NAMA in danger of just being a debt collector -- CIF boss
Industry needs capital funding from agency
Published 12/09/2011 | 05:00
THE country's construction industry will warn today that the National Asset Management Agency (NAMA) is in danger of becoming just a "debt collection agency'' which is not prepared to lend the kind of working capital required to revitalise Ireland's infrastructure and building trade.
In an address today, Matt Gallagher, the president of the Construction Industry Federation (CIF), is expected to warn that NAMA needs to start "recycling'' funds within the building industry and not just simply collecting debts.
He will say the onus on NAMA has increased because the traditional lenders are simply not able to supply credit to contractors, builders or those involved in infrastructural development.
"Unfortunately, under current market conditions, the credit institutions are not capable of providing any credit. This has increased the importance of NAMA as a source of funding to the construction industry,'' he will state.
"The credit crisis has enormously increased the role that NAMA must play in financing the property market. This was probably never envisaged when the legislation was being enacted but this being the case, there is a huge onus on NAMA to recycle funds within the industry rather than just be a debt collection agency,'' Mr Gallagher will add.
The building industry has been very reluctant to comment on NAMA since it was established in December 2009, often concentrating on lobbying the organisation behind the scenes.
Mr Gallagher's speech will emphasise that the working capital so far extended by NAMA, believed to be about €900m, is not enough.
Builders claim in private that NAMA effectively has a stranglehold over everything they do.
For example, NAMA largely controls all their loan security and can decide if the builders are able to get funding from other lenders. NAMA also controls their asset disposal strategy and salary levels of senior employees.
Several major developers have tried to refinance their loans out of NAMA, but this remains a rare event.
"NAMA can play its part in supporting the restoration of a functioning property market and construction industry by effectively deploying working capital,'' a draft of Mr Gallagher's speech says.
"NAMA must be provided with sufficient working capital for the job in hand.
"Even allowing for development of a small proportion -- less than 10pc of available projects -- NAMA requires working capital considerably in excess of that currently available to it.
The organisation is also expected to mount a serious attack on the idea of changing upward-only rent review clauses on existing lease contracts, something the Government is committed to reforming.
"If the Government goes ahead with a blanket decision to amend legislation relating to existing business leases, billions more will be wiped off the value of NAMA's portfolio and Irish commercial property generally," Mr Gallagher will insist.