Mr. Frank Daly:

Thank you, Chairman. We last appeared before the joint committee just over a year ago and can report that very good progress has been made in the meantime across a range of activities. In 2015, to date, we have generated cash receipts of €8.8 billion, which brings the total cash generated since inception to €32.4 billion. Recently, for the first half of the year, we reported a profit of €473 million, including, for the first time, a write-back on impairment. This was higher than the €458 million profit we had reported for the full year of 2014. We expect the 2015 full-year profits to be well in excess of €1 billion. Crucially, from our perspective, we are close to achieving our target of redeeming 80% of our senior debt by the end of 2016. As of today, we have redeemed €22.1 billion or 73% of the €24 billion required to achieve that target. We are confident of redeeming all of our senior debt by 2018 and repaying our €1.593 billion subordinated debt by the first call date of March 2020. As of today, based on current market conditions continuing to prevail, our expectation is that by the time we complete our work, we will have generated a surplus of the order of €2 billion to hand over to the Exchequer. This is some distance from the forecasts of some commentators who not so long ago were predicting NAMA losses of up to €8 billion.

Our strong cash position, bolstered by the proceeds of the Project Arrow transaction which was completed last Friday, means that we have the capacity, if required, to fund two significant development programmes which would help to address major supply shortages of residential and office accommodation, particularly in the Dublin area. The chief executive, Mr. Brendan McDonagh, will outline our plans for facilitating and funding the delivery of 20,000 residential units on a commercial basis, mainly located in the greater Dublin area, by 2020. I will focus on the progress made in facilitating the development of key sites which secure our loans within the Dublin docklands strategic development zone, SDZ, area.

The development of the Dublin docklands SDZ is a major priority for NAMA and one on which excellent progress has been made in a relatively short time. Shortly after the docklands area received SDZ designation in May 2014 the NAMA board approved a docklands SDZ business plan and established a special delivery team to oversee the development and, if necessary, funding of sites within the docklands SDZ. The sites under the control of NAMA-appointed receivers and investment partners have the capacity to deliver 3.8 million sq. ft. of commercial space and about 2,000 residential units. The position as of today is as follows: construction has started on sites which are expected to deliver just over 780,000sq. ft. of commercial, mainly office, accommodation and 245 residential units. Planning permission has been obtained or sought for another 1.8 millionsq. ft. of commercial development space, including office, hotel and 970-bed student accommodation, in addition to 326 residential units. This includes block 10A on North Wall Quay where in recent days planning permission was received for a development of almost 400,000 sq. ft. Pre-planning work is under way on the remaining 1.3 millionsq. ft. of commercial space and some 1,168 residential units. Planning permission was received recently for the construction of a new road from Sheriff Street to North Wall Quay. Construction is expected to begin during the second quarter of 2016. Design work is also under way for the construction of a number of new pedestrian bridges which will facilitate access between the north and south docklands areas.

There are 14 individual sites within the SDZ area which secure our loans. The approach we adopt towards each site depends on its particular characteristics and particular complications that may attach to it. Accordingly, the level of our involvement in the development of sites can vary considerably from very active involvement in some cases to a more passive role in others. In the case of Boland’s Mill, now designated as Boland’s Quay, we have committed to advancing to the receiver all of the required development and associated funding – about €170 million - to enable the site to be developed. The project which will include two landmark office buildings and a block of apartments, in addition to retail, commercial and cultural space, is expected to be completed by the end of 2018.

In other cases, our role is less active. For instance, in the case of a development at 8 Hanover Quay, our involvement is by means of a share in a fund - in this case, an Irish collective asset management vehicle, ICAV - with two joint venture partners. We have also provided construction funding for the project on arm’s length commercial terms. The ICAV’s function is to secure planning permission, procure a tenant, develop the site and dispose of the property when completed. A tenant – Airbnb – has been secured and the sale of the building is close to being agreed. Construction began earlier this year and is expected to be completed during the first quarter of 2016.

We have adopted a different approach again in the case of a site at 72 to 80 North Wall Quay, Project Wave. In this instance, we entered into an agreement with Oxley Holdings Limited which was selected after an open market process. Under the agreement for lease structure, it acquired the right to develop, manage and realise the site. NAMA has retained the freehold interest and will receive a secure income stream, in addition to a percentage of future sales proceeds.

The development work which has begun in the docklands SDZ will have a major transformational impact on the area and the associated benefits will be felt for many decades to come, not least in the attraction of quality foreign direct investment to Ireland. I emphasise the progress made to date in the docklands would not have been possible without the positive engagement and support we have received from Dublin City Council, both in its capacity as planning authority and as development agency for the area.

NAMA was established almost exactly six years ago. Our first board meeting, the minutes of which I was just looking at today, was held on 23 December 2009; we are, therefore, within a week of our sixth anniversary. I cannot help but contrast the very fraught circumstances in which NAMA came into being with the much more positive outlook today. As I mentioned, I recall reading newspaper articles during those early days which included forecasts by various commentators who were predicting authoritatively that NAMA would incur losses of up to €8 billion during its lifetime. Thankfully, they have been well wide of the mark. We will deliver a profit of at least €2 billion. Part of the initial pessimism had to do with the fact that people were unsure about the asset management agency model as a mechanism for dealing with the soured property lending of the banks. In the European context, it was largely untried and untested on the scale envisaged for NAMA. Part of the pessimism also reflected the depth of despair many felt at the rapidly deteriorating property lending crisis as it unfolded during 2009 and 2010. Either way, there was not a huge amount of hope to propel NAMA on its way. The intervening six years have often been difficult and challenging. There can be few organisations which have been the subject of so many differing views and expectations of its role and what it was expected to deliver.

Some took the view that NAMA's job was to hold its portfolio for the long term, the premise being, I presume, that somehow the Irish market would recover without the stimulative impact of NAMA's market transactions. Others took the opposite view, that we should forget about maximising the recovery value of the loan portfolio and instead sell the portfolio quickly to generate activity and thereby stimulate the Irish market out of the torpor into which it had fallen as a result of the crisis. There was also a view that NAMA's role should have been to donate property at little or no cost to various groups and activities. This we could not do, however, as we are obliged under the legislation to act commercially and ensure debtors maximised their debt repayments from asset sale proceeds. Those debt repayments go back to the Irish taxpayer. Another view was that NAMA should enforce against all of its debtors on the basis that those who were part of the problem should not be part of the solution. Finally, we had those who characterised NAMA dismissively as a debt collector, the implication being that those who borrowed millions and billions should have been granted a moratorium on debt repayments at the same time as many ordinary people were struggling to keep up payments on their mortgages.

In reality, NAMA could not be all things to all people and, indeed, it never sought to be. We were obliged to operate to the clear and unequivocal mandate set for us by the Oireachtas, namely, to conduct our business on an independent and commercial basis and, subject to that requirement, if we could also make a worthwhile social and economic contribution, so much the better. This clear mandate meant, first and foremost, that we had to recover the €32 billion of debt we incurred to acquire loans from the banks. This meant working with our debtors and receivers, who controlled the underlying property collateral, to repay as much of their debt as possible. If, as a result of our efforts and those of our debtors and receivers, there is a surplus by whatever future date we complete our work, that surplus will be handed over to the Exchequer. I take this opportunity to refer to the significant amount of commentary we have seen recently regarding one of our sales transactions. To clarify, we cannot give preferential treatment to some bidders at the expense of others who are willing to pay higher prices for assets. If taxpayer funds are to be allocated to particular groups or activities, it is appropriate that the elected Government, not NAMA, should decide how those funds are allocated and which groups or activities benefit from them.

I mentioned earlier that the asset management agency approach was untested on a major scale in the European context until it was implemented in Ireland with the establishment of NAMA in 2009. My view that the agency has been very successful in carrying out its work is a view shared by major international organisations and by other sovereigns. A recent report by Moody's, for example, compared NAMA very favourably with two other large European sovereign work-out vehicles, Sareb in Spain and Germany's FMS-WM. Of course, NAMA has had its share of critics, not least mong that minority of debtors who expected their spell in NAMA to be one long untroubled sabbatical from reality, with no requirement on their part to make the adjustments necessary to deal with the crisis. That was not how we saw it and I doubt if taxpayers would see it that way. The cosy relationships between some debtors and their banks could not continue if the crisis was to be addressed.

We are often asked for advice by other sovereigns which have established or are contemplating the establishment of entities similar to NAMA. Our view is that the asset management agency approach works best where one has a portfolio of distressed assets which are broadly similar - commercial property loans, in our case - and there is sufficient scale to justify the recruitment of experienced specialists to manage it in a professional manner. We also highlight the importance of a clear and independent statutory mandate to enable the business to be conducted in a commercial manner and without external interference. We emphasise, too, something that has been very important in terms of attracting and consolidating investor interest in Ireland, namely, the assurance that transactions will be openly marketed, managed in a professional manner and that the best bids will be accepted with no preferential treatment for anyone.

With the very formidable challenges of the past six years behind us, we have now begun the final phase of our work. This will involve facilitating an expanded residential delivery programme and the development of the Dublin docklands strategic development zone, SDZ. The primary motivation for these programmes is commercial, that is, to maximise the sales proceeds our debtors and receivers can generate from their assets and thereby enhance their capacity to repay their debt to taxpayers. Given the serious supply shortages of residential and office accommodation in Dublin and other urban areas, these programmes are likely to generate wider economic and social benefits. Those seeking to purchase their first homes will benefit from the greater choice that will be available as new supply is delivered. New supply will act to reduce upward pressure on sales prices and on the level of rents. I am convinced that NAMA funding of this programme will mean that supply comes on stream sooner than would be the case if the sites were to be sold to the market.

There will also be major benefits in terms of employment. Our estimates, based on industry benchmarks, suggest that construction funding on the scale proposed will lead to the creation of 30,000construction jobs when activity reaches its peak. In addition to direct jobs, this scale of construction activity will generate an additional 10,000 jobs downstream in the construction supply chain. There will also be fiscal gains from this increased economic activity in the form of higher tax receipts from newly employed construction and other workers and an associated reduction in social protection payments. We expect NAMA's funding of residential projects will generate a positive return for taxpayers and thereby enhance the currently projected €2 billion surplus that is to be transferred to the Exchequer when we complete our work. NAMA debtors and receivers, even operating at full capacity, can deliver only one fifth of the 100,000 unit supply that will be required over the next five years. That leaves more than enough scope for others to deliver the additional 80,000 units the country so badly needs.