- Section 227 review concludes NAMA meetings its objectives and continues to be necessary
- NAMA directly supporting 15,000 jobs and each sale is follow by significant increase in building activity and jobs on the building
- NAMA to redeem a minimum of 80% of its senior debt by the end of 2016, a full two years ahead of schedule
- Minister and NAMA Chairman set out NAMA strategy to create a Dublin Docklands area to rival of London’s Canary Warf, Boston’s Seaport and Singapore’s Marina Bay
The Minister for Finance, Mr. Michael Noonan T.D. has today (16th of July 2014) published the Review of the National Asset Management Agency (NAMA) and the review is available at [www.finance.gov.ie]. The Review is a requirement under Section 227 of the NAMA Act 2009 and was prepared by officials in the Department of Finance to assist the Minister in assessing:
(a) the extent to which the Agency has made progress in achieving its overall objectives and
(b) whether its continuation is necessary having regard to the purposes of the Act
The review summarises NAMA'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.
The review, which relies on aggregated borrower information, considers the activities of NAMA from inception up to end of 2013 and concludes that:
· NAMA has made significant progress in achieving its overall objectives
· Based on NAMA's performance to date and its financial projections in light of the strength of current investor interest in Ireland, NAMA is well positioned to achieve its objectives and so continues to be necessary.
Commenting on the publication of the review Minister Noonan stated:
"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.
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.
Based on the assessment published today and in line with Section 227 of the NAMA Act I accept the conclusions of the Review that NAMA has made significant progress in achieving its overall objectives and continues to be necessary."
While not required under the Act, the Department, in consultation with the Board and Management of NAMA, also considered various strategic alternatives that may or may not facilitate NAMA achieving and ideally surpassing its objectives. Following this consideration the NAMA board has committed:
· To redeem a minimum of 80% of its senior debt by the end of 2016, a full two years ahead of schedule, and to accelerate redemptions beyond that target if possible;
· To ensure the timely and coherent delivery of key Grade A office space, retail and residential space within the Dublin Docklands strategic development zone and Dublin’s Central Business District; and
· To maximize the delivery of residential housing units in areas of most need.
Welcoming NAMA's strategic direction and in particular their plans for the Dublin Docklands for the coming years Minister Noonan stated:
"While NAMA was created out of necessity during an economic and banking crisis I firmly believe it can play a major role in Ireland's economic recovery. By year end NAMA will have redeemed 50% of its senior debt, two years ahead of schedule and the new redemption target of 80% by 2016 strikes the right balance between reducing debt and maximising the return to the taxpayer. It should not be forgotten that many NAMA sales transactions generate building and construction activity.
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. 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 Warf, Boston’s Seaport and Singapore’s Marina Bay."
Note to Editors
Section 227 of the NAMA Act requires as soon as may be after 31 December 2012 and every 5 years after that while NAMA continues to be in existence, the Minister
(a) shall assess the extent to which NAMA has made progress toward achieving its overall objectives, and
(b) decide whether continuation of NAMA is necessary having regard to the purposes of this Act.
Following the completion of the report and taking into account what NAMA has achieved to date my officials have concluded that:
· NAMA has made significant progress in achieving its overall objectives.
· Based on NAMA’s performance to date and its financial projections in light of the strength of current investor interest in Ireland, NAMA is well positioned to achieve its objectives
· As a result, NAMA’s continuation is necessary to achieve these objectives.
While the strategy which NAMA adopts in pursuing its objectives is primarily a matter for the NAMA Board, in the context of this report my officials and I have considered the various strategic alternatives that may or may not facilitate NAMA achieving and ideally surpassing its objectives.
The results of this consideration and consultation with the Board and Management of NAMA have resulted in a number of agreed strategic objectives to which NAMA is committing as set out below:
· NAMA is committing to achieve the redemption of a minimum of 80% of its senior debt by end 2016, a full two years ahead of schedule.
· NAMA will endeavour to clearly set out its pipeline of portfolio sales to the market to help sustain investor interest in and commitment to the Irish market.
· NAMA is committing to take full advantage of the current strong investor interest in Irish assets and will maintain a flexible approach with a view to accelerating disposals and resulting redemptions beyond the 80% target.
· NAMA has also agreed, in the context of the above targets, that it will protect its ability to ensure the timely and coherent delivery of key Grade A office space within the Dublin Docklands SDZ and Dublin’s Central Business District and more generally to maximise the delivery of residential housing units in areas of most need.
It is important to note that achieving these targets is premised on the assumption that investors will maintain their strong appetite for Irish assets and that there will be no major macroeconomic or financial shocks which would cause investors to revise their current positive view of Ireland or of property as an asset class. In addition it is assumed that NAMA can retain the required operational capacity and staffing expertise.
With that in mind, any proposal to help safeguard NAMA’s operational capacity and staffing expertise will receive careful consideration in light of the potentially significant value implications associated with the loss of key employees.