NAMA unveils funding plans to finance property deals
NAMA, the state loans agency, is proposing to lend directly to overseas pension funds, sovereign wealth funds and private equity groups so they can buy commercial property here in a bid to get the market moving again.
The agency admitted yesterday Irish investors were already too exposed to property and it was time for a new approach, involving NAMA as a lender in its own right. NAMA is prepared to lend to potential buyers once they put up 25pc to 30pc of the purchase price, with NAMA funding the remainder, a process known as vendor or 'stapled' finance.
NAMA said foreign investors had "hardly featured'' in the last 10 years in the Irish commercial property market and would not return without funding being made available on attractive terms.
"The key constraint, as we see it, is neither supply nor demand but liquidity,'' said NAMA chairman Frank Daly in Cork yesterday.
"In terms of the entities to which we would make . . . debt available, clearly we would have to be satisfied as to their track record, reputation and capacity to repay,'' said Mr Daly.
NAMA is only planning to use the arrangements for commercial property with a rental flow, with undeveloped land and ghost estates to be handled separately at a later date.
"The assets involved are likely to be investment assets which are well-tenanted and income-producing, for instance, large office buildings, shopping centres and other retail and industrial properties,'' said Mr Daly.
Once a buyer puts up 25pc to 30pc of the purchase price, the loan from NAMA will be paid down over a five- to seven-year time horizon.
NAMA said such deals would allow it to replace risky borrowers with better quality borrowers, with the agency getting a 25pc to 30pc cash payment upfront.
Mr Daly admitted the arrangements would not mean any new money being used by NAMA.
"In reality, it does not require any new money from NAMA; it is a recycling of existing debt but achieving a significant cash payment upfront,'' he said.
Meanwhile, Mr Daly also revealed that NAMA would soon attempt to operate more transparently, putting the name of assets its receivers are taking over on its website.
However, the agency said it would be against the law to reveal the names of borrowers publicly.
It said under data-protection rules customer names could not be disclosed by a bank or NAMA. While this could be changed by amending existing legislation, it was possible it could be challenged on constitutional grounds.