Thursday, 23 June 2016
NAMA Assets Sale
7. To ask the Minister for Finance the details of his Department's discussions with the National Asset Management Agency officials regarding the decision to shorten the duration of time for disposal of the agency's assets including if these included a discussion on outlining both the pros and cons of such a decision; and if he will make a statement on the matter. [17497/16]
My question relates to the disposal of NAMA assets and the thinking behind reducing the duration of time for the working through of those assets. One of the consequences of that measure was that assets were bundled into very large portfolios.
Did we get the best value possible by doing that? What was the thinking and rigour behind it?
NAMA's purpose and objectives are set out in the NAMA Act as established by the Oireachtas. NAMA's primary objective is, as per section 10 of the NAMA Act, to obtain the best achievable financial return for the State and to deal expeditiously with its assets in achieving this objective. The strategy which NAMA adopts in pursuing its objectives is a matter for the NAMA board.
As Minister, I do not have a role in NAMA's commercial decisions. However, while respecting NAMA's independence, I and my officials regularly engage with NAMA regarding its performance and strategy. I maintain a regular dialogue with the NAMA chairman and receive appropriate updates regarding NAMA's ongoing progress and future plans. I have also met occasionally with the NAMA board, which provides me with an opportunity to share my views and understand the board's views.
My officials meet with NAMA executives on a monthly basis to discuss NAMA's current and expected performance. In mid-2014, my officials produced a report under section 227 of the NAMA Act, assessing the extent to which NAMA had made progress toward achieving its overall objectives and whether the continuation of NAMA was necessary for the purposes of the Act.
The report concluded that NAMA had made significant progress in achieving its overall objectives and, based on its performance and financial projections in light of the strength of investor interest in Ireland, was well positioned to achieve its overall objectives and so continued to be necessary. In the context of this report, consideration was given to the various strategic alternatives that may or may not facilitate NAMA achieving and ideally surpassing its objectives. This report is available on the Department of Finance website.
Extensive engagement around this report and ongoing regular engagement with NAMA has allowed my officials to form an independent view of NAMA's progress and the strategic options reflected in this report. This engagement continues and the ongoing consideration of strategic options naturally includes an element of challenge from both sides in evaluating the pros and cons of various strategies.
It is very difficult to see how the optimum is achieved if people who want to purchase assets are removed. The bundling into very large portfolios at a time when the market was rising does not seem logical in terms of getting the optimum return. Was it considered at the time that the fallout from accelerating the sales would necessitate that kind of approach? We had moved a little bit away from the crash in respect of property values, even when the last Government took office in 2011. Was the bundling of those assets evaluated?
I have no expertise in the sale or valuation of property but I understand that the NAMA board had a view that it should take advantage, to the greatest extent possible, of favourable Irish market conditions by increasing the flow of assets to the markets while remaining faithful to its purpose and objectives under the NAMA Act. I think it is right that it cannot sell a property portfolio house by house, field by field or business by business. It would have to bundle them to do its job effectively because it had so many assets to dispose of and had to get the best return for the taxpayer. We could argue about how big the bundles should be but that is for the property people who have the expertise in this area and all evaluations of NAMA to date have been that it is doing a pretty good job.
I am not saying they should not be bundled. It is very obvious that there can be an advantage in bundling assets for sale but some of the portfolios are so large that they are only attractive to very large investment funds from outside the State. It is hard to see how that brings the best value. Is the Minister happy that that was, in hindsight, the best approach and that it brought the best return possible?
I have no particular expertise in property values or in the technical area and have no role under the NAMA Act in anything relating to making a commercial decision. That is a matter for NAMA. I do know that the theory of bundling is to put good with bad. If the lots are very small, the tendency would be to cherry-pick. Many of the good assets would be sold and NAMA would be left with assets that had little or no market value. By bundling large, the good and bad are all sold and the taxpayer gets a return. It is a debatable point. NAMA follows the debates here in the Dáil very closely. If the Deputy likes, I will ask NAMA to contact her directly to give its point of view.