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Annual Report & Financial Statements Annual Report & Financial Statements 2018 ANNUAL REPORT & FINANCIAL STATEMENTS Delivering on its mandate NAMA was mandated to deal expeditiously with the assets acquired by it and to obtain the best achievable financial return for the Irish State Annual Report & Financial Statements DELEVERAGING PROGRESS 2010 – 2018 €m 43,970 44,000 40,698 40,000 38,138 36,000 32,739 32,000 27,951 28,000 25,607 23,646 24,000 22,776 19,598 20,000 15,084 16,000 13,360 12,000 10,604 7,816 8,000 6,099 3,935 3,194 4,000 1,925 1,014 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year End Loan Portfolio Value Cumulative Cash Generation The evolution of NAMA April 2009 – April 2019 2009 2010 2011 2012 The Government decision €30.2bn NAMA establishes a to establish NAMA is first The first repayment of special purpose vehicle announced on 7 April 2009 by - NARPS - to expedite The EU Commission gives the €30.2 billion government- the then Minister for Finance, the delivery of social its formal approval for guaranteed senior bonds is the late Mr. Brian Lenihan TD. housing. the NAMA scheme in made – €1.25 billion is February 2010. redeemed. 75% The North Lotts and €71bn Grand Canal Docks area Over €71 billion in loan assets After enactment of the NAMA of the Dublin Docklands is acquired by NAMA from legislation in November 2009, is designated a Strategic the five participating NAMA is formally established 500 Development Zone by institutions (an additional Debtor engagement in December 2009. Mr Frank Dublin City Council - €3 billion in loans is acquired intensifies with over 500 Daly is appointed Chairman NAMA has an interest in in 2011). debtor business plans of the NAMA Board and Mr 75% of the developable formally reviewed in 2011. Brendan McDonagh is area. appointed as CEO. The evolution of NAMA April 2009 – April 2019 2013 2014 2015 2016 25% The Dublin Docklands SDZ 20,000 NAMA exceeds its end-2016 NAMA meets its first Planning Scheme is approved As more residential sites become cumulative senior bond major milestone by redeeming a by An Bord Pleanála and NAMA commercially viable to develop, redemption target of 80% cumulative 25% of senior bonds. intensifies its preparatory work the residential delivery - by end-2016, a cumulative in relation to the 15 sites in programme is expanded in late 91% of senior debt has been IBRC is liquidated and NAMA which it holds an interest. 2015 to facilitate the delivery of redeemed. is designated as the backstop 20,000 new units in Ireland by purchaser of any unsold assets. 2020. In response to improving market 4,500 units 4,600+ units A dedicated residential delivery demand, NAMA completes its NAMA completes its largest NAMA exceeds its end-2016 unit is established to enhance first major loan portfolio sale transaction, in terms of sales residential delivery funding NAMA's return from loans secured by Irish properties proceeds, with the sale of the target - 4,650 units secured by development sites (Project Aspen). Project Jewel portfolio of loans, delivered. - NAMA's initial target is to fund secured by Dundrum Town Centre the delivery of 4,500 units by and other retail assets. end-2016. Annual Report & Financial Statements 2018 In this Report Letter to the Minister for Finance 2 Introduction 3 Key Strategic Objectives set by the NAMA Board 4 Key Financial Indicators 2018 5 Key Business Highlights 6 2017 2018 2019 Chairman’s Statement 8 Chief Executive's Statement 10 Major Dublin Docklands SDZ 100% €529m Deleveraging Activity 12 In October, NAMA NAMA commences the milestone is achieved - all Disposals and Cash Generation 13 achieves its primary process of redeeming sites have moved beyond the commercial objective its subordinated debt planning stage with Asset and Loan Sales 14 by redeeming 100% of of €1.6 billion - €529m construction in progress or Significant NAMA Transactions in 2018 16 its senior debt, thus is redeemed in 2018. completed on NAMA-related eliminating the projects. Residential Delivery 17 contingent liability Residential Delivery Progress 18 of the Irish State. Methods of Delivery 20 NAMA's last major loan €40bn Residential Sites Sold 21 sale - Project Lee - is In October, cumulative Project Case Study 22 cash generation since completed. By end-April, a cumulative Examples of Residential Projects 24 inception exceeds €40 10,000 residential units have billion. been delivered since 2014 through NAMA funding under Dublin Docklands SDZ 27 its residential delivery Progress to Date 28 programme. Active NAMA Projects 29 Poolbeg West SDZ 32 Social and Economic Contribution 33 Resolution of Unfinished Housing Estates 34 Social Housing 34 Wider Economic Contribution 38 Financial Review 39 NAMA Organisation and Governance 44 Organisational Structure 44 Board Members 46 Board and Committees of the Board 49 Reports from Chairpersons of NAMA Committees 52 Code of Practice for the Governance of 58 State Bodies 2016 Disclosure and Accountability 59 Risk Management 60 Consolidated Financial Statements 61 Glossary of Terms 159 2 Introduction 10 May 2019 Mr. Paschal Donohoe T.D. Minister for Finance Government Buildings Upper Merrion Street Dublin 2 Dear Minister, We have the honour to submit to you the Report and Accounts of the National Asset Management Agency for the year ended 31 December 2018. Yours sincerely, Frank Daly Brendan McDonagh Chairman Chief Executive Officer Annual Report & Financial Statements 2018 3 Introduction Introduction Deleveraging Activity Key Strategic Objectives set by the NAMA Board 4 Key Financial Indicators 2018 5 Key Business Highlights 6 Chairman’s Statement 8 DeliveryResidential Chief Executive's Statement 10 Dublin Docklands SDZ Social And Economic Social And Economic Contribution Financial Review NAMA Organisation Governance Financial Statements WWW.NAMA.IE 4 Introduction Key Strategic Objectives set by the NAMA Board Driving transformation through our strategic objectives 1 2 3 The Board’s primary commercial In order to meet its primary NAMA will facilitate the delivery objective is to meet all of its commercial objective (as at of Grade A office accommodation remaining subordinated debt and 1 above), NAMA will manage in the Dublin Docklands SDZ; it equity obligations and, subject to assets intensively and invest will contribute, not only in terms prevailing market conditions, to in them so as to optimise their of project funding, if required, generate the largest surplus that income-producing potential but also in bringing coherence, can feasibly be achieved by the and disposal value. Through its direction and drive to the time it completes its work. It disposal activity, it will continue delivery process. aims to meet all of its future to generate transactions aimed commitments out of its own at sustaining the strong resources. performance which the Irish property market has experienced over recent years. 4 5 NAMA aims to facilitate the Subject to the primacy of its completion of 20,000 new Section 10 commercial mandate residential units, subject to but often complementing it, commercial viability, principally NAMA will seek to make a positive in the Dublin area, in the period social and economic contribution to the end of 2020 and, through across the broad range of intensive asset management of its activities. residential sites, aims also to maximise the number of sites that are ready for development. Annual Report & Financial Statements 2018 5 Key Financial Indicators 2018 Introduction A continued strong performance Deleveraging Activity in terms of profitability Cash generation and profit in 2018 represent notable increases on DeliveryResidential 2017 figures. This is despite the reduced size of NAMA’s loan portfolio and reflects, in part, the realisation of value enhancement work undertaken in relation to the portfolio in earlier years. NAMA’s continued strong performance in terms of profitability has enabled Dublin Docklands SDZ the Board to revise its projected terminal surplus from €3.5 billion to €4 billion. Social And Economic Social And Economic Contribution 2018 PROFIT 2018 CASH GENERATION Financial Review €795m €3.27bn 2017: €481 million 2017: €2.56 billion NAMA Organisation 2018 SUBORDINATED BOND REDEMPTIONS 2018 DISPOSAL RECEIPTS Governance €3.14bn €529m 2017: €2.43 billion 2017: Zero Financial Statements WWW.NAMA.IE 6 Introduction Key Business Highlights 2018 Delivering on our strategic objectives RESIDENTIAL DELIVERY STATUS AT END-MARCH 2019 9,759 3,000 4,300 Since 2014, NAMA has funded An additional 3,000 units NAMA holds security over the construction of 9,759 new are under construction or residential development land residential units in Ireland on have funding approved on which planning permission residential sites securing its for construction in active has been granted for an loan portfolio. residential developments additional 4,300 units. controlled by NAMA debtors and receivers. 3,700 13,400 Over 3,700 residential units The overall total number of have been delivered on sites residential units directly and previously secured to NAMA indirectly facilitated and for which NAMA had funded delivered by NAMA is over planning permission, enabling 13,400. works, legal costs or holding costs. Annual Report & Financial Statements 2018 7 Introduction DUBLIN DOCKLANDS SDZ STATUS AT END-MARCH 2019 Deleveraging Activity Residential DeliveryResidential 4.2m sq. ft. 1.14m sq. ft. 1.46m sq. ft. Strategies have been agreed and are To date, NAMA has facilitated the The remaining sites in which being implemented for 100% of Dublin construction of 1.14m sq. ft. of NAMA retains an interest are Docklands SDZ sites in which NAMA commercial space (mainly Grade currently under construction with originally had an interest. These sites A offices) and 190 apartments. expected completion of 1.46m sq. ft. will ultimately deliver 4.2m sq. ft. of and 416 residential units in phases Dublin Docklands SDZ commercial space and some 2,200 during 2019, 2020 and 2021.
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