Without even having completed the first tranche (and remembering that there are valuation issues with 3 of the 4 financial institutions whose first loans have transferred and that the question of EU approval of the first tranche apparently remains), NAMA told the Independent yesterday that it has begun spending its development pot to provide funding to developers “if the projects make sense”. There had been suggestions from some quarters that NAMA would need wait until all the loans had transferred so that allocating the €5bn pot could be prioritised. It is not clear what projects have received what NAMA describes as “small amounts”.
The Independent goes on to say that some of the developer business plans in respect of the first 10 developers remain outstanding. Previous media reporting has suggested that some of the business plans that have been submitted have been returned because they are not judged realistic or they assume further interest roll-ups. Today’s Independent article implies that NAMA is considering allowing the roll-over of debts. The article also implies that NAMA still has the ability to obtain information from the Revenue, something which the EU Decision had apparently put paid to. Lastly the article states that developers will be forced “now” to sell underperforming or unprofitable assets – this is in concert with rumours that NAMA will dispose of assets as soon as May 2010.
Meanwhile no word on Anglo whose first tranche was estimated to be 63% (€10bn out of €16bn) of the total first tranche for all 5 institutions. Also NAMA have not apparently filled the vacancy for a third party provider of services to analyse the business plans.
I think the commencement of spending from the development pot is to be welcomed for sound projects. Although €5bn is a limited sum, I think NAMA will be able to attract significant additional finance from third party investors as NAMA acts as a matchmaker between distressed developers and investors. The construction and property sector is on its knees and as long as the spending is viable, it will safeguard and build wealth and employment.