Monday 5 December 2016

NAMA to pocket €150m profit on UK property deal

Emmet Oliver Deputy Business Editor

Published 09/03/2011 | 05:00

NAMA is in line for a profit of almost €150m on a property deal in central London, as the agency begins offloading some of its trophy assets in the UK market.

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A property in the affluent Grosvenor Square area, near Oxford Street, is the asset at the centre of the deal.

The loan used to buy the property was originally given out by Michael Fingleton's Irish Nationwide, but was transferred to NAMA last year, making the agency the legal owner of the loan.

It is understood a UK consortium behind the property, at 20/21 Grosvenor Square, has now paid the entire loan back to NAMA, leaving the agency sitting on a major profit.

NAMA declined yesterday to comment on the details.

According to a report in the UK trade journal Estates Gazette, the consortium will pay NAMA back the entire loan Irish Nationwide originally gave out, about €290m.

However, it is understood NAMA only paid half this amount when it bought the loan from Irish Nationwide. If that is the case, it means a profit of almost €150m for NAMA.

It is estimated that 25pc of NAMA's assets are in the UK, which means it has access to assets worth €19bn there.

The UK market has recovered strongly in the past two years while the downturn here has been more severe.

As a result, NAMA is likely to do a number of deals in the UK this year as it tries to break even or make a profit by the time it is wound up in about 10 years.

Until recently, the Grosvenor Square building was the headquarters of the US Navy in Europe, but is far better known from the 1940s when it was the European headquarters of Dwight Eisenhower, supreme commander of the Allied forces.

The building is close to the US Embassy and some of the city's most upmarket restaurants, including one owned by celebrity chef Gordon Ramsay.

The prime location is likely to mean the consortium was able to pay off NAMA by doing a refinancing deal with another bank.

NAMA refused to comment on suggestions it has also won the right to a 'claw back' arrangement, where if the property is sold in future to another buyer at a higher price than NAMA was paid, it will get a share of the proceeds.

The agency is also negotiating to sell its interest in a property in Mayfair. In this case, the original loan was advanced to developer Derek Quinlan.

NAMA disclosed its latest performance last week, showing that 75pc of its loans are "non-performing", meaning they are in arrears of some kind.

However, it is planning to restructure many of these loans with developers -- the interest rates on loans will be lowered and the term of the loans extended.

As a result of this, the proportion of so-called "non performing'' loans will drop.

Development

While NAMA is selling off loans on prime property, the land and development assets it owns are likely to be kept off the market for some time.

The amount of loans the agency is taking will also fall.

This week, opposition parties said the agency would get no further loans, despite the IMF/EU insisting that those worth less than €20m should be moved into the agency.

Irish Independent

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