* Completes purchase of loans from banks with 2 billion euro
* Offering financing to commercial investors
* Has sold 4.6 billion euros of assets so far
* To appoint a panel of loan sale advisers
(Adds profits from overseas sales, competition from banks,
By Conor Humphries
DUBLIN, Oct 26 Ireland's state-run National
Asset Management Agency (NAMA) is offering financing to help
offload its commercial property portfolio, but said deleveraging
by banks and a proposed law on leases was making life difficult.
NAMA, created to purge Irish banks of nearly 75 billion
euros ($103.6 billion) of risky land and development loans, is
one of the world's largest property groups and needs to revive
Ireland's moribund commercial property sector to avoid further
writedowns to its portfolio.
In a bid to kickstart the market, the agency is willing to
provide up to 70 percent vendor debt finance if significant
equity capital is provided up front, Chairman Brendan McDonagh
told a parliamentary committee.
The product will target pension funds, insurance companies,
private equity firms and sovereign wealth funds, he said.
McDonagh said NAMA had sold over 4.6 billion euros' worth of
assets so far this year and had made a profit of between 12 and
15 percent on the 80 percent of that book sold overseas.
However, sales in Ireland were complicated by foreign banks
deleveraging their Irish assets, he said.
"It's a very difficult market. Asset markets are declining
rather than increasing. Asset values have to increase by 10
percent above 2009 before we see any profit," McDonagh said.
"From our experience, there is no pot of gold out there."
NAMA is under pressure to produce a profit at the end of its
10-year lifetime after its heavy discounting of the loans it
acquired caused huge holes on the banks' balance sheets that the
taxpayer was forced to plug.
The agency lost 1.18 billion euros last year on the back of
a 1.5 billion euro impairment charge. The agency expects to post
an operating profit before impairments of over 600 million euros
McDonagh declined to comment when asked if the impairment
could reach 1 billion euros.
As part of an EU-IMF bailout, NAMA is committed to selling
25 percent of its loan book by the end of 2013 to help it meet a
target of repaying 7.5 billion euros' worth of debt by that
So far, NAMA has repaid 1.55 billion euros in debt, and
McDonagh said the agency expected to make a substantial
additional redemption of securities before the end of the year.
COSTLY RENT LAW
With a portfolio that ranges from London skyscrapers to
farmland in the Irish midlands, NAMA has recently acquired an
additional 2 billion euros' worth of loans, completing its
purchase of badly impaired property loans and bringing the
nominal value of its portfolio to 74.2 billion euros.
The price for the 2 billion euro transfer has yet to be
finalised, but it is expected to be subject to an average
discount of around 58 percent, McDonagh said, meaning that NAMA
will have shelled out close to 33 billion euros for all loans.
The government's proposal to ban upward-only rent reviews by
Irish commercial landlords, which have left retailers paying
boom-time rents, could cut over 20 percent from values, costing
NAMA "a couple of billion" euros, McDonagh said.
As a result, "we wouldn't be able to pay all of the NAMA
debt", he said.
NAMA is considering offering incentives to some of its 850
debtors, including some of the country's most high-profile
property developers, to encourage them to beat the financial
targets set by NAMA. Around 200 developers are drawing down
salary from NAMA, at an average of 70,000-100,000 euros, to
manage their assets, with two on 200,000 euros per year.
But there is little prospect that the developers will turn a
profit, NAMA Chairman Frank Daly told the committee.
"I don't really see any portfolio in NAMA that'd result in
a big pay day for any developer in three, four, six years," Daly
($1 = 0.724 Euros)
(Writing by Carmel Crimmins; Editing by Will Waterman)