Thursday, 5 July 2012

Questions (31)

Derek Keating


23 Deputy Derek Keating asked the Minister for Finance if he will consider establishing an independent person similar to the Taxing Master to value land assets under the controlof the National Asset Management Agency; and if he will make a statement on the matter. [32572/12]

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Written answers (Question to Minister for Finance)

The formation of a single servicer capable of providing well informed and timely opinions on the many different asset classes, including office, retail, residential, industrial and residential, and across the range of locations in which NAMA debtors and receivers control properties is unlikely to be feasible, cost effective or productive. Furthermore, in light of the extensive and independent valuation process undertaken to inform NAMA's acquisition of loans from the five financial institutions and the on-going actions by NAMA to ensure the up-to-date valuation of the assets underlying the acquired loans, I do not believe that the formation of a single servicer to value land assets under the control of NAMA is necessary. All properties held as security for loans acquired by NAMA were independently valued, using a valuation methodology approved by the European Commission, as at 30th November 2009 for the purposes of establishing the consideration paid by NAMA to the Participating Institutions for the loans. An appeal/second valuation process was available and utilised where either party rejected the initial valuation. From start to finish the independent valuation of all property assets took two years.

NAMA has, in the course of it on-going business, access to a panel of suitably qualified valuation professionals whose services it procures on a competitive basis as and when required and with reference to the location and asset class of the property or properties subject to valuation. In addition, the Deputy may be aware that disposals by NAMA debtors and receivers are conducted in accordance with NAMA Board guidelines, a key principle of which is that the conduct of disposals should be on a competitive basis and subject to current market valuation. The guidelines specifically require that an independent valuation is prepared for each disposal before the commencement of the sales process and that the sales agents prepare a final valuation report and recommendation addressed to the debtor and copied to NAMA.

In addition, NAMA is required to carry out an impairment exercise on an annual basis. In 2011, this has been carried out at an individual debtor connection level for 95% of the NAMA managed cases, involving detailed analysis of the underlying assets to project their future cash flows with reference to rental incomes, property management costs and expected disposal receipts. Where expectations as to future cash flows are revised downwards, an impairment charge is applied.

Finally NAMA is a secured lender and its objective is to obtain the best achievable financial return. I do not believe that it is in the interest of Irish taxpayers that NAMA should be fettered in such a way and the amounts due from debtors are not generally matters which are in dispute, unlike matters which are referred to the Taxing Master.