Assets, mainly buildings, seized by the Asset Management Corporation of Nigeria (AMCON) generally have long shelf life or stay long on the market for reasons which, experts say, have to do with legal, economic or bureaucratic factors.
In the last 10 years of its establishment, the corporation has made recoveries from delinquent or defaulting debtors which authorities of the corporation estimate at N1.1 trillion as at the end of the first quarter of 2020.
This figure, according to Ahmed Kuru, the corporation’s managing director and chief executive officer, is an improvement, by about N100 billion, on the N1 trillion disclosed by the corporation in the corresponding period in 2019 with cash accounting for about 60 percent of the recovery, while non-cash assets were about 40 percent.
Recently, the corporation, following a court order of Justice Oluremi Omowunmi Oguntoyinbo, Judge, Federal High Court Nigeria, Lagos Division, took possession of a company building in Victoria Island, Lagos, over an indebtedness of N470 million.
This action has raised concerns and people are asking what the asset management corporation would do next after taking possession of an asset as many of the assets it had seized in the past are still there scattered all over choice locations in big cities, especially Abuja, Lagos and Port Harcourt.
Though Kuru explained that some of the debtors are in agreement with them and repay their loans by installment while others are in court, Tayo Odunsi, CEO, Northcourt Real Estate argued that people don’t want to buy AMCON seized assets for other reasons.
“AMCON stigmatizes properties with the markings they put on them which scare buyers. Only predatory investors are attracted to stigmatized properties. My take is that they should give such properties to managers instead of leaving them on the market for too long,” Odunsi advised.
Assets seized by the corporation are, when necessary, disposed of by selling them to interested and eligible buyers who submit bids by downloading relevant documents from AMCON website or collecting forms from a sales agent. This comes with some bureaucratic challenges that delay buying and selling.
Gbenga Olaniyan, CEO, Estate Links Limited, however, advises that seized properties should be given immediate valuation with realistic forced sale values put on them with the target being to sell somewhere between the open market value and forced sale value.
According to him, the best practice for toxic assets worldwide is for them to be put up on auction, adding that AMCON needs to team up with professional auctioneers to get the highest bidders for these assets as several of them stay too long on the market with the current practice of sale by private treaty.
“The unoccupied assets need to be managed. AMCON should outsource to facility managers to prevent them from decaying. For plots of land that cannot be sold quickly, joint ventures can be entered into where the developer pays a premium (earning immediate income) and then AMCON can earn income from the units ceded to them when sold after development,” Olaniyan said.
Adedotun Bamigbola, chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos Chapter, warns that the issue of AMCON and seized assets should be well understood, explaining that not all seized assets totally belong to the corporation in the real sense of it.
Some of the seized assets, he explained further, are under litigation and the corporation cannot do anything with them until the injunctions on them are vacated or there is a negotiation between the defaulting debtor or asset owner and the corporation.
“But if the asset is not under litigation, the best thing to do is to value it for immediate disposal. If it is an income generating property, the corporation can allow it to continue to function with the tenants intact such that the income could be used as part of the debt,” the posited.
