CHAIRMAN'S STATEMENT

This was a key target for NAMA and was one of the Troika milestones that had to be fulfilled. Meeting it highlights the real progress that the Agency and Ireland is making in managing and reducing our liabilities.

This progress has continued in 2014 and is demonstrated by very substantial NAMA loan and asset sales in Ireland in the early part of the year. We are increasingly confident that we will complete our work on behalf of taxpayers earlier than the 2020 date originally envisaged. Indeed, subject to the outcome of portfolio and asset sales currently underway, we aim to have as much as half of our Senior Bonds repaid by the end of 2014 – a full two years ahead of schedule. This would have been unthinkable 12 months ago and reflects the successful strategies pursued by NAMA and the remarkable rebound in sentiment towards Ireland on the part of international capital.

This is very important for taxpayers. NAMA paid €31.8 billion for the loans it acquired and €30.2 billion of this was Senior Bonds guaranteed by the State – a contingent liability on taxpayers. When NAMA was first set up, some expressed concern that it would cost the State billions of euro because, it was suggested, the assets that NAMA needed to sell would not realise enough cash to repay the Senior Bonds. From where we stand today, it is our strong expectation that NAMA will not cost the taxpayer a cent and we are aiming to generate a surplus over our lifetime through a phased and orderly disposal of our assets. By meeting and exceeding our own strategic targets, we have also contributed to building confidence in Ireland's recovery and to the international perception that Ireland is, once again, a good location in which to do business and to invest.

GENERATING STRONG CASH FLOWS

In his Statement, the Chief Executive outlines the significant progress made in 2013 in terms of generating cash from disposals and from assets and the profit generated by NAMA's activities over the course of the year. By the end of 2013, less than four years after the first set of loan transfers, NAMA had generated €15 billion in cash, excluding receipts from the liquidation of Irish Bank Resolution Corporation Limited ('IBRC'). By end-March 2014, exactly four years after the first loans transferred to NAMA, total cash generated stood at €16.8 billion and included receipts from the sale of assets and loans of €12.4 billion.

A welcome feature of 2013 activity was the resurgence in the Irish commercial market. When conditions were more favourable in Britain, particularly London, in 2011 and 2012, we took advantage by selling assets at yields that typically fell into the 3%-5% range. With conditions now improving in Ireland, our options in terms of asset disposals have expanded in line with greater investor demand. We intend to ensure that there is a steady supply of assets reaching the market to meet that demand. Part of our job is to provide a clear signal of pipeline activity to the market. We have given a commitment that, in each quarter, we will offer for sale packaged transactions with a minimum value of €250m. That will be in addition to the sale of individual properties by debtors and Receivers and the sale of loan portfolios. All key market participants - home buyers, debtors, investors and those working in the Irish construction industry as well as NAMA - want to see transactions taking place and confidence and liquidity restored in a properly functioning and sustainable property market and, in that context, 2013 may well prove to have been a pivotal year.

INVESTING IN THE IRISH ECONOMY

In addition to repaying debt, we are using our cash reserves prudently and commercially to add further value to our portfolio and this will have benefits throughout the wider economy. We have invested €600m in commercially viable projects in our Irish portfolio and have committed to investing at least €2.5 billion in total development funding in Ireland by end-2016 if suitable commercial opportunities present themselves. Examples of projects that we are funding are included in this Report.

This investment facilitates NAMA in delivering a commercial return for taxpayers but it also generates substantial employment during the construction and fit-out phases of projects. Government and industry studies indicate that investment on the scale envisaged by NAMA could contribute up to 30,000 construction and associated jobs in the Irish economy in the period out to 2016. NAMA is playing an important role therefore in getting people back to work in construction and in supporting Government policy aimed at a vibrant and sustainable construction industry. This is in addition to the estimated 15,000 people whose jobs have been sustained since we acquired our debtors' loans in 2010; we provided support to those debtors' businesses during very difficult economic circumstances.

NAMA's investment will also convert undeveloped and unfinished sites into completed developments. The offices, houses, apartments and retail space that we are funding will be assets of real value to the Irish economy, whether in terms of facilitating businesses which wish to create jobs or people wishing to buy homes. In this respect, our investment is aligned with the IDA's work in attracting investment and jobs into Ireland and aims at reinforcing and delivering on national planning policy in terms of where development should be prioritised.

The work that we are doing in relation to the Dublin Dockland's Strategic Development Zone ('SDZ') is a good example of this. NAMA expects to finance significant new development in the SDZ over the medium-term, particularly of commercial office space, to facilitate the expansion of the financial services and ICT sectors in Ireland, both of which have significant clusters in the Dublin Docklands, and to facilitate also the creation of new employment hubs. To put the scale of potential investment in context: the SDZ envisages the development of over 3.5m sq. ft. of commercial office space and some 2,600 residential units. NAMA has an exposure to about 70% of the total undeveloped area of the SDZ and will be involved, either as a funder or more directly through joint ventures and other mechanisms, in delivering much of this. On the assumption of an early adjudication on the scheme by An Bord Pleanála - hopefully by mid-2014 - we could see the first cranes appearing in the SDZ area by the first quarter of 2015.

NAMA is also focused on delivering new housing. In relation to both unfinished housing units and new development, we expect to fund the completion of approximately 4,500 residential properties in Dublin over the period up to the end of 2016. This is a significant contribution considering that just over 1,200 housing units were completed in Dublin in 2013.

We are also looking at the scope for NAMA funding and facilitating the provision of residential units in the period after 2016. Given the lead-in time required to deliver future housing needs, clearly much of the preparatory work in terms of securing suitable planning permissions will have to be done sooner rather than later. We have already started on this.

SUPPORTING BUSINESS

In addition to the 15,000 jobs we are supporting in businesses linked to our loans - jobs in property, hotel and leisure, retail, healthcare, manufacturing and agriculture - we are also directly supporting small and medium businesses in the retail sector. To date, NAMA has approved rent abatements with an annual aggregate value of €20m and rent reliefs in excess of €40m to retailers. Whilst this represents a significant cost to NAMA, we believe it is more than offset by the longer-term benefits for the economy of ensuring that tenants remain in business and that jobs are safeguarded.

These initiatives are very important to NAMA. Whilst we have debts to collect on behalf of Irish taxpayers, we are much more than a debt collection agency. We are well aware that the funds that we provide to our debtors and Receivers and our work in areas such as rent abatements, quite apart from enhancing the value of assets in our portfolio, generate economic activity and create substantial Irish employment.

MAKING A WIDER CONTRIBUTION

I would also like to mention our contribution on social housing. In this Report, we provide detail on our work with the Department of the Environment, Community and Local Government ('DECLG'), local authorities and approved housing bodies to provide homes to help meet the needs of applicants on social housing waiting lists. Whilst NAMA has a finite exposure to the type and location of properties that may be suitable for social housing, we are making a real contribution in this area and will continue to do so. There can often be obstacles to delivery which we work assiduously to overcome but we are not alone in this respect; we rely on the work of others such as the Housing Agency, the approved housing bodies, the local authorities, DECLG and, of course, on the debtors and Receivers who control the properties. We are also working with Government departments and statutory bodies to deliver suitable land and property for schools, health care facilities, community and recreational and other uses.

CONCLUSION

During Christmas week of 2009, I accepted the invitation of the former Minister for Finance, the late Mr. Brian Lenihan, to become Chairman of NAMA. At that stage, I could not have had a full appreciation of the energy, intensity and resilience that the task would require or of the scale of market failure with which we would be faced subsequently. There were times, indeed, when it appeared as if the darkness would never lift.

But now, without wishing to attract charges of complacency, it appears that we may have turned the corner. The Dublin commercial market has become very active, buoyed by international investors who are convinced that the most difficult phase of our economic recovery has been successfully surmounted and who now see Ireland in terms of a strong recovery trajectory. The Dublin residential market has also seen an upsurge in demand from buyers previously unsure that the market had reached its nadir. We would expect that markets in other cities would also progressively improve as the impact of economic growth radiates throughout the wider economy this year and into the medium-term and as domestic investors participate more fully in the opportunities afforded by recovery.

From a standing start in late 2009, with just a few staff, NAMA now has over 370 high calibre staff with expertise in a range of disciplines, including finance, banking, property and law. The achievements recorded in this Report are a testament to those staff, to the senior management in NAMA, most ably led by the CEO, the committees and to its Board. I would like to take the opportunity to thank former Board members, Steven Seelig, Éilish Finan and John Mulcahy, for their contribution to the work of the Board over the past four years.

In everything we do, we are conscious that our primary obligation is to Irish taxpayers and I would hope that this is evident in the broad range of activities described in this Report. I am now more confident than ever that NAMA, by maintaining a phased and orderly approach, will achieve not only its primary commercial objective of repaying its liabilities and recovering its costs (and possibly producing a surplus) but will also make a significant contribution more generally to the Irish economy, both in terms of job creation and of wider public policy objectives such as the provision of housing.