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NAMA will find it tough to sell Irish properties

Bloomberg reported this week that NAMA was close to agreeing the sale of €300m of property-backed loans.

On the face of it, this is good news for taxpayers, who guaranteed the almost €32bn which NAMA paid for the Irish banks' bad property loans.

This comes on top of last month's announcement from the state "bad bank" that it hoped to offload €250m of property loans every quarter this year, so €1bn for the whole of 2014.

Unfortunately, there may be less to this apparent good news than meets the eye.

When announcing the planned sales, all NAMA would say is that the assets being sold were in Ireland and the UK.

In practice, this almost certainly means that the vast bulk of the assets being sold will be across the water.

At the end of 2012 – NAMA has yet to publish its full-year 2012 results – 54pc of NAMA's assets were in the Republic while 36pc were in the UK.

However, 80pc of the proceeds of NAMA asset sales have come from the UK since the organisation was established in 2009.

It would appear that NAMA has been relying on the booming London property market (almost two-thirds of its UK assets are in that city) to keep the wolf from the door.

While it makes perfect sense for NAMA to sell its UK assets first while it waits for the Irish property market to recover, this huge mismatch between the location of its sales and the location of its assets can't continue indefinitely.


If things continue as they have done, NAMA will run out of UK assets while still having a large portfolio of unsold – and possibly unsaleable – Irish assets on its books.

So is there any sign of a recovery in the Irish commercial property market?

Unfortunately, it is even less transparent than the residential property market.

While there have been some sales of better-quality properties in Dublin and some of the other large cities, most deals overseas involve "vulture" funds buying distressed assets on the cheap.

These bottom-feeders are likely to take their profit and sell as soon as the market shows any signs of recovery.

Meanwhile, there is very little sign of purchases by domestic buyers.

What seems to be happening is a mirror-image of what is taking place in the residential property market – a handful of cash-buyers is chasing a few desirable assets in good locations but nothing at all happening in large swathes of the country.

If this is in fact the case, NAMA will find it very difficult to sell more than a tiny proportion of its Irish properties this year.

With the 2020 deadline – by which point NAMA is supposed to have finished its mission and repaid its debts in full – fast approaching, that's not good news for the much put-upon Irish taxpayer.

Meanwhile, in separate but somewhat related news (which may or may not be good), flamboyant property developer Johnny Ronan is seeking to raise €250m from investors to fund a comeback.


Sources close to Mr Ronan have said that he intends to use part of the money he hopes to raise to fully repay his personal exposure to NAMA.

Unfortunately, this does not seem to include most of the €1bn which Mr Ronan's former company, Treasury Holdings, owed NAMA when it went into receivership on 2012.

Will he use the €250m to help kick-start the Irish property market, or will he too place his bets on the London property market?