The National Asset Management Agency (Nama) has once again rejected claims that it is too soft on developers who borrowed too much during the boom.
Nama chief executive Brendan McDonagh said that while the agency has been more patient in its dealings with debtors than many corresponding private sector commercial bank or private equity entities would be, the agency could not allow negotiations with developers to continue indefinitely.
Mr McDonagh and other senior representatives from Nama appeared before the Public Accounts Committee on Thursday to brief members on a number of issues including bond redemptions, assets sales and key developments such as plans to provide upfront funding for social housing and the redevelopment of the Dublin Docklands.
The head of Nama said suggestions that the agency had been lenient with developers were untrue.
“We have been before this committee and others in the past and have had to defend ourselves against the view that perhaps we have been too soft on debtors by allowing them to retain part of the income from their asset cashflows as salaries. More recently, there seems to be a suggestion that we have been too demanding of some debtors. Nama disagrees with both of these assertions,” he said.
“Our approach to dealing with any debtor - be they large or small, cooperative or uncooperative - is to be resolute but fair. We seek the course of action which will deliver the best return for taxpayers but which is also within the debtor’s capacity to deliver, given our knowledge of the debtor’s assets and the remaining assets available to the debtor to meet his debt obligations,” Mr McDonagh added.
Bonuses
Responding to a question by Sinn Féin deputy leader Mary Lou McDonald, Mr McDonagh said that while no developers in Nama were currently receiving performance related bonuses, it was something that was under consideration.
Mr McDonagh said there are 122 developers in Nama who are currently drawing a salary at a collective cost of €10million per annum. Of these, three individuals were drawing salaries of €200,000 while a further 13 individuals were on salaries of between €150,000 and €199,000.
Mr McDonagh told committee members that Nama has generated €23.2 billion in cash from its loans since being set up five years ago this month and has repaid 55 per cent of its outstanding senior debt, two years ahead of schedule.
“Our faster-than-anticipated progress on the debt redemption has been made possible by the major improvement in conditions in the Irish commercial property market over the past 18 months and the depth of investor capital being deployed towards Ireland”, said Mr McDonagh.
Nama reported profits of €214 million last year. For the first six months of 2014 it made a profit of €102 million. The agency also generated cash of €5.4 billion during the first half of this year compared with €2 billion in the same period of 2013.
Dublin Docklands SDZ
On Wednesday, Nama named Singapore's Oxley Holdings as the preferred bidder for a key 2.35 hectare site close to the proposed new headquarters of the Central Bank.
Commenting on the development of the Dublin Docklands SDZ (Strategic Development Zone), Mr McDonagh reiterated that Nama is not a developer and had no interest in becoming one. However, he added that with a number of important sites under the control of its receivers, it was well placed to co-ordinate and drive the potential and delivery of viable commercial and residential projects in the Docklands area.
“We are not wedded to any particular approach when setting strategy for individual SDZ sites. We have made it clear that we are in a position to fund all of the development if that is required but we are also conscious of the need to ensure that not all of the risk falls on taxpayers. For that reason, we see substantial scope for private investors to provide the necessary funding for at least some of the sites,” he said.
Mr McDonagh said a detailed business plan has been prepared for each of the sites in which Nama has an interest, comprising 75pc of the 22 hectares of undeveloped land in the SDZ area.
“Our initial appraisal suggests that up to 3.4m sq ft of commercial space and 1,848 apartments could potentially be delivered if all these sites were to be fully developed over the next five to seven years.”
Mr McDonagh added that the agency has a role in four major projects announced in recent weeks - Boland’s Mill, the South Docks Fund, the City Development Fund and Project Wave. In total, these initiatives are expected to provide over 1.5m sq ft of office, retail, residential and cultural accommodation in the Docklands.
Residential housing
Mr McDonagh also told committee members that the agency was making a contribution to addressing residential supply shortages in the Greater Dublin area.
He said the agency had established a dedicated team to coordinate the completion of 4,5000 residential units and to assess the scope for delivery of additional apartments.
“We have exceeded our end-2014 target of funding the delivery of 1,000 residential units and we expect that another 1,500 residential units will be delivered in 2015 with the residual to be delivered in 2016,” he said.
The head of Nama also said the agency was contributing to the provision of social housing with local authorities having confirmed demand for just over 2,000 of the 5,500 houses and apartments that it had made available.
“By the end of this year, we will have exceeded the target of delivering 1,000 of these units for social housing and expect to deliver the remaining social housing units over the course of 2015,” he said.
