Business Irish

Sunday 17 December 2017

NAMA defends timing of UK property sales

The Treasury Building on Grand Canal Street Lower where NAMA is based
The Treasury Building on Grand Canal Street Lower where NAMA is based

Peter Flanagan Commercial Property Editor

The National Asset Management Agency has defended itself from criticism that it should have delayed UK property sales to benefit from recent price spikes in London.

Battersea Power Station was sold by NAMA and other investors for £400m (€483m) 18 months ago, but the site has since been named repeatedly as an asset that has gone up sharply in value since.

It is now being developed into a high-profile area for apartments and offices.

NAMA, which was created by former Finance Minister Brian Lenihan in 2009, began selling property in the UK long before it sold property here.

That strategy meant that NAMA could begin making some money but profits could have been higher if the agency had waited until the recent hikes in prices in the English capital. London property prices are now far above their levels before the 2008 crash and, much like Dublin, prices there bear little resemblance to the rest of the country.

"In some ways NAMA had its hand forced in London because during 2011 in particular the Irish market was frozen," one property agent said. "That meant if NAMA wanted to start selling, London was the obvious place," said the agent.

CONCERNS

London was named earlier this week as the most desirable city in the world for property investments, and Savills estimates that foreign buyers pumped more than £7bn into the city's housing market last year.

A spokesman for the agency said NAMA had no concerns about how it has deleveraged in London. "The timing of sales has been consistent with NAMA's policy of a phased and orderly programme of disposals and the requirement to generate cashflows to meet its milestone, which was adopted by the troika, of repaying €7.5bn of its senior debt by the end of 2013," he said.

"Claims, from unnamed sources, that NAMA may have sold London assets prematurely do not stand up to serious scrutiny. The fact that the assets were sold at sub-5pc yields suggests that there was limited upside to be gained from delaying sales.

"The fact that there is now widespread discussion that property prices in London may have entered a 'bubble' phase supports NAMA's strategy of a phased sale of London assets," he added.

"Europe and the US were in the midst of major economic crisis, especially in the 2010 to 2012 period, and London was seen as a safe haven for investors. NAMA used this opportunity to sell assets at very attractive yields."

Irish Independent

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