Joe Costello (Dublin Central, Labour)
Link to this: Individually | In context

This matter is not unrelated to the debate earlier because NAMA was created to pick up the pieces from the bad debts created during the property speculation, the property bubble and the banks. I refer specifically to a number of areas in the city of Dublin, particularly Smithfield and the docklands area, because these were the subject of intense developments. Many property portfolios have been acquired by NAMA. The recent threat to the Light House Cinema is an example of what is going on, where NAMA has control of property, there is an absentee landlord and there are upwards only rents. Rent for the cinema has increased from €100,000 to €200,000 in the space of two years. The absentee landlord is based in Florida and is taking the matter to the courts to wind up the company for its inability to pay exorbitant rents.

Vast swathes of the country, and in particular urban areas in the city of Dublin, are lying idle. There are unoccupied, vacant premises, commercial and residential ghost properties. In many cases planning permission has been granted but the planning developments are partially finished or not started. A raft of areas in the docklands, including Spencer Dock, Alexander Place, Island Key, East Road, the Paper Mill, Ravensdale Road, Castleforbes and the Village Watchtower are ghost developments, partially constructed or partially occupied. Island Key has been at 37% occupation for the past number of years. The proposed headquarters of Anglo Irish Bank is a skeletal development with rusted cranes on the docklands. It is a monument to what the property bubble became. Will it ever be finished and who is in charge? NAMA has control over this. What is happening? It is derelict.

The situation in Smithfield is similar. This was once intended to be the cultural heart of the city of Dublin. The project was known as the heritage area rejuvenation project, HARP. We now have a lopsided development, with unoccupied residential units and unoccupied commercial units. In this case, an occupied commercial unit — the Light House Cinema — was threatened with a doubling of rent over two years. This is impossible to pay but the landlord is threatening to take the company to court to wind it up if it cannot pay.

The programme for Government states "We will insist on the highest standards of transparency in the operation of NAMA, on reduction in the cost associated with the operation of NAMA, and that decision-making in NAMA does not delay the restoration of the Irish property market." It is essential to get an early audit of the category and quantity of residential and commercial property. I am specifically concerned with urban areas. There is no property market at the present time and there cannot be one while NAMA is sitting on all of the property in the country. There is stagnation and we have artificial values on everything. NAMA is waiting for the market to develop. The market cannot develop unless NAMA moves. When will the Government, the Department of the Environment, Heritage and Local Government, local authorities and NAMA get together to view the audit of property that NAMA now has under its control and devise a progressive mechanism to get it out into the marketplace so that we get the property market moving here and that in addition to the ghost estates we have at present we do not have derelict property that is vandalised and will give rise to huge problems as a result?

Paul Kehoe (Wexford, Fine Gael)
Link to this: Individually | In context

I am informed by NAMA that, to date, it has acquired €72.3 billion in loans from the five participating institutions for which it has paid consideration of €30.5 billion in the form of Government-guaranteed securities. In addition, NAMA may acquire up to €3.5 billion in further loans over the coming months under the existing NAMA legislative scheme. These have been held up by litigation and by eligibility appeals.

NAMA advises me that it does not have a property portfolio in the docklands area and-or in Smithfield. NAMA has acquired eligible loans from the participating institutions and the property or other assets securing these loans remain in the possession of the debtor. It is therefore possible to speak on this topic in general terms only.

NAMA has acquired the property loans of approximately 850 debtors. The loans of the largest 175 debtor connections, accounting for €61 billion of debt, will be managed directly by NAMA. The rest will be managed by the institutions under delegated authority. NAMA has acquired eligible loans from the participating institutions and the property or other assets securing these loans remain in the possession of the debtor. In cases where enforcement action is taken against a debtor, NAMA may ultimately take control of the property or may appoint a receiver. In these instances, the property will be managed by a receiver who is the agent of the debtor but who acts in accordance with NAMA's instructions. To date, NAMA has appointed receivers who are acting under its instructions in a number of cases, including one of the areas mentioned by the Deputy. However, NAMA has not yet taken direct control of property and, as such, does not yet have a property portfolio.

NAMA has advised that it is currently reviewing business plans for the largest 30 debtors whose loans it has acquired and that the business plans of most other large debtors are currently at advanced stages of preparation. Debtors with loans in respect of property developments in the Smithfield and docklands areas of Dublin are included in the group of largest debtors, which means that many of these loans will be managed directly by NAMA.

A debtor's business plan essentially consists of individual asset plans for each of his properties. In some cases, NAMA will be unable to reach agreement with debtors as they will be unable to demonstrate overall viability. However, for those debtors who can prove viability, NAMA will agree specific asset plans for each of their assets, whether that involves disposal or completion, and so on. NAMA will not, as such, adopt an overarching policy towards any particular area or region. Rather, its policy will emerge only after its detailed review and its acceptance or otherwise of debtor asset plans for individual properties.

In determining a plan for any asset, NAMA will assess the supply and demand for similar assets in the same area or region. In particular, the agency will be very mindful of whatever planning policies have been set by the local authority in each instance. I am advised by NAMA that it is currently developing sectoral policies which will govern its strategic approach towards key subsectors in its loan portfolio. I understand, for instance, that a sectoral policy on the hotel sector is well advanced and this policy will have implications for how NAMA deals with debtors whose loans include facilities borrowed for the acquisition or upgrade of hotels. NAMA has acknowledged that hotels have been built with the wrong grading and in the wrong location. Ultimately, the long-term future of those hotels may not be as hotels and alternative uses will have to be found for them.

I am further advised by NAMA that as part of the business plan process and ongoing management of the debtor relationship, NAMA is actively engaging with debtors to get their assets to produce income and is approving decisions relating to the underlying security including lease agreements between the debtor and third parties where it makes commercial sense to do so. There is no reluctance on the part of NAMA to approve commercially viable agreements. Nor is there any enthusiasm on its part for approving commercially agreements that are not viable.

NAMA advises that it does not yet have a property portfolio but that when it does take control of properties, it will not adopt a strategy for any particular area or region. However the agency is presently developing policies which will govern its strategic approach towards certain key subsectors in its loan portfolio.