NAMA seeks downgrade for hotels to boost profits
NAMA will shortly have indirect control over 100 Irish hotels and wants to change how many stars some of the properties have in attempt to return them to profit.
The agency revealed late last year it had bought loans backed by 87 Irish hotels, but it is understood this will shortly go over 100 as the agency draws up a radical plan to turn around the fortunes of some properties.
The agency has asked Patrick Ryan, the former UK corporate financier who specialises in hotels and pubs, to draw up the plan.
One aspect of the plan will focus on some hotels' star ratings, so they can cut their costs and move into a different segment of the market.
The traditional grading system for hotels, while not a problem during the boom, has now been identified as a major issue. Too many five star hotels are situated in the wrong segment, while other hotels with lower star ratings need to move.
Some hotels who hold four and five star ratings no longer have the resources to meet those standards and need to shift down in price, helping them to move back into profit.
The lower occupancy rates in the Irish hotel industry are at five-star properties in the south west, according to a report last year from economist Dr Peter Bacon. Some of these properties are on average only 41pc full during the year, the economist found.
Overall, NAMA has 139 hotel loans in its portfolio, with 37 in the UK, five in Germany, five in France and two in the Czech Republic. There are also properties in Belgium, Malta and Spain.
NAMA is expected to publish its latest quarterly report next week giving an update on its performance.
The agency has stepped up its enforcement activities in recent weeks with action developers like Bernard McNamara and Paddy Shovlin.
The agency has however reached a memorandum of understanding with Treasury Holdings, although this is described by that company as a basis for "further discussion" with NAMA. Other developers have requested NAMA to roll up interest for them so they can wait until assets they own rise in value.
North County Dublin developer Gerry Gannon is one of the developers looking for this facility.