NAMA expects that the nominal value of loans which it will acquire which are secured on Northern Ireland assets will come to approximately STG£3.35 billion (€4 billion)¹The figure was revealed today by Peter Stewart, NAMA Director and Chairman of the NAMA Board’s Advisory Committee on Northern Ireland. Mr. Stewart was speaking a conference on Northern Ireland’s economy held today in Belfast.

Loan Make-Up

Mr. Stewart said that the final figure would not be confirmed until the loan acquisition phase for NAMA was completed and therefore, the STG£3.35 billion (€4 billion) was a “qualified estimate”. He also indicated that the agency expected that the make-up of this figure would be broadly as follows:  

Undeveloped Land	STG£2 billion (€2.4 billion)
Investments	STG£1 billion (€1.2 billion)
Property & Land in course of development	STG£350 million (€400 million)
Total	STG£3.35 bn. (€4 billion)

Mr. Stewart noted that Northern Ireland had its own particular property bubble in undeveloped land. He quoted estimates from CBRE in Belfast which suggest that the normal market for land sales in Northern Ireland in the years 2000 to 2005 was approximately STG£100 million per annum but that this figure spiked to STG£750 million in the years 2006 and 2007.

Mr. Stewart said that while NAMA did not have to sell “today, this month or this year,”…it does have to operate to a ten year time scale. He warned; “even over such a period of time it is likely that we will see what was previously viewed as potential development land being sold to go back to farm land. For those builders, developers and also land traders and speculators who got caught up in the frenzy, unfortunately there is going to be financial pain.”

Property and land in course of development

However in respect of residential development properties, Mr. Stewart said that unlike the South; “in this part of the island [NI], there does not appear to be a huge supply overhang of residential properties.”

Investments

In respect of Investment properties, Mr. Stewart said that the investment property market echoed the experience of the undeveloped land market with a rise in the normal value of transactions from a typical STG£200 million per annum to a peak of close to STG£1 billion in 2006 and 2007. Speaking on this, Mr. Stewart said "it is clear that the NAMA secured supply side of the market is significant in terms of normal turnover levels and there will be challenges in realising these assets."

Mr. Stewart said that NAMA will be prepared to consider structured financing proposals that could involve joint ventures, mezzanine debt, shared security, phased transfers of ownership and so on; "we expect that the investment community and their financial advisors will, in due course, develop such proposals."

Developers

Mr. Stewart indicated that the choice facing debtors was to work with NAMA or to face enforcement; "these debtors have an opportunity through working with NAMA to make some amends for the damage that has been done and to avoid enforcement proceedings." But he warned where it was necessary to take go through the full process of enforcement proceedings, "they will be taken – regardless of jurisdiction."

Mr. Stewart said that NAMA was acutely aware of the particular sensitivities of the Northern Ireland economy and market; "What we must do, and which is in our interest as well as that of the Northern Ireland economy, is to carefully manage the impact of the ending of the false boom in property values."

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