Monday 24 July 2017

Interest in Irish loans is waning says Nama dealmaker

NAMA chief executive Brendan McDonagh with chairman Frank Daly
NAMA chief executive Brendan McDonagh with chairman Frank Daly

Peter Flanagan and Colm Kelpie

IT is getting much more difficult to sell Irish loan portfolios to international investors as interest in the country wanes, according to one of the most important figures in the property industry.

Cushman & Wakefield head of European loan sales Federico Montero, said the market was "getting tougher and tougher" to sell Nama portfolios.

"Nama was very successful because, among other reasons, it was able to start selling in 2010 when it and the UK almost had the market to itself," he told an investor conference in London run by industry magazine 'Private Equity Real Estate'.

When asked if there was still an opportunity in Ireland, Mr Montero said it was "getting tougher and tougher" to sell loan portfolios.

"It is a bit like Spain: if you are investing now, the perception is you are late," he claimed.

Mr Montero is a key figure in the European loan market, and has orchestrated the sale of a number of Nama portfolios.

He is currently in charge of selling the Project Ruby and Emerald portfolios of Nama loans, which have a par or face value of €4.7bn. Given the quality of those portfolios, however, they are likely to sell for as little as €800m.

Overall, he has been involved in European loan sales with a nominal value of as much as €30bn.

His comments reflect a wider sense of little interest in the Irish market for now.

A poll carried out at the conference showed nearly 80pc of attendees - mostly senior figures in private equity - did not plan on investing in European loan books this year. That is a contrast to previous years.

They also contrast with suggestions that current Nama sales are thriving because of concerns around Brexit in the UK and investors' ability to take control of assets in the UK and Spain, where enforcement laws are much different to Ireland's.

It comes as Nama reported a profit for last year of €1.8bn - up from €458m the previous year.

Cash amounting to €9.1bn was generated during the year, overwhelmingly from asset disposals.

Publishing its annual report, the agency said the strong cash generation during the year allowed it to redeem €5.5bn of senior debt.

Total senior debt repaid now stands at €24.6bn.

Income for the year increased 127pc to €1.9bn, while the agency reported its first full-year impairment write-back, bolstering the books by €86m.

Chief executive Brendan McDonagh said the agency was on course to deliver a significant surplus for the taxpayer.

"This was an outstanding performance that delivered a very substantial profit," he said.

Chairman Frank Daly said Nama could deliver a surplus to the taxpayer of around €2.3bn.

"Nama's successful delivery of its mandate is good news for the taxpayer. We plan on being just as successful in delivering major development projects in the Docklands and thousands of homes for people who need them," he said.

Nama said it has funded the construction of 2,800 homes since 2014 and that a further 3,000 Nama-funded homes are under construction.

Planning permission has been obtained for an additional 5,100 units, the agency said.

Regarding Dublin's Docklands, construction has started on sites that will deliver 1.2m sq ft of commercial accommodation and 345 new homes, Nama said.

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