PRESS STATEMENT – 13th October 2015
NAMA Residential Delivery Programme 2016-2020
At the request of the Minister for Finance, the NAMA Board has carried out a preliminary, high-level analysis of development sites controlled by its debtors and receivers with a view to identifying the scope for residential delivery over the five-year period to the end of 2020. Based on this preliminary analysis, the Board has informed the Minister that a delivery target of 20,000 residential units before the end of 2020 is potentially achievable:
§ Sites capable of delivering
14,000 units are commercially viable to develop based on current sales prices, current planning and current completion costs.
§ Sites capable of delivering at least another
6,000 units are commercially marginal to develop at current sales prices but may become commercially viable through intensive asset management and planning work by NAMA. The provision of requisite infrastructure by the local authorities, Irish Water and Transport Infrastructure Ireland will also contribute to the commercial viability of some sites.
NAMA is currently carrying out a detailed, site-by-site, bottom-up review of the residential sites controlled by its debtors and receivers with a view to refining the potential delivery programme.
Key points:
· The Board considers that, given current market conditions, NAMA can fund the delivery of 20,000 residential units by 2020 without compromising its commitment to repay all of its senior debt by 2018 and its subordinated debt by 2020.
· The overall programme - funding the development of 20,000 units - will require total expenditure of €4.5 billion with peak funding at €2.5 billion – this will come from NAMA’s own cash resources.
· NAMA’s capacity to fund the residential programme is based on its current expectation of a projected surplus of €1.75 billion (upper-range) over and above the funds required to redeem all of its senior and subordinated debt. Essentially, the programme will require investment of the projected NAMA surplus to ensure expeditious housing delivery. Ultimately, it is expected that the surplus will be enhanced by the programme and will be available to the Minister after the sales proceeds from the programme have been received.
· Achievement of a 20,000 residential unit funding delivery target will be very challenging: NAMA will need to have at least 100 sites concurrently active (there are about 40 active sites at present). It will need to fund the delivery of houses/apartments at an average run rate of 80 per week (4,000 p.a.) compared to 30 per week (1,500 p.a.) at present.
· The programme is expected to generate some 30,000 jobs in the construction industry and in ancillary activities.
· Based on initial analysis, a high proportion of the sites which are currently commercially viable are located in Dublin and in neighbouring counties and in other large cities. It is estimated that over 90% of the 20,000 target will be in the Greater Dublin area (Dublin, Meath, Kildare and Wicklow) where the current residential supply shortage is most acute.
· It is expected that about 75% of the 20,000 target will be houses, mainly starter homes.
· Achieving the demanding housing target of 20,000 units will require NAMA to retain and recruit the necessary expertise to meet this new strategic challenge.
· To achieve the target, NAMA will work with existing debtors, where possible, but it will also work on a commercial basis with developers with no current links with NAMA. It will seek out JV and partnership arrangements to ensure that a broad range of developers and contractors have an opportunity to contribute to the residential delivery programme.
· It will be necessary for NAMA to review its output on an ongoing basis, taking into account the market’s absorption capacity and economic conditions more generally. If there should be a build-up of unsold stock, NAMA will reduce output pending recovery of the market’s capacity to absorb new supply.
· In addition to aiming to fund for delivery of 20,000 units by 2020, NAMA will also continue to review and manage other sites in the portfolio and it is possible that some of these will also become viable over the period to 2020, particularly if infrastructural deficits are addressed by the local authorities, Irish Water and Transport Infrastructure Ireland.
· Given the vital importance of ensuring, for social and economic reasons, that new residential supply is delivered as quickly as is feasible, NAMA will work closely with local authorities and with utilities to ensure that all relevant bodies co-operate effectively to deliver the programme. It is crucial, in particular, that sufficient resources are available in the local authorities and in An Bord Pleanála to deal with planning issues expeditiously.
Mr. Frank Daly, Chairman of NAMA, said:
We are satisfied, based on current market conditions, that this proposed residential delivery programme can be funded without compromising our commitment to redeem all of our senior debt by 2018 and our subordinated debt by March 2020 and without reducing our projected terminal surplus of €1.75 billion. This initiative is designed to maximise the return that NAMA can generate on behalf of taxpayers from funding the development sites under its control. It will represent a major commitment by NAMA in terms of its social and economic contribution. Housing is badly needed and we are delighted that we can play our part in providing it.
Mr. Brendan McDonagh, NAMA CEO, said:
This scale of this proposed residential funding programme represents a major and interesting strategic challenge for NAMA but it is one that we as a team will address with great energy and commitment. We will work with our existing debtors where possible but the scale of the challenge is such that we will also work in partnership with contractors and counterparties to ensure delivery of this ambitious residential programme. Other bodies, such as local authorities and utilities, will also have a major role to play to ensure delivery of the programme.
Issued on behalf of NAMA by
David Clerkin
Gordon MRM
Ph: + 353 1 665 0454
Mob: + 353 87 830 1779
e:
nama@gordonmrm.ie
