"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years..." That, according to Warren Buffett, is one of his golden rules when it comes to investments.
But it might not be one that Minister for Finance Michael Noonan subscribes to when it comes to assets held by the National Asset Management Agency in the North.
In fact, Noonan may be considering whether an opportunity might arise in the very near future for Nama to look at selling some of the property associated with its £3.35 billion loan portfolio locally.
Nama has a difficult line to tread in Northern Ireland, one that is very politically sensitive at the best of times.It is fundamentally a vehicle designed to achieve the best results for the State on the assets it has acquired. Its objective is to get the best return for the Irish taxpayer. Therein lies the cause of some initial wariness about the role it would play north of the Border.
There were perfectly natural concerns that it might be willing to sacrifice some assets to make a quick return without any regard to the impact on the local economy.
To be fair to Nama, that has not happened. There have not been any of the feared fire sales and the agency has, if anything, adopted a more modest approach to asset sales than it has in other territories.
Less distrust
There is less distrust now but still a reluctance among certain members of the business community to embrace it fully.
For a start, it has quite incredible leverage in the property market. That it is also providing vendor finance to potential buyers of commercial property has only served to strengthen its hand.
The agency says it has approved in the region of £123 million to local debtors and is actively looking for other projects to fund.
Noonan believes that, while Nama is focused on shrinking its daunting balance sheet and honouring its commitment to Irish taxpayers, it is also very aware of the responsibilities it has in the North.
Speaking during a visit to Belfast last week,he said: "We have a Northern Ireland Advisory Committee who advise the [Nama] board, who are very aware of the situation in Northern Ireland and who represent Northern Ireland's best interests. No-one should have any concerns about how Northern Ireland is represented. I am very confident that Nama will make the right decisions."
Noonan was in Belfast to address the business community directly for the first time at a Confederation of British Industry event attended by nearly 400 people. He told local businesspeople that the plan all along was for Nama to proceed with phased asset sales in the North. But Noonan also said that, if “the economy is right”, Nama could increase the pace of those sales.
It is a move that would appear to be welcomed given what one local commercial property group, CBRE Belfast, has recently described as the upturn in “demand for property investments”. It believes demand for property investments is being driven by pricing “that is below replacement cost in many cases and the comparative gap between property yields and interest rates”.
Strong hand
Either way, Nama has quite a few cards still to play if and when it decides to start releasing further assets in the North.
Noonan’s message in Belfast regarding, not just Nama, but also other key issues, such as the local campaign to secure a lower rate of corporation tax, suggested business here has a friend just across the Border – one that will provide support and, in the case of Nama, potentially much needed finance that could help get Northern Ireland’s economy back on its feet again.
