Nama to redeem ‘most’ of remaining €3.6bn in senior debt next year

The National Asset Management Agency (Nama) expects to reduce its direct operating costs by €36 million in 2017 as it continues to wind down its activities. The agency has budgeted €72 million for these costs for next year compared with €108 million for 2016, a reduction of 33 per cent.

It also expects the number of debtor connections to have reduced to 150 or fewer by the end of this year from about 800 in 2010 when loans began transferring to it from domestic banks.

And it intends to redeem “most” of the remaining €3.6 billion in outstanding senior debt in 2017, having already paid back 88 per cent of the €30.2 billion it originally issued. In addition, it plans to redeem subordinated debt of €1.6 billion by March 2020.

These details emerge in Nama's annual statement for 2017, which has been submitted to Minister for Finance Michael Noonan. The 10-page document details Nama's strategic priorities for next year.

The agency has reaffirmed its view that it will deliver a surplus to the State of between €1.6 billon and €2.3 billion by 2020, when it is due to cease operating.

Separately, Nama revealed on Wednesday that it made a profit after tax of €647 million in the first six months of this year, up from €473 million a year ago.

Cash balances

Nama said it generated €4.3 billion in proceeds between the start of this year and September 23rd, and it had €1.9 billion in cash balances at the end of June.

Results for the first half of this year include an impairment release of €247 million, which reflects an improvement in real estate values. The impairment release for the whole of 2015 was €86 million.

The half-year results do not take into account any impact on asset valuations following the Brexit vote. This will be assessed as part of the end-2016 impairment review.

Nama’s annual statement notes that it has generated cumulative cashflow of €36.6 billion from its loan portfolio – €30.8 billion in asset disposals and€5.7 billion from other income, mostly rental proceeds from properties controlled by debtors and receivers.

The carrying value of its remaining portfolio was €6.4 billion at the end of June, net of impairment provisions of €2.2 billion.

In terms of costs, Nama expects to pay the National Treasury Management Agency some €42 million next year for providing staff and other services. That would be a reduction of 9 per cent on 2016. This reflects a planned reduction in staff numbers from 303 at the end of June to 255 by the end of March 2017. Some 68 staff will work in its residential delivery division, which is tasked with delivering 20,000 units by 2020.

Dublin docklands

Nama also updated the Minister on its residential building programme and its Dublin docklands commercial construction work. The residential building is expected to require total funding of €5.6 billion.

At the end of August, Nama had completed 3,180 residential units, with another 3,632 under construction.

An additional 6,513 had planning permission, with 9,597 units either in the planning system or about to have an application lodged. Some 24,958 other housing units were at the pre-planning or feasibility stage.

Nama is also focused on delivering office and residential accommodation in the Dublin docklands under fast-track SDZ zoning. This could involve 3.95 million sq feet of commercial space and 1,991 homes.