Nama plans final €500m buyback of bonds

Agency plots to discharge €4bn in loans and assets ahead of final senior bond buyback

 Carton House Hotel, Spa and Golf Resort in Co Kildare. File photograph: Alan Betson

Carton House Hotel, Spa and Golf Resort in Co Kildare. File photograph: Alan Betson

 

Nama has used an auction house to sell smaller properties in recent months, as it plots ways to offload its remaining €4 billion in loans and assets.

The move comes as the “bad bank” plans on October 25th to redeem the remaining €500 million of the €30.2 billion in government-backed bonds it used to pay for toxic loans from banks during the financial crisis.

The final senior bond buyback is occurring three years ahead of an original schedule and will expunge taxpayers’ remaining liability relating to the agency, which was set up in 2009.

“Since inception, the Nama board, mindful of the wider impact on the financial standing of Ireland, has unwaveringly focused on eliminating this senior debt,” said Frank Daly, chairman of Nama. “While this job is done, we still need to maximise the return on our remaining portfolio of close to €4 billion and we will continue to progress our [Dublin] Docklands and residential delivery.”

He said Nama “remains firmly” on target to deliver a lifetime surplus for the State of €3 billion, after it repays €1.6 billion of junior debt to banks, due in March 2020 at the earliest.

Speaking to The Irish Times, Nama chief executive Brendan McDonagh said the agency started last month to put smaller assets, worth less than €1 million each, up for auction through a company called BidX1, formerly known as Allsop Ireland. The auction firm has sold about €1.1 billion worth of Irish property since it was set up in 2011.

Mr McDonagh said Nama will probably put about €10 million of property into BidX1’s monthly auctions for the foreseeable future, marking an evolution from the agency’s focus in recent years on multi-billion-euro loan portfolio sales.

The agency is also continuing to reduce its exposure to larger assets.

The owner of Carton House Hotel, Spa and Golf Resort in Co Kildare is currently selling the property and business for €60 million under a “consensual agreement with Nama”.

Nama-appointed receivers are also selling the Gibson Hotel in the Dublin Docklands for about €87 million.

In addition, the agency is marketing The Square shopping centre in Tallaght, Co Dublin, reportedly valued at well in excess of €300 million.

All three sales “are likely to complete before the end of 2017”, Mr McDonagh said.

Lifetime surplus target

While Nama has upgraded its lifetime surplus target a number of times in recent years due to a recovering property market, Mr McDonagh said the scope for further upward revisions was “marginal” as the agency had been caught by a Government move last year to tax property in certain special-purpose vehicles.

This resulted in a €159 million tax charge in 2016 and another “big bill this year”, said McDonagh.

“The reality is that the Government gets the upside either way – either through taxation in the near term or a dividend at the end,” he said.

Since Nama was tasked by the government in 2014 with helping to deliver more homes in Ireland to alleviate undersupply, the agency has delivered almost 5,600 homes, with a further 3,000 under construction, as it provided funding to its debtors to build out land, according to figures published by the Department of Finance on Tuesday. A further 6,400 units have planning permission.

Meanwhile, Nama expects to provide outsourced services to the Government’s planned Home Building Finance Ireland (HBFI) entity, which is aimed at providing up to €750 million of loans to non-Nama developers planning to build homes.

HBFI was announced by Minister for Finance Paschal Donohoe on Tuesday in his Budget 2018 speech.