Wednesday 17 January 2018

Nama the 'key vendor' in European loans sell-off

While Nama has been heavily criticised at home, its model is widely seen as a success overseas.
While Nama has been heavily criticised at home, its model is widely seen as a success overseas.
Peter Flanagan

Peter Flanagan

NAMA will be the "key vendor" of European property assets over the next two years and is likely to be far more significant than other European bad bank over the short term, according to property giant Cushman & Wakefield.

Unlike Spain's Sareb and Britain's UKAR, Cushman & Wakefield (C&W) points to Nama's own target of redeeming 80pc of its bonds by the end of next year and being complete by 2018 as being the key driver of upcoming sales.

"The Irish asset management agency is currently [about] 29pc through its deleveraging plan.

"In comparison, both UKAR and Sareb have relatively long term strategies due to their residential nature and the enormity of their portfolios," C&W say.

The report states that European bad banks - both public and private - have taken on assets with a par value of some €233bn since the crash.

Nama was the third biggest of those asset managers with assets worth €73.4bn. However, when taking into account IBRC's €21bn worth of assets and Ulster Bank's Irish loans which are wrapped into UKAR, more than a third of all assets managed by Europe's bad banks originated in Ireland.

Large US firms remain the biggest buyers of assets from the bad banks. LoneStar's decision to buy most of the IBRC portfolio means it has taken up nearly a quarter of all loans offered for sale by European bad banks.

The investment firm CarVal has teamed up with Goldman Sachs on several deals to snap up 18pc of assets. Cerberus, which has hit the headlines in recent weeks over its purchase of the Project Eagle portfolio of Northern Ireland property, has taken on 18pc of assets.

There have been relatively few major sales completed so far this year. Project Rathlin - a portfolio of Northern Irish loans tied to RBS - and Project Octopus - a loan portfolio tied to Germany's Commerzbank - are the only sales worth over €1bn. However that will change over the rest of this year, with over €30bn worth of sale processes currently taking place, says C&W partner Frank Nickel.

"It would be a mistake to assume that activity in the Europan commercial real estate loan sales market is subsiding.

"Behind the scenes there has been a flurry of preparation work as key vendors line up 'mega deals' for the second half of the year.

"Investors will have plenty of distressed opportunities," he said.

While Nama has been heavily criticised at home, its model is widely seen as a success overseas. So successful that other countries may now copy it, albeit on a smaller scale.

"Europe can anticipate the establishment of further [bad banks] by the end of 2016," claims C&W's Federico Montero.

"However, due to the smaller nature of the related local banks, it can be expected that the newly former asset management agencies will not have the same scale of troubled assets associated with the likes of Nama or Sareb."

Irish Independent

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