Mr. Seamus McCarthy:

Go raibh maith agat, a Chathaoirligh. As members are aware, NAMA was established in December 2009 as part of the State’s response to the 2008 banking crisis. It was set up to acquire property-related loans from the commercial banks, to hold and manage the loans and related collateral and ultimately to dispose of those assets in a manner that protected the State’s interests. At the outset, it was envisaged that NAMA would have a life of around ten years, and would therefore be winding up around 2020. However, following a Department of Finance review published in July 2019, NAMA’s timeline was extended to the end of 2025 to allow additional time to deal with its residual loans.

NAMA’s financial statements indicate that it had income of €128 million in 2022, mainly arising from gains on the value of its loans. After administrative expenses of €44 million and payment of tax of €3 million, the profit for the year was €81 million. This was down from the profit of €195 million reported for 2021. The decline in profitability reflects the continuing reduction in NAMA’s debtor loans.

NAMA’s accumulated reserves were €1.4 billion at the end of 2022. This was down from €1.8 billion at the end of 2021, mainly as a result of a transfer of €500 million to the Exchequer during the year. This brought the cumulative transfers from NAMA to the Exchequer up to the end of 2022 to €3.5 billion.

Because of NAMA’s remit to dispose of its assets as advantageously as possible over a set time period, it is probably more useful to look at what NAMA has achieved cumulatively over its lifetime than to look at the year-on-year movements captured in the annual financial statements. By law, I am required to carry out reviews every three years of the extent to which NAMA has made progress towards achieving its overall objectives. The report before the committee today is the fourth such progress report. The formal scope of the report is up to the end of 2021, but here I add 2022 updates where available.

At the outset, based on its own loan valuation methodology, NAMA paid €31.8 billion for the property-related loans it acquired from the participating lenders. At the time, this represented a 57% discount on the €74.4 billion par value of the loans, crystallising losses of some €43 billion for the lenders. NAMA funded the purchase of the loans by issuing debt. A key objective set by NAMA was to redeem all that debt by 2020, and it achieved this target. Without recourse to any further borrowing, NAMA has been able to invest in and manage its loan portfolio, and to cover its own operating costs, which, to end 2022, were just over €1.1 billion.

NAMA has a statutory objective to obtain the best achievable financial return for the State. At the end of 2021, the projected return on NAMA’s overall operations was calculated to be around 6.7%.

In fixing the prices it paid for the loans it acquired, NAMA effectively anticipated achieving a rate of return of around 5%. By reference to that benchmark, NAMA is likely to achieve a modestly better return for the State by the time it winds up.

A substantial part of NAMA's remit involved managing and, where possible, working with debtors to achieve the best financial return for the State. Receivers were appointed where enforcement of debts, including sale of collateral, was required. The sale of property directly back to debtors at discounted prices was prohibited in the NAMA Act 2009. In the course of the audit of the financial statements for 2021, it was noted that NAMA had finalised a sale of loans related to a debtor connection for a consideration of €265,000. This represented a 97.5% discount on the par value of the loans, and resulted in NAMA incurring a loss of just under €6 million. The loans had not been openly marketed prior to the sale, which was to a newly-incorporated company that NAMA understood to be promoted and funded by a family relative of the debtors. The loans were secured by property collateral comprising 14 occupied residential units, 28 unfinished residential units, and seven plots of land totalling 20.9 ha with varied planning status. Following the commencement of enforcement proceedings around October 2018, NAMA appointed a receiver over the assets. The debtors strongly resisted the enforcement proceedings. NAMA stated that the receiver resigned in May 2020, after a potential sale of some of the assets fell through, and he could not find a sales agent to market the properties. An independent desktop valuation of the remaining collateral assets commissioned by NAMA stated that the market value of the assets was "unlikely to ever be achieved or the lands disposed of while the threats and intimidation continue", and that the assets were not considered marketable. However, no specific instances of alleged threats or intimidation were described in the valuation report, or in the November 2020 paper submitted to the NAMA board, seeking approval for the proposed sales terms. NAMA confirmed that it does not have a set process for dealing with incidents of alleged intimidation of its staff or agents on the basis that it is something that has arisen very rarely, and the circumstances tend to be very specific in cases where it has arisen.

I will conclude with progress of some secondary objectives of NAMA. In 2014, NAMA had an interest in a substantial proportion of the undeveloped land in the Dublin docklands strategic development zone. By the end of 2022, only one site in the zone in which NAMA had an interest remained undeveloped, and a provisional agreement to sell it had been reached. NAMA also had a substantial interest in the Poolbeg west strategic development zone, in the form of two large adjacent brownfield sites held by a NAMA subsidiary. In June 2021, NAMA sold 80% of the shareholding in the subsidiary company to a private development consortium. NAMA sold its residual 20% minority shareholding to the consortium in June 2023.

In November 2015, the NAMA board adopted a residential delivery plan which set out its intention to provide funding, and to co-ordinate and manage the delivery of 20,000 housing units by end 2020. The plan recognised the target would be a challenge. By the end of 2021, NAMA had delivered 11,049 units on sites in which it had an interest, representing delivery of 55% of the target.

NAMA also set a target of delivering 2,000 social housing units by the end of 2015 and this target was met. By the end of 2021, NAMA had provided a total of 2,621 social housing units with a further 66 units at contract stage and 117 units still under construction.

National Asset Residential Property Services DAC, a NAMA subsidiary company, held 1,366 social housing units at the end of 2022, which have been made available to approved housing bodies on long-term leases. It is anticipated that this company, which had property assets valued at €325 million at end 2022, will form part of NAMA's overall surrender when it completes its work.