Nama plans to offload prime Dublin hotels in New Year

The National Asset Management Agency (Nama) will bring "several prime Dublin hotels" to the market shortly after Christmas to capitalise on significant international interest in the sector, according to a senior Nama executive.

Patrick Ryan, a senior adviser in the agency's hotels division, told the Hotel Property Conference in Dublin yesterday that it has raised €160 million in hotel asset and loan sales to date.

He also strongly rejected criticisms from the conference that the agency was driving down rates in the industry, or that it has too much influence on the sector.

Mr Ryan confirmed that Nama controls 10,900 hotel rooms, which is close to a fifth of the country’s entire stock.

"We do not have a dominant position in the market," said Mr Ryan. The Competition Authority "has twice investigated" Nama's influence on the market and found it has no case to answer.

He also denied that Nama supports so-called zombie hotels, loss-making properties that would otherwise close, but are propped up to sell cheap rooms and generate cash. “Eroding a hotel’s earnings potential is not in our interest,” he said at the conference, which took place in the DoubleTree by Hilton hotel, formerly the Burlington.

He said that the agency originally transferred loans attached to 134 Irish hotels. Mr Ryan said of these, 108 of these are still operating; 11 have closed down; two, including the Kilternan hotel in Dublin, never opened; and 10, including the €35 million Trinity Capital in Dublin, have been sold.

Nama has taken “enforcement action”, such as appointing a receiver, to 27 hotels. The agency controls 34 hotels in the Dublin area, 29 in Munster, 15 in Connaught, four in Ulster, with the balance in Leinster outside of Dublin.

Referring to the decision to bring more hotels to the market in Dublin in the new year, Mr Ryan said the agency “recognised the need to do this selectively”.

“The focus will be on prime Dublin assets in the short term,” he said.

Nama has received inquiries about its hotels mostly from “private equity, funds and high-net worth individuals”, he added.

The agency will listen to applications from hotels under its control for finance for capital expenditure, he said, and it will provide to prospective purchasers up to 60 per cent of the price in vendor financing.

“We finance at a rate of about 4 per cent above Libor [an interbank lending rate], and we would look to get our money back within three to five years.”

He said the agency was also looking at rolling the loans of several hotels together into portfolios, following demand from international buyers.

“But it is difficult for us, because the investors say nobody is interested in portfolios of less than €100 million. A lot of our hotel loans are quite small.”

Mr Ryan was also highly critical of public criticism of international investors coming to Ireland to snap up property assets at low prices.

“We should be at the airport rolling out the red carpet for these guys,” he said.

He also criticised the commercial rates charged by local authorities to hotels. “It is an absolutely savage burden. It beggars belief.”