The chairman of NAMA (National Asset Management
Agency), Frank Daly, said today that the agency is exploring ways by which it
can provide finance for commercial and residential property deals as part of its
efforts to restart the Irish property market. Separately, NAMA welcomed the
decision of the Supreme Court today that the legislation governing NAMA, is
Daly was speaking Tuesday at the launch of the Society of
Chartered Surveyors Ireland -- the result of the merger of the Society of
Chartered Surveyors and the Irish Auctioneers and Valuers Institute. The new
society represents 4,000 professionals working in the construction, land and
He said that NAMA sees it as "very much part of
our brief" to generate transactions in the market. He said that "many
sellers may still retain unreasonable expectations of the prices that can be
realised for the foreseeable future" and that the only way that the market
can be lifted out of its 4 year hiatus is by generating transactions "at
whatever prices buyers are currently willing to pay."
Further enforcement actions likely
Daly warned that the agency will be taking further enforcement action
"shortly" against some of the thirty largest developers whose debts have
been acquired by the agency and whose business plans were not viable or who were
attempting to prolong the process as much as they can while not dealing with the
issues; "it is likely that we will end up enforcing against these debtors in
the near term also."
The meeting also heard that NAMA has set a deadline of the end of April for
the submission of business plans by the second tier of debtors - - some 145
people. These collectively account for some €34bn of debts. Daly said that if
these borrowers do not meet this end of April deadline, "we will not indulge
them further" and will proceed straight to enforcement.
Property sales to increase in months ahead
Looking ahead, the chairman predicted that "quite a number of properties
will be going on the market over the rest of this year and into next year"
to add to the €2.7bn in property assets whose sales have been approved by NAMA
over the past twelve months. Daly predicted that many transactions similar to
the recently announced purchase of the Montevetro Building in Dublin by Google
would be facilitated over the coming months and said that the agency had seen
enormous interest from foreign investors in properties with good yields that are
likely to be coming up for sale.
On Irish property valuations, Daly said that NAMA’s view on valuations was
that the bulk of the decline has already occurred in property prices but that
the agency was less sanguine in its view of residential property which may have
a little more to fall than in the case of commercial property which is already
60% down from peak.
Upward Only Rent Reviews
On the issue of retrospective legislation to prevent Upward Only Rent Reviews
on existing leases, Daly said that there was merit in many of the arguments made
by opponents and supporters of the proposal. However he warned that there was a
substantial risk that a retrospective ban on existing contracts with upward only
review clauses would give rise to litigation which in turn could prolong the
current stasis in the market at a time when stability and certainty is needed to
attract foreign investors. Daly, stressing that he was not commenting on
Government policy, stated that, one way or another, the current uncertainty
needs to be removed as quickly as possible so that we can maintain and
capitalise on the appetite of those with funds for investing in Irish property.
Whatever decision is to be made should be made quickly so that the market can
digest it and move on..
Property bubble raises questions for the profession
Finally, Daly spoke of the property bubble in Ireland and the questions it
raised for the two professional bodies which were merging to form the new
Society. He questioned whether the two bodies might have been more vigilant
in drawing attention to the enormous systemic risk that was being created
through the bubble and suggested that, in hindsight, the two bodies should have
signalled some concern that what was taking place was unsustainable. He
proposed that the new Society should consider undertaking a critique of the
performance of the profession during the evolution of the property price bubble
and use that as a learning mechanism for the future.
John Curtin, the new Society’s first President,
said it was clear the country would be paying for the mistakes which were made
across the economy for quite some time and while there was no magic formula it
was now time to roll up the sleeves and come up with solutions.
"As professionals in the property and construction sector we are not
immune from criticism for our involvement in the creation of an unsustainable
property market. We have to take those lessons on board and the main objectives
for the Society of Chartered Surveyors Ireland will be to use our greater
resources to maintain the highest professional standards and enforce regulation
of our members. Our overriding priority however must be to act in the public’s
best interests at all times."
Curtin said it was an exciting day for the profession and he hoped it
marked the beginning of a more positive narrative for the property and
“A lot of the groundwork for reform has now been done but we need to
move on and take the next steps for the wider economy and consumers. These
include the setting up of a property register, the establishment of a commercial
property database and reform of the way rates are levied on commercial premises.
But we also need imaginative intervention to kick start the construction sector,
to create employment and ensure the skills and expertise built up over the last
20 years are not lost,” he concluded.
The Supreme Court today ruled that the
legislation governing the NAMA is constitutional, but the court found that
developer Paddy McKillen should have the right to make representations to the
agency before his loans are acquired.
The court was giving its decision on the remaining elements of McKillen's
challenge to NAMA.
Last month it ruled that the original decision to take in McKillen's loans was
invalid, because it was made before the agency was officially established.
The Supreme Court did not agree that the definition of eligible bank loans in
the NAMA legislation was too broad and was unconstitutional. However, it
unanimously found that McKillen and his companies, and people such as them, do
have the right to make representations before any decision is taken to acquire
The court said McKillen and his companies were entitled to be informed by NAMA
of any intention to consider making a decision to acquire his loans, so as to
give them an opportunity of making representations concerning such a decision.
NAMA has not yet made a decision to acquire McKillen's loans and he and his
companies owe more than €2bn to banks participating in the agency.
Farnk Day commented:"On behalf of the
board of the National Asset Management agency, I welcome the decision of the
Supreme Court today which confirms the constitutionality of the NAMA Act. The
outcome of this hearing is an important confirmation of the legal standing of
NAMA and eliminates any uncertainty in this area.
We will study the decision carefully with our legal advisors and we note the
finding of the Court that Mr. McKillen and his companies have the right to make
representations to NAMA before the agency makes a decision to acquire the bank
NAMA has made important progress in the 15 months since it was approved and has
an important agenda of work to progress. Our purpose remains that of operating
as efficiently, objectively and fairly as possible in order to deal with the
onerous task entrusted to us.
I want to express our appreciation to the current and former Attorneys General,
the CSSO [Chief State Solicitor’s Office], Department of Finance and our legal
teams and the NAMA executives for the huge amount of work which they put into
this hearing to defend NAMA and the Act."