,” Beard says.
While precise figures are difficult to obtain, according to a number of players in the market the vast bulk—in excess of 80%—of the art-secured lending business is in the US.
The Art Newspaper - The Rise of Art-Secured Lending
Belgian Court Seizes USD15 mio Worth of Paintings
A Belgian Court Has Seized 58 Banksy Artworks Worth Over $15 Million From an ‘Illegal’ Brussels Exhibition: It turns out Banksy isn’t the only one hanging up works by Banksy without permission. A Belgian court has shut down a Banksy exhibition in Brussels, known as “Banksy Unauthorised,” as questions swirl around who is the rightful owner of the 58 works on view.
On Thursday at midnight, bailiffs loaded up and drove the works to an unidentified location, where they will be held until the next court hearing in January, according to the Guardian.
Artnet - Belgian Court Seizes USD15 mid Worth of Paintings
Refund Over Fake Art
A federal jury in New Hampshire said a former college professor and her son defrauded a Wall Street titan by selling him a series of fake paintings they claimed were by the modern artist Leon Golub.
After deliberating for about two hours, the civil court jury in Federal District Court in Concord on Thursday ordered Lorettann Gascard, 70, formerly of Franklin Pierce University in New Hampshire, and her son Nikolas Gascard, 36, to repay Andrew J. Hall, a trader and a prolific art collector, $465,000.
The lawyer for the Gascards, William B. Pribis, had no comment and said no decision had been made about an appeal. But the finding seemed to end a saga that began when Mr. Hall, who had amassed a fortune with canny trades in oil markets, started building a personal art collection, including many works by Golub, an American postwar painter whose art explored dire political conditions with expressionistic, heroic-scale figures. Mr. Hall believed Golub’s work was undervalued and due to appreciate.
But Mr. Hall became suspicious in 2015 when he set out to stage an exhibition of Golub’s art at the private rural museum he established near his home in Reading, Vt.
A foundation established to promote work by Golub and his wife, the artist Nancy Spero, examined the paintings and found problems, including no record of the Gascard Golubs in the foundation’s database and “a number of unusual formal characteristics during in-person examinations of the paintings,” according to court papers.
NYT - Wall Street Titan to Get a Refund Over Fake Art
Excited to say that sponsors are starting to roll in for the China Now event this upcoming February in Mayfair, London. We announced this past week that JTC will be joining the event as a sponsor. We have a several other exciting conversations in the works with great people and companies so stay tuned.
There is a WeChat group for delegates, sponsors and people interested in learning more about the event and the subsequent 2019 China Now events.
We've already booked the venue for a spring 2019 Shanghai event and are building the content at this time. The idea is to keep the party the rolling and provide a deeper platform for folks interested in actually visiting Mainland.
Be in touch if you'd like to join the WeChat group.
Until next time,
Blake