NAMA Oireachtas Committee on Housing and Homelessness 12 th May 2016
NAMA - Overview NAMA acquired loans, the debtors own the properties NAMA’s relationship to property is the same as AIB or BOI as secured lender The management and sale of properties is carried out by owners or receivers 2
Section 10 of the Act requires NAMA to Obtain the best Deal MANDATE achievable expeditiously financial return with assets for the State acquired by it NAMA has a clear commercial mandate Protect or otherwise enhance the value of those assets 3
NAMA - Overview Acquired land and development and related property loans in 2010 and 2011 Did not acquire residential mortgages (owner-occupier or buy-to-let) Collateral included approximately 14,000 completed residential property units in Ireland (less than 1% of the estimated 2m houses and apartments in Ireland) 50% of these units were tenanted or quickly became tenanted after NAMA acquired the loans The rest were offered for social housing 4
Social Housing Delivery 6,635 Identified by NAMA 4,104 0 2,531 No Longer Demand to be determined Demand Confirmed Under Consideration 2,042 § 1,647 NAMA has invested over € 100m Contracted/delivered Sold or let to make properties ready for social housing. 211 2,457 § In addition NAMA has spent Deemed unsuitable Terms agreed/ or no demand in active negotiation € 160m acquiring properties to rent by NARPS to AHBs. 278 § Over 2,000 delivered to date. Pre-appraisal § Approx. 5,700 in total delivered under Part V in 2002-2011. 5
Offered all vacant NAMA has no control houses and over the take-up of apartments within properties original NAMA portfolio Social Housing Delivery Key NAMA facts Where no demand - properties are NAMA makes NAMA agreed a long- made available for whatever funding is term successful families/individuals needed to make leasing model with in the private housing habitable standardised lease residential sales or rental market
Social Housing Methods of Delivery Direct sale to AHB/LA by NAMA Debtor or Receiver 39% Direct lease to Acquisition by In 2015, 73% of all delivery AHB/LA by NARPS and through NARPS NAMA Debtor onward lease or Receiver to AHB/LA NARPS acquisition costs: 55% 6% €160m 7
Social Housing Delivery - By Local Authority Area 8
Social Housing Delivery - County Breakdown 9
NAMA’s Social Housing Programme Examples of properties delivered for social housing The Mills, Lismore, Co. Waterford Tallaght Cross West, South Dublin Parkton Mews, Enniscorthy, Co. Wexford Long term lease of 8 houses to Co-Operative Long term lease of 65 apartments to Tùath Long term lease of 15 houses to Co- Housing Ireland (formerly NABCO). Housing. Operative Housing Ireland (formerly NABCO). 10
Sale of Residential Property 1,562 11,219 12,781 (12%) (88%) 1,562 or 12% were sold 12,781 residential in portfolio sales – these 11,219 or 88% of these properties sold by properties were already were sold to individual NAMA debtors and tenanted and vacant house buyers receivers in Ireland possession was not since 2010 sought prior to the sale Sale of tenanted properties attract interest from investors seeking long-term rental streams, rather than seeking to sell the properties in the short-term, and therefore existing tenancy arrangements tend not to be impacted 11
Sale of Loans NAMA debtors/receivers do not seek vacant possession of residential property Prior to selling any loans linked to residential property, NAMA ensures that scope to use the properties for social housing has been exhausted NAMA also carves out loans secured by sites that can contribute to its 20,000 target Ruby and Emerald portfolios : NAMA carved out loans of 16 debtor connections from the proposed loan sale as it identified properties owned by these debtors that could be used to deliver additional residential supply on a commercial basis, funded by NAMA Arrow: NAMA decided to retain a number of loans secured by residential development sites and in cases where local authorities indicated that certain residential units were suitable for social housing, the loans concerned were also withdrawn from the sale
Sale of Loans NAMA’s Approach 425 properties were removed from the Project Arrow loan sale for onward leasing or direct sale to local authorities and approved social housing bodies. Examples include: Barr na Claise, Chapel Hill, Innishannon, Cork 11 Cork County Council Glanerought, Kenmare, Co. Kerry 7 Túath Housing Rookery Road, Innisfallen, Killarney, Co Kerry 6 NABCO Cluain Ros Leamhain, Ennis, Co Clare 8 NABCO Gleann Cora, Newmarket on Fergus, Clare 6 Clare County Council Ardán na Mara, Youghal, Co Cork 14 Cork County Council 13
Sale of Loans NAMA’s Approach Example of other properties where work is currently underway: Lough na Glack, Fruithill Manor, Aisling, The Paddocks, Leas na Mara, Carrickmacross, Carlow Town Shanvogh, Ennis, Williamstown Ballymoneen Co Monaghan Co Clare Road, Waterford Road, Co. Galway 38 NARPS units 72 NARPS units 50 NARPS units 24 NARPS units 34 NARPS to be leased to to be leased to to be leased to to be leased to units. Works to North & East. Co-Operative Tùath. Works Oaklee Housing. commence on Works to Housing Ireland. complete with Works complete site August commence on Works underway units to be with units to be 2016 site this month on site handed over handed over this shortly summer 14
Sale of Loans NAMA’s Approach Example of other properties removed from loan sales: Project Arrow Project Abbey Project Ruby & Emerald • Lands with the potential • • Lands with the Lands with the to build 817 residential potential to build potential to deliver units were identified and 924 housing units 931 housing units removed were removed have been removed • An additional 106 for residential houses and apartments development which have been built, purposes partially built, or not completed, were removed from the loan sale for completion and sale, or onward lease to social housing bodies 15
Residential Development Land Active strategy in place for every hectare of land within the portfolio Estimated 1500 hectares required to deliver NAMA’s 20,000 target Wide-ranging barriers to the delivery of new housing on remaining land – most particularly commercial viability and infrastructure deficits 16
Commercially viability remains marginal - even in the Dublin area Development Costs Sale Price (Ex. Vat) 350,000 300,000 Development feasibility study – 250,000 based on 3-bed semi-detached 200,000 house in North 150,000 Dublin and assumed profit on 100,000 costs 15% Not Commercially Viable 50,000 - 2009 2010 2011 2012 2013 2014 2015 2016 Q1 17
Development just becoming viable – in Dublin, Dublin commuter belt, Cork and Galway Residential construction - Profitability 2010 – 2016 (based on CSO RPPI) Profit / Loss 30,000 Live example of 20,000 North County 10,000 Dublin project - -10,000 -20,000 -30,000 -40,000 -50,000 -60,000 2011 2012 2013 2014 2015 2016 Q1 18
But viability remains marginal - in Dublin, Dublin commuter belt, Cork and Galway Sensitivity of profit to sales price variances Profit / Loss 5% increase 50,000 Development raises profits to € 30,000 40,000 profit/loss 5% price assuming all 30,000 reduction costs remain eliminates 20,000 constant profit 10,000 - -10,000 -20,000 -10% -5% 0% 5% 10% Sales price variances 19
Cost of Building a House Source: SCSI
Infrastructure deficits holding back supply in key growth centres Dublin Housing Supply and Co-Ordination Task Force (Jan 2015) “The number of new homes [within the four Dublin local authorities] which are constrained by immediate strategic infrastructure deficits and for which planning permission for new homes is not possible until these deficits are addressed amounts to 48,490 homes. The total indicative costs of these immediate strategic infrastructure requirements, excluding public transport, amount to € 164.2m comprised as follows:” Constrained Units Estimated Cost Infrastructure ( € million) Fingal County Council 24,150 66.5 Dublin City Council 5,400 48 South Dublin County Council 1,940 4.7 Dùn-Laoghaire Rathdown County Council 17,000 45 Total 48,490 164.2 21
Infrastructure deficits holding back supply in key growth centres Continued… “Whilst recognising that it may be some time before the full extent of this funding is required in the context of existing cumulative development potential, initial investment of the order of € 62.7m has been identified by the relevant local authorities as essential to initiative the process of relieving the most critical yet resolvable blockages.” Fingal County Dublin City Council South Dublin County Dùn Laoghaire-Rathdown Council Council County Council Donabate Poolbeg Ballycullen/Oldcourt Cherrywood 4,000 4,000 2,400 1,600 Baldoyle North Fringe Stepaside/Kilternan Woodbrook/Shangaragh 1,000 1,000 2,500 1,000 Rush Cherry Orchard Newcastle Old Conna 1,350 2,000 500 1,350 Lusk 1,350 Swords 7,500 22
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