Bacon urges sale of Nama loans

NAMA’S MAIN architect believes that the State assets agency will not recover the €31 billion it spent on buying property loans from the Irish banks.

Economist Peter Bacon, who originally proposed establishing the National Asset Management Agency as a way of restoring the Irish banks’ balance sheets in the wake of the 2008 property collapse, said yesterday that part of it should be sold to an international or private equity investor, which would give the taxpayer a better return.

Mr Bacon was launching a report commissioned by property company Treasury Holdings, which is involved in three High Court cases against Nama.

A spokesman for the agency itself said it would not comment yesterday, but he noted that Mr Bacon’s consultancy was commissioned by an organisation engaged in litigation with the agency.

The economist warned it was “inevitable” Nama would not recover the €31 billion it paid the lenders for their distressed property loans.

Mr Bacon said yesterday the agency is selling assets that it has taken over too quickly, and argued that it should be holding properties in strong markets such as London for longer periods instead of disposing of them.

“How can you achieve long-term capital values for properties that you are taking over if you find that you have to realise €7.5 billion by the end of the year?

“The only way to achieve long-term capital value is to hold and grow those assets until they achieve their potential,” he said.

Nama bought almost €80 billion worth of property loans for €31 billion. About two out of three borrowers are working with the agency and have come up with business plans designed to repay their original loans.

In the other cases, Nama has appointed receivers to properties and has begun selling them. Last week, administrators appointed by the agency and Lloyds Bank began exclusive talks on the sale of Battersea Power Station to Malaysian bidders SP Setia and Sime Darby.

Real Estate Opportunities, which Treasury part-owns, originally paid €600 million for Battersea in December 2006.

Mr Bacon’s report, A Contribution to the Debate on National Economic Recovery, recommends the Government establish national mortgage and investment banks to help kick-start property and provide funds for business. It points out the key to demand is consumer confidence, and the key to that is getting the housing market growing again. Treasury chairman Richard Barrett said he hoped it would make a valuable contribution to the debate on recovery.