Ireland’s NAMA yesterday announced it will fast track its asset and loan sales programme in response to the Irish government’s desire to speed up repayment of the bad bank’s remaining €15bn of senior debt.
By the end of last month, NAMA had redeemed €13bn of the senior bonds used to finance its purchase of the loans it holds, and by the end of this year expects to have redeemed €15bn (50%), in itself two years ahead of schedule.
Minister for Finance, Michael Noonan, requested that NAMA consider whether it could advance repayment of the remainder – due by 2020. NAMA said it has now set a target of redeeming another 30%, or €9bn, by 2016.
The acceleration comes off the back of a strongly improved Irish commercial property market since last summer. NAMA said its priority would be to offload domestic assets, rather than assets in overseas markets like London that recovered earliest, and where it concentrated first. Latterly the bad bank has been selling heavily in Dublin and it will be banking next on the recovery in Dublin rippling out to the rest of the country.
NAMA began to step up the pace of Irish portfolio sales last year, first selling €810m of loans in Project Aspen at a 75% discount to Starwood in April 2013 followed in November by €250m of loans in Project Club at a similar discount to CarVal. Since then, it has sold at least seven more sizeable portfolios, five of them in Ireland. According to Cushman & Wakefield’s latest data, the agency has four more irish portfolios in the market now: projects, Circle, Spring, Acorn and Orange.
In a statement, NAMA chairman Frank Daly said the agency also expects “ultimately” to deliver a surplus to the country’s Exchequer.
“If achieved, this would be a very creditable outcome bearing in mind the very difficult market conditions faced by NAMA in its first three years of operation, not least the fall of 25% – 30% in property prices in the Irish market between the start of 2010 and mid-2013”, he commented.
He said NAMA will also focus on delivering Grade A office space within the Dublin Docklands SDZ and Dublin’s Central Business District, as well as housing “in areas of most need”.
NAMA’s chief executive, Brendan McDonagh added the caveat that meeting the timetable would depend on keeping staff in the recovering market and as the deadline gets closer: “The scale of what still needs to be done is very substantial” he said, “and, in order to achieve best value for taxpayers, it is vital that NAMA is in a position to retain staff with a detailed knowledge of the loans and underlying assets that are to be offered for sale and with the expertise to ensure that sales processes are managed professionally and effectively.
“In that context, we welcome the commitment that careful consideration will be given to any proposal that will help safeguard NAMA’s operational capacity and staffing expertise in light of the potentially significant value implications associated with the loss of key employees.”