Adjournment Matter

National Asset Management Agency

I thank the Minister of State, Deputy O'Dowd, for attending the House. I raise this issue as it has come to my attention twice in the past two weeks. I met representatives of the Construction Industry Federation in Cork recently when they had a regular briefing for Members. Among a number of issues raised was the need to ensure commercial properties with loans under the auspices of NAMA would be developed and brought to market. The issue is considered to be an impediment to attracting investment from abroad and domestically.

Last week, the National Competitiveness Council produced one of many reports which I follow with interest as best I can. It concerned the cost of doing business in Ireland and one of the recommendations was that NAMA move to provide certainty for the commercial property market. The manner in which NAMA will deal with unfinished developments must be addressed, along with how assets will be disposed of. It recommended that an orderly programme of disposals and interventions is desirable at this stage. Properties should be brought to market on a phased basis over the next few years. A lack of information on these properties is creating an atmosphere of uncertainty. The report also recommends that the property service regulatory authority compile data on purchasing and leasing relating to price, floor space, quality, location and finish.

The Minister of State may argue that if there is a survey of available office and commercial spaces in the country, there would be an excess, but there is a lack of grade 4 high-quality office space, especially in the Dublin area. There will be a shortage in the next 18 to 24 months in that respect, so if we are to get to a position to attract new investment, many properties must be brought up to required standards. This will ensure IDA Ireland, Enterprise Ireland and others can attract businesses.

Recently I attended a meeting where Mr. Frank Daly, chairman of NAMA, outlined the progress of the agency to date. I recognise that in the past 18 months it has done much work in getting EU approval, acquiring a portfolio of loans, engaging with developers and recruiting staff. That takes time. Mr. Daly indicated that the agency is working with loans related to properties that are well-tenanted, such as office blocks, shopping centres and other retail and industrial premises. However, these active properties are not the kind I am discussing. I refer to properties that could have a high level of occupancy such as fourth generation office space instead of older office space that does not have the kind of future we need if we are to move forward.

I know the argument may seem irrelevant at this time but the issue is important if we are to create certainty in future markets and get to such a point in the next 18 to 24 months when it is predicted that we will need this type of office space. Now is the time to move forward and create certainty in the area. The point was made to me that NAMA can borrow up to €5 billion if it needs money to facilitate the development of properties to make them marketable. That has not been touched so far and I hope the Minister of State can answer that query. Why has NAMA not touched the funding as some would argue it should do now to get a return on those properties? I thank the Cathaoirleach for making time available and I look forward to the Minister of State's response.

I thank Senator Clune for bringing this matter to my attention and I will report the issues she raised directly to the Minister for Finance. NAMA has advised the Minister for Finance that the matter of unfinished estates is complex with no readily available solutions. Although NAMA must strive to achieve and set an overall strategy, solutions may need to be tailored individually to the environment and could include sale, rent or completion. In some cases, the only available option may be restoration to agricultural use.

NAMA participated in a working group set up by the Government to examine the issue and the extent of unfinished estates in Ireland. The group's report was published in June by the Minister of State responsible for housing and it identified 2,800 unfinished estates, categorising them by reference to the extent to which they required remediation. The report identified about 225 category 4 estates, which are deemed to require immediate remedial attention. NAMA debtors have loans with an exposure to 28 of those category 4 estates and the agency has committed to undertaking an analysis of the 28 estates with a view to developing site resolution plans which will address the most pressing issues that require remediation.

The board of NAMA has advised that it wants to realise 25% of its portfolio by the end of 2013 and this has been factored into the debtor business plan process. The rate of progress in this sales process will be affected by the demand in the market and the availability of purchasers. It will be a matter for the NAMA board to manage and deal with acquired properties in a commercial fashion case by case to maximise value and generate the best achievable financial return for the State. The chairman of NAMA has explained that the best commercial return will not be achieved by engaging in a fire sale of assets. This is consistent with the approach recommended by the National Competitiveness Council that a programme of disposals should be orderly.

Under the NAMA legislation, the agency has power to borrow up to €5 billion in working capital for the purpose of advancing new money to complete developments or projects where it is commercially advantageous to do so. All approvals of working and development capital are subject to a credit decision-making process which has been approved by the board of NAMA. This is a point the Senator raised. To the end of April 2011, NAMA had approved over €800 million in new money advances, for example, NAMA advanced new money for the completion and sale of the high profile Montevetro building to Google for almost €100 million.

NAMA is aware of the need to enhance the availability of information with regard to properties. In that regard, under an initiative currently in preparation, NAMA will include on its website a database of properties which are under the control of receivers appointed to enforce against NAMA debtors, appointed either directly by NAMA or by participating institutions working on its behalf. This will provide a single source of information on NAMA assets which are for sale and it will be updated on a very regular basis. NAMA is currently undertaking a risk assessment of the project and is conducting a rigorous process of data verification to ensure that the information is factually correct. The agency expects this risk assessment and data verification process to be completed shortly, which would enable it to launch the site within the next few weeks.

I welcome the fact that the website will be up and running shortly. That will contribute to the debate and towards moving matters forward by ensuring that properties, particularly commercial properties, reach a marketable position.

The Seanad adjourned at 2.55 p.m. until 2.30 p.m. on Tuesday, 5 July 2011.