Pressure mounts to extend Nama’s mandate into construction of houses

Financing for developer Michael O’Flynn should boost house building

Reports at the weekend that Cork property developer Michael O'Flynn is on the cusp of securing the financing to purchase the undeveloped assets in his portfolio in Ireland from lender Blackstone should provide a welcome boost to house building in this country.

O'Flynn was one of the biggest property developers in the State before the crash. He ended up having his loans transferred to the National Asset Management Agency.

These loans, worth €1.8 billion at face value, were subsequently sold to a subsidiary of Blackstone for €1.1 billion last year.

O’Flynn then had to fight a rearguard action through the courts to prevent Blackstone from wresting control of the assets from him completely.


This refinancing will once again give him control of his own destiny – not that he has been sitting on his hands.

His O’Flynn Capital Partners company is building housing at Rokeby Park near Lucan village in Dublin while he is dispute with Dún Laoghaire-Rathdown County Council over a housing development in Cabinteely.

Back in action



and US investment group Avenue Capital supplying the funding, we can expect O’Flynn to again become one of the busiest builders in Ireland, joining a small group of developers who are finally back in action post the recession.

A lack of house construction is one of the biggest problems facing the State at the minute, which explains why the Government is considering extending the mandate of the National Asset Management Agency.

An announcement of precisely what Minister for Finance Michael Noonan expects of Nama is likely to come in next month's budget.

Nama on standby

Nama is often the go-to agency for the Government. When the

Irish Bank Resolution Corporation

was placed into liquidation in dramatic fashion in February 2013, Nama was placed on standby to accept whatever loans

Kieran Wallace


Eamonn Richardson

couldn’t shift.

Thankfully, the liquidators were able to sell most of IBRC’s assets on the open market.

Nama was also charged with the commercial development of the Dublin Docklands, aided by fast-track planning powers under Dublin City Council’s strategic development zone initiative.

With Nama on track to make a surplus of up to €1 billion by the time of its wind-down, it has the readies to fund construction without compromising its ability to repay its €30 billion in senior debt (it has already paid back €19 billion and has targeted a figure of €24 billion by the end of 2016).

Just 11,016 homes were built in Ireland in 2014, according to official figures. An Economic and Social Research Institute analysis suggests an ongoing need for at least 25,000 new dwellings per annum over the coming 15 years to meet population demands.

There is little to suggest that supply will be able to meet that demand, due to a lack of funding and issues around planning.

Nama is already committed to building 4,500 new houses and apartments in Dublin by the end of next year. According to the Government’s Construction 2020 strategy, published in May 2014, Nama had identified the potential for the land and property to which it is exposed to yield up to 22,500 housing units out to 2019, just one year before it is due to be wound up by the State.

On one level, extending Nama’s housebuilding mandate makes sense. It has control of huge landbanks, access to funding and political support.

On the flip side, it would put Nama in competition with property developers, many of whom are struggling to cobble together the finance to build out their projects.

It might also arguably cut across the work of Activate Capital, a joint venture between the Ireland Strategic Investment Fund (a sister agency of Nama) and Kohlberg Kravis Roberts (KKR) to provide €500 million to build 11,000 units over its eight-year lifespan.

With an election hoving into view, charging Nama with the task of breathing some life into the ailing construction sector should appeal to voters keen to step on to the property ladder. As should Noonan’s call on the Central Bank of Ireland to review the rule that requires budding homeowners to have a 20 per cent deposit in place before being approved for a mortgage.

It might also soften the cough of Opposition politicians such as TD Ruth Coppinger, who was involved in the occupation this week of a housing site being developed by Nama in the Castleknock area. Coppinger's aim was to highlight the plight of homeless people in her Dublin West constituency.

Market intervention

The State’s record in terms of intervening in the housing market has been patchy, to say the least. Economist

Peter Bacon

produced three reports on the housing market for Fianna Fáil-led governments between 1998 and 2000 with mixed results.

Landlords also moan about how various government interventions have screwed up the rental market.

Developers accuse Nama of hoarding land and of failing to support their projects with finance.

They would prefer the Government to reduce input costs and to streamline the planning rules to allow them build homes more cost-efficiently, with savings passed on to buyers. They could be right, but the devastation caused by the property crash here post-2008 was such that very few people are listening to them.

Twitter: @CiaranHancock1