NAMA to own €2.4bn of undeveloped land in Northern Ireland

Or more accurately €2.4bn of face-value loans secured by undeveloped land. And before you start translating that into 0.4m acres at GBP £5k/acre remember that this land would probably have been valued with development potential when the loan was first secured. Nonetheless it is a very significant amount of property, and is to be but part of the NAMA portfolio in Northern Ireland.

Peter Stewart who chairs the NAMA Northern Ireland Advisory Committee was in action in Belfast earlier today where he delivered a speech to the Northern Ireland Economic Conference at the Culloden Hotel. He provided unprecedented public information on NAMA’s activities in Northern Ireland and given the scale of NAMA’s activity, it is now clear why NAMA has been so attentive to the sensibilities of the good people of Northern Ireland – NAMA is going to be the owner of loans secured by very substantial amounts of property there. Peter’s speech is available here and a press release from NAMA giving an overview of Northern Ireland is here.

Peter revealed that NAMA now expects to take over €4bn (GBP £3.35bn, according to when Peter did the exchange translation at GBP1 = EUR 1.19) of loans secured by assets in Northern Ireland. This is almost €1bn less than had previously been mentioned in the context of Northern Ireland and the explanation apparently is that the €5bn related to Northern Ireland developers but some of their loans relate to property outside of Northern Ireland – I wonder were there any developers in the State with loans on property in Northern Ireland and if this is included in the €4bn? Also does this mean that the 67% of loans that are supposed to be in the State might relate in part to foreign assets? This doesn’t quite make sense to me and the concern always with any reduction in loans being acquired by NAMA is that good quality performing loans are being let slip away.

And for the first time there is a breakdown of the loans as follows

Investments                   – €1.2bn (GBP £1bn)

Undeveloped land          – €2.4bn (GBP £2bn)

Property and land

(party developed)         – €0.4bn (GBP £0.35bn)

With investment transactions running at about GBP £200m per annum in a normal year, it looks like NAMA has upto five years worth of loans. Of course property may have declined from when the loans were acquired but nonetheless NAMA has a colossal portfolio of investment property securing its loans.

Whilst Northern Ireland does not have the same issues at the State with an overhang of vacant property (and a population which is remaining flat in the short term at least), Peter did explain that some land would be returned to agricultural use.  And that like with investments, NAMA’s portfolio would account for a number of normal years of transactions.

Peter didn’t refer to the reports earlier this month that a group of Northern Irish developers were considering going to court to avoid NAMA dealing with their loans.

Peter made it clear that NAMA has a long timeframe in which to manage its loans and that there will not be firesales or hoarding. As with previous NAMA presentations, the agency appears to be going out of its way to reassure the community that it will manage the loans in a way which will not be harmful to the Northern Ireland economy and indeed given that there is up to €5bn of NAMA development funding available, NAMA’s presence could be extraordinarily beneficial at a time when property lending is generally in the doldrums.

UPDATE: 31st January, 2011. Deputy First Minister, Martin McGuiness has informed the Stormont Executive that NAMA has now acquired the GBP 3.35bn (€3.953m) referred to above. It is likely to be the case that NAMA acquires even more loans in Northern Ireland as it now moves to acquire sub-€20m exposures at AIB and Bank of Ireland.