Business Irish

Monday 19 February 2018

'Bad bank' generates €4.4bn from rents and sell-offs

Donal O'Donovan and Peter Flanagan

THE National Asset Management Agency has made €6.9bn from the sale of 3,900 properties since the agency was set up in 2009, according to new figures published by the state controlled "bad bank".

It threw off €4.4bn in cash over the past year alone and is sitting on a cash pile of €3.6bn, according to an end of year update released yesterday.

The huge income being generated by the state agency is a mix of rental income from NAMA-linked property as well as the proceeds of assets sales.

The €4.4bn in cash that NAMA took in over the course of 2012 was made up of €1.3bn in rents, interest and other "recurring income" plus €3.1bn made by selling loans and property.

At the same time the agency paid out €3.5bn to the main banks, to redeem some of the €30bn in IOUs that NAMA used to pay for the vast portfolio of property loans it bought from the bailed-out banks.

The repayment, along with earlier payouts means that NAMA is on course to cut the amount it owes to the banks to €22.5bn by the end of this year, down from the original €30bn.

That is a hard target, because Finance Minister Michael Noonan and the EU/IMF team have included a commitment for NAMA to have repaid €7.5bn by the end of this year in the updated bailout agreement.

A relatively minor €300m in start-up costs has already been repaid to the Department of Finance.

NAMA will only break even when the debt to the banks has been repaid, ideally over the 10-year life of the agency.

Any cash left after that would mean a "profit" to the State, though only if losses in the wider banking sector are not taken into account.

On the day-to-day running of the agency, NAMA said the controversial "80:20" deferred payment initiative mortgage scheme has been used to finance the sale of around 100 houses so far, worth more than €18m.

The scheme protects buyers against falls of up to 20pc in the value of the proprieties over the next five years.

It was launched in October for an initial 295 houses in 12 counties.

The scheme will now be expanded to 750 properties, NAMA said.

When it comes to commercial rents, NAMA said it had received 276 applications to cut rent during the year.

Of those, 212 were approved, providing a rent abatement with an aggregate value of €13.5m, while another 56 are currently being reviewed. Only eight were refused.

In a sign of just how big a role the agency has in the day-to-day economy, NAMA said it has made more than 17,000 credit decisions during its existence.

Those include straightforward credit decisions and "highly complex and substantial applications".

Decisions are being made on average within five days, NAMA said.

Irish Independent

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