Recently in nama Category

News last week that Real Estate Opportunities is to try to spin-off its giant Battersea Power Station regeneration scheme was met by interest in the property and financial markets, but little enthusiasm from REO's shreholders - the shares dropped 42% on the news.

Why? Because by diluting the company's ownership of the scheme, which has an estimated end value of £5.5bn, there is little potential future upside in the company's UK and Irish portfolio. Many REO shareholders were likely holding on to shares as an option on whether Battersea would eventually pay out, and without that option, they have now checked out.

While the debt secured against Battersea has been transferred to NAMA, REO's management is going to be spending a lot of time on other debt negotiations over the next year, as well as the global roadshow designed to find a new investor in Battersea. The company has £371m of convertible loan notes and zero-dividend preference shares which need to be repaid by May next year, and it said that these all need to be restructured and extended as it cannot currently repay.

Spin out Battersea, and that's what you're left with at REO.

There have been claims in the media that the new Irish National Asset Management Agency (NAMA) may force fire-sales of a swathe of buildings and undermine the current recovery, particularly in the UK.
However, in a research note today, Capital Economics says it believes NAMA's impact will be minimal.
In late March, NAMA began to take over the riskiest property-related loans of five of Ireland's biggest lenders in exchange for safer, more liquid government securities.
NAMA will take on about €80bn of loans, with 70% of that total being loans secured against land or incomplete developments and the remaining 30% against standing property.

So what are the implications of NAMA for commercial property markets?
Capital Economics says:

• In the UK, we suspect that the effects will be minimal. First, NAMA's documentation shows that only about a quarter, i.e. €20bn , of its (potential) portfolio is accounted for by loans secured against UK property. It also estimates that the average LTV across these loans at the time of origination was around 75%, suggesting that it will acquire UK loans originally secured against about €27bn of property.

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.