NAMA will act against developers who have 'yet to adapt'
NAMA expects to take legal action against developers who have "not yet adapted to the new realities some three-and-a-half years after the property market collapsed", chairman Frank Daly said yesterday.
Mr Daly conceded in a speech to the Licensed Vintners Association that only 11 of the top 30 debtors had signed a memorandum of understanding with NAMA and he gave no details about how many had also signed two other documents needed by NAMA to proceed.
Receivers had been appointed to two of the top 30 debtors who together owed €27bn to the agency, Mr Daly added.
"It is likely that enforcement action will follow for some of those in negotiation as some debtors are making little effort to progress matters and have not yet adapted to the new realities," the former head of the Revenue Commissioners told publicans at their annual general meeting in Dublin.
Mr Daly said his agency was preparing to request and review draft business plans from another 145 debtors whose loans would be directly managed by NAMA staff.
These developers would have to supply less information than their larger rivals in an effort to streamline operations, he added.
"It is our objective to have all these major debtor business plans reviewed by year-end; however, I would stress that this depends on the timely submission of plans by debtors. We are having to put some pressure on some debtors to actively engage in this work," he said.
It is not the first time NAMA has threatened enforcement action against developers.
Chief executive Brendan McDonagh said last September the agency was clamping down on unco-operative developers and threatened legal action.
Mr Daly said yesterday that NAMA had sent in receivers in 41 cases to date.
The agency has acquired debts from a total of 850 developers, although most of these loans are being managed by the banks.
Turning to the hotel sector, the NAMA chairman said 83 Irish hotels had been used as security for loans with NAMA.
"NAMA has acquired loans which are secured by 83 hotels in Ireland -- 30 in Dublin, 24 in Leinster (excluding Dublin), 17 in Munster, nine in Connacht and three hotels in Ulster," he said.
"Hotels with debt due to NAMA account for less than 10pc of the total number of hotels in Ireland and it is pretty well known that there are at least two non-Irish lending institutions with a significantly greater exposure to the sector (about 300 hotels combined) compared to the 83 in NAMA."
Mr Daly said the agency had no interest in directly managing the hotels or operating so-called zombie hotels that were kept going to avail of tax reliefs which were only paid if a hotel remained open for several years.
"We are acutely aware of the excess capacity of 15,000-20,000 rooms nationally. What is of interest to us is whether or not they are fundamentally viable on a medium-term basis; in other words, whether they are capable of generating sufficient sustainable cashflow to service the debt associated with them," Mr Daly said.
NAMA is looking at alternative uses for hotels which are not viable such as nursing homes or student accommodation.
"In circumstances where we must take greater control, we will look at options such as paired sales -- placing hotels into complementary groups and arranging for their sale to investors who may not necessarily be interested in the purchase of individual hotel assets," Mr Daly added.