Nama confirms plans to intervene in property market

Review concludes agency should be able to redeem senior and subordinated debt ahead of time

Nama chaiman Frank Daly. A new review has said the agency is meeting its strategic objectives

Nama chaiman Frank Daly. A new review has said the agency is meeting its strategic objectives

Wed, Jul 16, 2014, 12:10

The National Asset Management Agency (NAMA) has confirmed it is to become more involved in the Dublin property market as part of a plan to boost housing supply in the capital.

At the publication of a formal review of the agency’s operations on Wednesday, Minister for Finance Michael Noonan and Nama chairman Frank Daly announced plans to deliver key Grade A office space, retail and residential space within the Dublin Docklands strategic development zone and Dublin’s Central Business District. They also gave futher details on plans to step up lending to help ease the growing property crisis.

The objective is to deploy Nama’s “influence” in the market to ensure homes are built on land bank assets in west and south Dublin.

Although Nama does not own the land itself, it owns the loans used to acquire them.

The plan will see Nama provide more development financing to viable developers, the aim being to make up for the continued shortfall in bank lending.

Nama’s next phase also sees it increase its involvement in office projects in the north docks area of Dublin via increased financing and joint venture deals.

“The Dublin Docklands area presents a unique opportunity for Nama and the Irish taxpayer. It is rare that such large swathes of prime waterfront land in a modern city such as Dublin has remained undeveloped. It is even rarer that the ownership of such land rests in a State organisation providing the opportunity for truly joined up planning, development and construction of such a large and important area,” said Mr Noonan.

“Nama now has the opportunity to bring this area to life and create a Dublin Docklands that will rival the likes of London’s Canary Wharf, Boston’s Seaport and Singapore’s Marina Bay, ” he added.

The Section 227 review, which was published on Wednesday, concludes that the agency has made significant progress in achieving its overall objectives since it was established in 2009.

It adds that Nama is “well positioned to achieve its objectives and so continues to be necessary.”

The review summarises the agency’s strategic objectives as to redeem, at a minimum, the senior bonds issued (€30.2 billion) and cover its own costs, balancing speed with value optimisation in light of market conditions, and in so doing contribute to the social and economic development of the State.

“Since its inception Nama has made steady progress in securing value for the Irish taxpayer and is well positioned, if market conditions remain strong, to not only redeem its debts and cover its costs ahead of target but to generate a surplus,” said Mr Noonan.

“In addition, Nama has played a very significant role in attracting investment into Ireland, supporting the building and construction industry and supporting 15,000 jobs in Ireland through trading businesses linked to their loans,” he added.

The Government said last week that Nama would accelerate its disposal strategy so 80 per cent of its assets would be sold by 2016, two years earlier than expected.

It is understood, however, that the Government believes the agency can finish the disposal of all assets by 2018.

To the end of June, Nama had generated over €20 billion in cash which has allowed it to redeem €13 billion of Government guaranteed senior bonds.

“The board is very confident that Nama will redeem its senior and subordinated debt sooner than the 2020 date that it had originally envisaged. We also believe that Nama will ultimately return a surplus to the Exchequer,” said Mr Daly.

“ If achieved, this would be a very creditable outcome bearing in mind the very difficult market conditions faced by Nama in its first three years of operation, not least the fall of between 25 per cent and 30 per cent in property prices in the Irish market between the start of 2010 and mid-2013,” he added.