Apparently Frank is now making an offer which you might find difficult to refuse if you’re a developer. This worked example would seem to be how the deal works.
You are a developer with a €100m loan on a development.
NAMA bought the loan from your bank for €42m
NAMA gets your business plan and together you work out a plan whereby the development will be sold for €45m
The development actually sells for €50m
NAMA will give you a cheque for €300-450,000, just for yourself.
The above is based on Emmet Oliver’s article in today’s Independent in which he claims such deal terms are now on offer from NAMA. The “Frank” is Frank Daly, the NAMA chairman. The claim is that NAMA is offering a 6-9% bonus to developers on any excess value received on a development, above the value agreed between NAMA and the developer in the business plan. It is reported that NAMA will not put the bonus into a legally enforceable agreement but it will be in the memorandum of understanding, and the deal is conditional on co-operation and a full disclosure of assets by the developer. Apparently NAMA is not in a position to confirm the details, but it does have a ring of credibility about it.
Of course, if you’re a developer, the trick will be to convince NAMA in the above example that the best the agency can possibly get for the development is €40m, so when it comes in at €50m you’ll get double the bonus. Or if you’re a really tuned-in developer, you might be able to find out what NAMA paid for the loan and pitch the base sale value at that level, since NAMA is going around telling everyone its primary objective is to recover what it has paid for the loan.