THE PURCHASER of the first commercial property sold by the National Asset Management Agency (Nama) with an offer of vendor financing from the State loans body has chosen not to avail of the funding and to complete the deal without the agency’s help.
Nama sought bids from interested parties for One Warrington Place, an office block in Dublin city centre, offering vendor debt or “stapled” financing for up to 70 per cent of the property’s value.
The agency reached agreement with UK insurer Prudential on the sale of the property last month in a deal worth more than €25 million.
The insurer chose not to use the debt financing arrangement from Nama, which was being offered at a premium of 2.5 per cent above the standard bank interest rate.
The transaction was due to have been Nama’s first vendor financing deal. The agency is looking at other Irish properties – office blocks or shopping centres – that could be sold with the incentive of finance from the body.
A Nama spokesman had no comment, while a spokesman for Prudential’s real estate management company said it did not comment on “transaction rumours”.
The decision means Nama secures a much bigger windfall on the transaction, clearing the outstanding debt on the office block previously owned by developer David Arnold.
But Prudential’s decision to avail of its own financial arrangements to complete the deal means Nama has yet to road-test its vendor financing, introduced to stimulate activity and attract buyers into a moribund market.
The offer of vendor financing – where buyers walk away with a loss of just their 30 per cent equity investment if the transaction turns sour – may have increased the level of interest in the property.
Nama chief executive Brendan McDonagh said in October that the property at the corner of Lower Mount Street and Warrington Place attracted 30 expressions of interest. Prudential beat five bidders for the property where Bord Gáis is the tenant.
Investment properties have collapsed by about 65 per cent in value since the peak of the market.
Nama is also offering a deferred payment scheme on residential property to entice buyers who fear further property price declines.
The agency, which plans to launch the scheme on a pilot basis in the coming months, will offer to defer up to 20 per cent of the value of a property if it falls in value.
Nama has agreed to provide additional disclosures in its 2011 accounts showing the movement in the face value of the €74 billion of loans acquired from the banks. The agency only accounts for the assets based on the €32 billion acquisition value of the loans.
