Recently in Loan workouts Category

Now it has been given full EU approval, the giant Irish National Asset Management Association is starting to creak into action. By the end of this month, the loans of the top 10 borrowers within the €77bn scheme are set to be transferred.

Of this figure, around €16bn of loans are secured against UK property, and questions are starting to be asked about the property these loans are secured against. There is an increasing feeling that sales are far from unlikely. A lot of the land and development loans within Ireland are secured against farmland which, following the property crash, will never be developed out. The feeling is that in order to make a profit for the Irish taxpayer, the good stuff has to be sold, and probably sold soon. The good stuff that can be found in the UK.

A little taste of the debate going on across the Irish Sea can be found in the report here, from RTE, Ireland's equivalent of the BBC. The NAMA report starts at 14.35 through the video. You can have a chuckle at my good self about a minute in.

So, something of a black Thursday for HBOS's joint venture partners. Two companies backed by the bank's Uberior joint venture division were put into administration today.

Now, it is important not to overstate the importnance of the timing. This is likely not a sign that HBOS - now part of Lloyds Banking Group - came back into work on Monday with a big axe and orders to cull their property partners. Discussions between HBOS and the two companies in question - Kilmartin and a subsidiary of Thornfield - have been going on for more than a year, and it is pure coincidence that both collpased on the same day.

What it does point to though, is the fact that Lloyds, after plenty of internal reshuffles and discussions on strategy, now have their ducks in order.

As the headline states, lenders are still cautious about the commercial property sector, according to the first ever Jones Lang LaSalle report into bank lending expectations - but there is definitely reason to be cheerful in this report.

William Newsom at Savills pioneered this kind of research into which banks were in the market, and how much they were willing to lend, and his benchmark definition of a 'big ticket' deal always used to be £100m.

In the dark days of 2009, commercial property was such a dirty word for lenders that no banks were willing to lend that much, and the definition of being 'in the market' moved to just £25m.

So the fact that JLL's report shows that 30% of banks are willing to lend between £50m and £100m, and 12% of banks are willing to lend more than £100m is actually a cause for a little bit of cheer - the goalposts are being moved back on to the right pitch.  

Last week, the Treasury revealed a breakdown of the £282bn of asset that Royal Bank of Scotland will ringfence through the Asset Protection Scheme.

As far as property goes, the extent of the loans that RBS will put into the scheme paints a shocking picture of the extent of the problems within its loan book.

It is putting £69bn of property loans into the scheme, which equates to more than three quarters of its £91bn property loan book. And as the Treasury stated in its 100-page analysis of the RBS assets, all of the property loans going into the scheme have either defaulted already, are in the middle of a restructuring process to avoid a default, or are on its high-risk "watchlist".

So, the Government decided to continue with its program of quantative easing, pumping another £25bn into the UK economy, taking the total amount of QE so far to £200bn.

As JP Morgan analyst Harm Meijer has been pointing out for a few months, it is the amount of liquidity being created in the wider financial system that is mainly responsible for the recent sharp rise in prices:

In a world in which it seems almost every 'light' is engineered on 'green' and appears likely to stay that way for a while, we believe property prices will be boosted by government/bank policies - much more strongly than most market participants currently appear to expect and perhaps even more strongly than some can even imagine.

"Indeed, we forecast real estate values in the UK to jump by 10% in the next 12 months, albeit to unsustainable levels, and those on the continent to stabilise. Yield compression is back; we forecast a 100bp reduction for the UK.

But be warned, there are risks:  

Quintain has to be one of the most remarkable recovery stories of the current downturn.

Earlier this year, the smart money was betting that they would go bust - that's not just my hyperbole, in March the company's shares were trading at 8p, and they failed to get a rescue rights issue away.

Now, the company is set to unveil a larger, proactive rights issue, with the share price sitting at a far more healthy 183p. Admittedly this is down from a high of 240p, but it shows what can be done by companies who engage early with lenders, renegotiate covenants to more sensible levels and mark concessions in terms of selling assets to pay back debt.

There will be more of a couple of companies in the private markets who will do well to follow that example.

Last week, the Irish Treasury published further info on how it expects its giant bad bank, the National Asset Management Agency, to work.

Unfortunately, there wasn't much info on how the UK will be administered or affected. But it did provide a fascinating insight into how the scheme - which will buy €77bn of property loans from Irish banks - will work in practice.

Rather than have me do a second rate job, read a brilliant analysis of the pros and cons of the scheme, written by Richard Curren of the Sunday Business Post, here.  

News emerged last night of what should prove to be a good hire for DTZ, in my humble opinion.

Chief executive Paul Idzik has once again raided the talent pool of his alma mata Barclays, and poached BarCap CMBS analyst Hans Vrensen to be the agency's new head of research.

Vrensen is an incredibly smart guy, and, importnatly for DTZ in this market, when it comes to the subject of property debt, he is wired into the Matrix. His appointment cannot but help the firm in terms of the expertise it can offer to clients in the complicated debt renegotiations they are no doubt currently undertaking.

Yesterday, Savills released research reporting a sharp rise in the number of lenders willing to lend against UK commercial property.
Today, we are beginning to see some industry reaction to that research.
The Savills data showed that there are currently 23 lenders willing to advance commercial property loans of at least £20m. This compares with just 12 lenders in the agent's March survey.
Today, research firm Capital Economics commented on the data saying it "clearly adds to the case for expecting a short-term rally in the market".
"But the facts remain that lenders are still highly exposed to commercial property and tenant defaults remain a concern," according to property economist Kelvin Davidson.
"Accordingly, we doubt that property lending is about to boom again."

The same interesting proposition arose from two separate meetings I had today, and that's close enough to a trend for me to share with you.

It centred (inevitably) on the issue of property sales initiated from banks. Leaving aside for a second whether these sales are at distressed prices, take it as read that banks will have to conduct some sales, even if they only drip through over the next five years.