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Dragon Lords - Ireland’s New Real Estate Empire

22 March 2012

The National Asset Management Agency (NAMA) now owns most of the real estate and development loans previously made by Irish banks. NAMA is not the owner of the underlying assets, although it can trigger a statutory process to become the owner in specific circumstances. In the Year of the Dragon, will the Irish people experience the associated dragon traits of power and wisdom from NAMA, or will its intended advantages prove to be illusory?

NAMA acquired loans at the market value of the underlying assets in November 2009. Real estate values have continued to fall since then and NAMA is now facing substantial paper losses. It is difficult for NAMA to explain this reality to the public, but it must do so, as otherwise public opinion will not tolerate the resulting losses.

To Hold or Not to Hold?

One of the basic principles of establishing NAMA was that it would be in a position to hold real estate in the longer term, thereby allowing for a recovery in market value before realisation.

Some might consider that the very low cost of NAMA funding, compared with most other funding sources, would mean that it should hold all assets for as long as possible to maximise the chance of some return for the Irish taxpayer. Additionally, this would minimise the risk of embarrassment to NAMA and the State if a purchaser from NAMA was to make a substantial profit as a result of NAMA selling at the bottom of the market.