Ireland's National Asset Management Agency offering 70% vendor finance to lure investors

Ireland’s National Asset Management Agency is offering up to 70% vendor financing to investors willing to buy commercial property in an effort to revitalise the ailing Irish property market.

The state agency has criticised UK banks for selling Irish property cheaply at below rebuilding costs.

NAMA was set up in 2009 to purge Irish banks of about €75 billion in impaired loans after the country’s property crash and international banking crisis.

“With a view to generating sales transactions which would not otherwise take place and to attracting new equity into the Irish market, NAMA is willing to provide up to 70% vendor debt financing to purchasers of commercial property,” Brendan McDonagh, chief executive of NAMA, told an Irish parliamentary committee.

The product would target pension funds, insurance companies, private equity firms and sovereign wealth funds, McDonagh says.

It is hoped the vendor financing will attract foreign investors to Ireland where falls of more than 40% have occurred since the 2007 peak.

The committee members were keen for assurances that the NAMA business model was working and that there was no danger that the state would have to step in to help NAMA meet its repayments.

NAMA says it had completed its purchase of badly impaired loans from the five covered Irish banks and building societies – Bank of Ireland, AIB, Anglo Irish Bank, Irish Nationwide and EBS.

It has paid €31.7 billion to acquire loans worth €74.2 billion.

The agency hopes to turn a profit by selling the loans or properties linked to the loans between now and 2019.

Reuters has reported with a portfolio that ranges from London skyscrapers to farmland in the Irish midlands, NAMA has around 200 developers drawing a salary to manage their assets.