€31bn in small loans 'will be NAMA's biggest worry'

Laura Noonan and John Mulligan

September 30 2010 04:45 AM

THE "serious issues" for the National Asset Management Agency (NAMA) will stem from the €31bn of smaller loans it will take on later in the year and not from the big portfolios already transferred, the boss of Jones Lang LaSalle Ireland warned yesterday.

Addressing the 2010 Corporate Restructuring Summit, estate agency chief John Moran also said that even though house prices had already fallen by 60pc he "didn't believe for a moment" that the market had bottomed.

But there was some brighter news, as experts described the massive private equity interest in Ireland and predicted significant investment once the rules of engagement for dealing with Nama were laid out.

Nama has already taken over €15.28bn of loans at a discount of 50pc and another €11.93m at a discount of 55.6pc, all drawn from the country's biggest borrowers, who will account for about €50bn of the agency's €80bn portfolio.

"The top 100 borrowers at least have some high calibre real estate," Mr Moran said yesterday. "The serious issues are with the other €31bn [owed by smaller borrowers]."

The estate agency boss declined to be drawn on whether the €31bn in smaller loans would necessarily be subjected to higher discounts than the loans held by the major developers.

Future

Mr Moran was more forthcoming on the future of the housing market, suggesting prices had "at least another 10pc or 15pc" to go.

"If you think we're at the bottom of the property market in Ireland, we don't believe that for a moment," he said, adding that his agency believed house prices had actually fallen by 60pc and not the 30pc suggested by some indexes.

Mr Moran said the falls had made Irish residential property attractive to some foreign investors.

Andrew Wilkinson, head of European Restructuring with Goldman Sachs, also testified to the international interest in the Irish market, describing the opportunities the market presents to private equity investors.

Mark Dewar, senior managing director with the London offshoot of FTI corporate finance, said that while there was international interest in Ireland, "distressed investors are looking for far higher discounts than Nama is willing to take".

The commentary came as a senior Nama official revealed that the agency expected to acquire loans nominally valued at over £3.3bn (€4bn) held on assets in Northern Ireland.

The figure was revealed yesterday by NAMA director Peter Stewart, who described it as a "qualified estimate".

"For those builders, developers and also land traders and speculators who got caught up in the frenzy, unfortunately there is going to be financial pain," Mr Stewart said.