Maureen O'Sullivan (Dublin Central, Independent)
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Question 195: To ask the Minister for Finance if he will explain the justification for the National Assets Management Agency stating that businesses which possess other viable businesses in a group are considered eligible to pay requested increases in rent; and if he will make a statement on the matter. [32008/12]

Michael Noonan (Limerick City, Fine Gael)
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In agreeing to requests for rent abatements from its debtors, NAMA must in all instances be cognisant of the overriding requirement to preserve the value of collateral supporting its loans. The Agency seeks to ensure this by implementing rent abatements under the terms set out in its Guidance Note on Upwards Only Commercial Leases, which is available on its website, www.nama.ie. The terms of the Guidance Note are intended to deal with situations where tenants of NAMA debtors can demonstrate that the rents payable under their current leases are in excess of current market levels and that, in consequence, the viability of their business is threatened. This situation clearly does not arise in the case of businesses that are profitably trading or part of a profitably trading group that are in a position to honour their current contractual arrangements on rent, nor was it ever intended that the Guidance Note on Upwards Only Commercial Leases would confer benefit on such businesses.

NAMA advises that the judicious implementation of rent abatements can support the achievement of its objective of preserving the value of its properties securing its loans by (1) ensuring that qualifying tenants remain in business and continue to thereby generate rental income and (2) by safeguarding jobs and economic activity in general. The Agency points out that as rent abatements are typically agreed for an initial fixed period of no more than twelve months and are thereafter subject to ongoing assessment by reference to factors such as turnover and business profitability, any short-term loss of rental income arising from abatements is likely to be more than off-set by these long-term benefits. Agreement to rent abatements outside of the terms of the Guidance Note would, in contrast, prove contrary to the requirement on the Agency to protect the position of Irish taxpayers by extracting the best possible returns on its acquired loans and underlying property assets.