As the deputy is aware NAMA has acquired loans from the five participating institutions and is not the owner/operator of properties. The Agency's role is that of a secured lender. Other than properties that have been enforced, all of which are listed on NAMA's website and which are managed by the appointed receivers/administrators, properties continue to be managed by their existing owners or their professional managers/agents albeit NAMA takes a very close interest in their efficient management and sale with a view to maximum loan repayment in order to protect the position of the taxpayer.
NAMA's primary concern is that properties securing its loans are professionally managed at the most economical cost to ensure that rental and occupancy is optimised towards the servicing of interest and capital repayment on related loans. The owners/professional managers are responsible for the efficient running of properties, the collection of rents and service charges, arrangements for letting of vacant units and the operation of rent reviews in accordance with the leases into which tenants have entered. As lender and holder of security on the asset, NAMA's approval is needed for key decisions such as significant new leases, rental reductions or abatements and plans for ultimate sale of the property.
On the issue of rent abatements, as I have previously advised NAMA has published very clear Guidelines, available onwww.nama.ie, for tenants seeking a rent reduction from a NAMA debtor or receiver. It is important to emphasise that applications for rent abatements may be made in situations where tenants of NAMA debtors can demonstrate that the rents payable under their current leases are in excess of current market levels and, as a result, that the viability of their businesses is threatened. In such circumstances, tenants may seek NAMA’s approval for rent reductions. The Guidance Note is not intended to provide benefits to tenants whose businesses are trading profitably and who are in a position to honour their current contractual arrangements on rent. By the end of May 2012, the Agency had approved 145 applications for rent reductions under these Guidelines with just 4 applications refused.
NAMA is prohibited by Sections 99 and 202 of the NAMA Act and the normal rules of banking confidentiality from commenting on individual debtors or arrangements between tenants and landlords who may be borrowers from NAMA but NAMA assures me that in its role as lender/security holder it responds promptly and pragmatically to requests from its borrowers regarding lease arrangements including rent abatements on their properties where there is a justifiable case.
NAMA does not pay consultancy fees to debtors. As previously advised to the House it is the Agency's practice to allow debtor companies to retain overhead costs from rental or other income that are produced by their assets where this is necessary for the operations of the debtor companies. The level of overhead is only agreed following a thorough and rigorous evaluation of the debtor's business plan by NAMA. Each cost element is reduced to the minimum and NAMA advised that the level of overhead sanctioned by NAMA typically represents a very significant reduction on the level which prevailed prior to NAMA acquisition of the loans: typically, reductions of 50% to 75% in overhead costs have been imposed by NAMA.
