Tuesday 24 October 2017

NAMA now kingmaker for some 35 struggling hotels

Half of new transfers to bad bank are foreign projects, latest figures show

Laura Noonan

Laura Noonan

THE National Asset Management Agency (NAMA) is now kingmaker for 35 Irish hotels after a dramatic surge in the level of hotel-linked debt parked with the bad bank.

Figures on the second batch of NAMA transfers also show a surge in non-Irish debt.

Just 50pc of the loans sent over in the second batch were linked to Irish projects, compared with a 66pc contingent in Tranche 1.

Loans for projects in the UK and the Channel Islands accounted for 44pc of the second tranche transfers, significantly up on their 30pc share of the first batch.

A quarter of the entire €11.9bn sent across was secured on 31 hotels, including 22 in Ireland. The picture is in stark contrast to the first tranche of transfers, when just 4pc of the €27.2bn transferred over was secured on hotels.

The latest figures are understood to be inflated by the transfer of a sizable debt relating to a UK hotel group.

The extra 22 Irish hotels brought into NAMA's reach by the latest transfers brings the total number of NAMA-linked hotels to 35, while NAMA also has a claim on 13 non-Irish hotels.

The State's bad bank doesn't own or directly operate the hotels, but it can have a major say in their futures.

Developers will be required to include detailed strategies for the hotels when they present their business plans to NAMA over the coming months.

NAMA will have the power to interrogate aspects of the plans, and can also suggest borrowers sell their hotels to pay debts.

Since the hotels are being used as security for loans, NAMA is also empowered to seize the hotels in the event of developers defaulting on their debts.

In its business plan, NAMA hints that it may close hotels where a "number of NAMA-funded hotels are competing in a location where there is only potential for a single facility".


"NAMA will make its decision based on the optimal commercial outcome," the business plan adds.

NAMA's growing influence in the hotels sector comes amid dire warnings from the Irish Hotels Federation (IHF) about the detrimental market-impact of hotels artificially propped up by banks.

The IHF is expected to formally ask the Competition Authority to probe NAMA's position in the market once the bad bank begins seizing hotels.

Yesterday's data on the second tranche of NAMA transfers also revealed that Anglo Irish Bank has taken a worse-than-expected 61.9pc writedown on it debt.

Anglo got securities worth just €2.57bn for the €6.75bn of loans it transferred over, an outcome significantly worse than the 55pc discount on Anglo's Tranche 1 transfers.

The second batch of transfers came in at an average discount of 56.5pc, against the 50pc discount of Tranche 1, largely due to higher discounts at Anglo and Irish Nationwide.


Figures for all institutions bar Anglo were released in August, with nationalised Anglo delayed due to the administrative burden of dealing with its massive transfers.

Across sectors, development remained the dominant category in the second batch, with 43pc of all loans secured on developments less than 30pc completed, compared with 52pc in Tranche 1.

Irish Independent

Also in Business