BATMAN IN NAMALAND
It wasn’t until Paul Clarke smiled on my TV screen that I realised I’d been utterly hoodwinked. And yes, I probably should have known better to believe that the Lord Mayor of Belfast, the fantastic Councillor Máirtín Ó Muilleoir, had donned a cape and mask in a bid to defeat tyranny and fight for justice.
But like many viewers of the news that April fool’s Day – I was utterly hoodwinked. It happens to the best of us – and unfortunately many would now argue that NAMA, the Republic of Irelands bad bank, has been hoodwinking many of us over the past few months and years.
It has become very clear of late that NAMA are upping the ante in terms of the sale of various loans within their portfolio and winding down their entire loan book.
Michael Noonan, the Finance Minister with ultimate responsibility for NAMA, has gone on the record in the last fortnight telling us that the sale of loans may speed up in the foreseeable future, as the Irish property market is now hot again. He asked the agency to come back to him with reports on the basis that their entire book is wound down by Christmas 2015 – such a turnaround from the original 10 year business plan which was supposed to come to a close in 2020.
Just a quick reminder – the Irish government sold the NAMA business plan in 2009 to its people on the basis it would help the banks start lending again and also they would return a tidy profit of over €6bn based o just over an investment of over a cool €30bn. I am not trying to be funny but the dogs in the street know where our banks are at currently in terms of lending, and in terms of a €6bn profit for the organisation – that really is a distant pipe dream as we sit today, with the most recent projections anticipating the agency to only break even at best.
NAMA is now engaged in a loan sale process it said it would not entertain at one time. The plan was very clear, which was to set up an agency who would work out the property loans (over €70bn) throughout a 10 year lifespan. So when / where did it all go so horribly wrong?
Off course if you were to listen to the NAMA PR machine they would have you believe that the organisation has been a huge success and they are ahead of schedule. I think there is more chance of David Moyes getting his Man United job back than the people of Ireland buying into that philosophy. So the question has to be asked - who has really benefitted?
Enter the American Investment companies, who have been circling our skies since 2010, with large chequebooks and great chat. Apollo, Starwood, Kennedy Wilson, Cerberus Capital and Fortress to name a few. These guys are the movers and shakers of the Loan markets across the globe and all of these companies and many more are now well represented across the island of Ireland.
In the last few weeks the largest property deal ever recorded in this country completed. Cerberus Capital Management, a New York Investment company acquired the complete NAMA Northern Ireland loan book – at the stroke of a pen. It’s been reported that they paid in excess of £1bn for loans which totalled just over £4bn in 2009. I like most people have welcomed this move, however unlike many others; I do not see it as a get out of jail free card for the Northern Irish Investment companies. More an opportunity for them to engage in a real process, where they may just come out to fight another day. Time will tell.
The bottom line is if you are based in Northern Ireland and now owe Cerberus Capital the money, you are in a much better position than being based in the Republic of Ireland and owing NAMA the money. The truth is it should not be like this but due the fact NAMA is a politically driven animal and a law onto itself, that’s unfortunately the way it is.
The warning signs first appeared when Peter Bacon, the architect of NAMA very alarmingly distanced himself from the organisation over 18 months ago. He advised the agency to sell the loans to property companies, people who know what they are doing essentially. I suppose with the recent change in policy regarding the loan sale exits, this is in fact what they are now doing.
The point to note here is that these are inconceivable times for the country as a whole as the majority of our real estate changes ownership to predominantly the USA investment funds. These guys will not be here efor the long hail and once the markets settle, banks return to a form of health and people can borrow again, they will sell us the property back again – just like that.
Its best to fasten your seatbelt as there will be many more twist and turns before we see any form of normality return to the property market in the country.
I’ll watch this space with interest, and wonder maybe if we might need Batman (and maybe Robin) to come to all our rescues.