NAMA to pay salaries to developers

oceanclub

Are there still people claiming that NAMA is not a bailout for developers?

http://www.examiner.ie/ireland/nama-to-pay-salaries-expenses-to-developers-123606.html#ixzz0s91I18cM

BAILED-OUT developers are set to receive salaries and expenses from NAMA, it has emerged, but the toxic bank last night insisted it would not be supporting lavish lifestyles.



The decision to pay the wages of developers will shock taxpayers who have already been landed with a €16 billion bill to take over the loans of the country’s top 10 building tycoons.

A spokesman for the National Asset Management Agency (NAMA) yesterday confirmed it was considering the business plans of the broke developers, which include living expenses and salaries.

[...]

Reports that some builders could receive wages of hundreds of thousands of euro from NAMA were not commented on, as the agency said it could not speak about individual developers.

The 10 developers include well-known developers such Liam Carroll, Sean Mulryan, Derek Quinlan, Gerry Gannon, Bernard McNamara and Johnny Ronan.

We'll be paying for Johnny to jet to Marrakesh. Fantastic.

P.

Cookie_Monster

eh, what possible reason can they have for that?

Scofflaw

Cookie_Monster wrote: »

eh, what possible reason can they have for that?

It's a dramatic way of pointing out that the business plans of several developers include being lent the running costs of their companies, which they would then pay back out of the proceeds of the projects they're running.

If a developer cannot pay salaries during a project, then no work can be done on the project. The project therefore cannot be completed. If, in order to pay back the outstanding loans on the project, the project needs to be completed, then the developer needs to be able to pay salaries. If the developer cannot borrow that money from other sources, they will need to borrow it from NAMA, in order for NAMA to realise the expected value of the project and get the loan paid back.

It's not complicated, and the question of whether the salaries and expenses NAMA is prepared to lend for will be excessive is separate from the question of whether the salaries need to be paid. The article, and the OP, conflate the two.

cordially,
Scofflaw

oceanclub

Scofflaw wrote: »

It's a dramatic way of pointing out that the business plans of several developers include being lent the running costs of their companies, which they would then pay back out of the proceeds of the projects they're running.

If a developer cannot pay salaries during a project, then no work can be done on the project.

Sorry, but it's not salaries to staff. It's salaries to themselves. Please explain to me why Johnny Ronan, who appears to still have a lavish lifestyle, should be loaned money from taxpayers for living expenses.

P.

Cookie_Monster

Scofflaw wrote: »

It's a dramatic way of pointing out that the business plans of several developers include being lent the running costs of their companies, which they would then pay back out of the proceeds of the projects they're running.

If a developer cannot pay salaries during a project, then no work can be done on the project. The project therefore cannot be completed. If, in order to pay back the outstanding loans on the project, the project needs to be completed, then the developer needs to be able to pay salaries. If the developer cannot borrow that money from other sources, they will need to borrow it from NAMA, in order for NAMA to realise the expected value of the project and get the loan paid back.

It's not complicated, and the question of whether the salaries and expenses NAMA is prepared to lend for will be excessive is separate from the question of whether the salaries need to be paid. The article, and the OP, conflate the two.

cordially,
Scofflaw

ah I get you. They are been given lent money to pay their workforce rather than themselves as such, well that of course makes sense. Article is very badly phrased.

Though the "Living expenses" terms still seems a bit dubious

Scofflaw

Cookie_Monster wrote: »

ah I get you. They are been given lent money to pay their workforce rather than themselves as such, well that of course makes sense. Article is very badly phrased.

Though the "Living expenses" terms still seems a bit dubious

It includes both - the living expenses of the developer themselves would usually be part of the running costs of the company, since the developer is part of the workforce of the company (quite an important part, really).

NAMA have said that they won't be lending for lavish lifestyles, which makes sense. As usual, it's possible in theory that they could, just as the banks might also lend for private jets and champagne parties to a debtor in a similar situation - however, the traditional jumping of the gun appears to have taken place, with people who already believe it's a developer bailout assuming that because they in theory could, they definitely will. As yet, that's an assumption that has nothing to do with anything that's actually happened.

cordially,
Scofflaw

oceanclub

Scofflaw wrote: »

NAMA have said that they won't be lending for lavish lifestyles, which makes sense.

I'm just curious, but if NAMA were intending to lend enough money to developers to fund lavish lifestyles, do you think even they would be stupid enough to confirm it in those words? I would have a though a "no response" answer was damming enough:

Reports that some builders could receive wages of hundreds of thousands of euro from NAMA were not commented on, as the agency said it could not speak about individual developers.

Or are you actually expecting a press release saying "NAMA to Fly Johnny and Rosanna to Marrakesh; He Deserves a Break"?

P.

Cookie_Monster

but is the developer really only going to get the same 30-35k as a builder. that would be too little compared to what they're used to...

I'll guess we'll just have to wait and see, but I won't be holding my breath for any kind of fairness in this.

douglashyde

OP, you have quoted this newspaper article very badly - you are making it seem that these property developers are being paid wages period!


Here is the full article : http://www.independent.ie/national-news/nama-to-go-after-homes-of-wealthy-developers-2237354.html

It is titled "NAMA to go after homes of wealthy developers". Nama have a lot of unfinished property in their portfolio, they also have 5bn to develop "commercially viable projects" - so they are paying the developers to finish the projects - it's that simple.

What would you have us do with this property?

oceanclub

douglashyde wrote: »

OP, you have quoted this newspaper article very badly - you are making it seem that these property developers are being paid wages period!


Here is the full article : http://www.independent.ie/national-news/nama-to-go-after-homes-of-wealthy-developers-2237354.html

Er, that's a different article from a different newspaper. Perhaps that is why you think I quoted it badly.

Who determines what is "commercially viable"? And, if these developers are going to make money from these investments, why are they demanding expenses to do so?

P.

Welease

oceanclub wrote: »

I'm just curious, but if NAMA were intending to lend enough money to developers to fund lavish lifestyles, do you think even they would be stupid enough to confirm it in those words? I would have a though a "no response" answer was damming enough:



Or are you actually expecting a press release saying "NAMA to Fly Johnny and Rosanna to Marrakesh; He Deserves a Break"?

P.

As I understand it.. some of the business plans submitted to NAMA requested wages of up to 500K for the developers. Hence NAMA's response that they will not be funding lavish lifestyles for developers i.e. No plan with a 500K salary request will be agreed or paid.

oceanclub

Welease wrote: »

As I understand it.. some of the business plans submitted to NAMA requested wages of up to 500K for the developers. Hence NAMA's response that they will not be funding lavish lifestyles for developers i.e. No plan with a 500K salary request will be agreed or paid.

€500,000 a year salary is not "lavish"?

P.

douglashyde

Under the business-plan process, most developers must spell out exactly what they require to finish projects and pay down their debt. In some cases, there will be salaries included but they have to specify what the incomes would be. The income requirements should be very modest," the source said.

Quote from the Irish Independant article.

Scofflaw

oceanclub wrote: »

€500,000 a year salary is not "lavish"?

P.

Yes, it is - but that's what's being requested, not what's being paid.

I could submit an invoice to the government for €20m for 'psychological counselling for harassed developers', and someone could write a dramatic article about that request "Government shells out millions for developer 'counselling'!" - only thing is, if the government don't pay it, then nothing has happened.

I doubt we'll be told in details who gets what from NAMA, but developers living high on the hog when their companies are being loaned money by NAMA should be spottable.

cordially,
Scofflaw

fontanalis

Don't criticise the developers. Without them you'd be nothing.

Henry Ford III

I suppose if they genuinely haven't a rex, and without their input the projects wouldn't go any further, then it'd be ok to pay minimum wage.

jmayo

Scofflaw wrote: »

It includes both - the living expenses of the developer themselves would usually be part of the running costs of the company, since the developer is part of the workforce of the company (quite an important part, really).

...

cordially,
Scofflaw

The developers living expenses might be part of the running costs of the company, which often is their personal company, but would that not be when the company was actually making money, not reliant on handouts from the taxpayers ?

Jeeze no wonder our banks went bust if they not alone lent 500,000,000 for the actual cost of the project, but also lent a few million so that poor ould johnny could have a big 21st brithday bash for one of the kids and could fly a few so called Irish supermodels off to North Africa.

I have asked this on another thread, why do we still need the involvement of these developers ?

They are figureheads, failed business people and failed entrepreneurs.
It is not as if they are architects, chippies, site engineers nor even project managers.
Those people are necessary to complete the actual work, but what do we really get for giving johnny ronan a few hundred thousand a year ?

If they cannot repay their loans, and most of them can't, then tough luck bye bye.

If in any other walk of life a company goes bust, which effectively all of these guys have, the receiver or administrator does not keep the head honchos around at inflated salaries to try and get the company out of trouble.
In fact they are the first to exit.

I am sure there are plenty of out of work multi million euro project managers out of work around the world (hell the guys that project managed soccer stadiums in SA are probably available) that could manage these projects so why still have involvement of these leeches.

But of course just like Ireland's economy and building bubble was different, so is the necessity of these developers to oversee all these ego projects. :rolleyes:

fontanalis

jmayo wrote: »

The developers living expenses might be part of the running costs of the company, which often is their personal company, but would that not be when the company was actually making money, not reliant on handouts from the taxpayers ?

Jeeze no wonder our banks went bust if they not alone lent 500,000,000 for the actual cost of the project, but also lent a few million so that poor ould johnny could have a big 21st brithday bash for one of the kids and could fly a few so called Irish supermodels off to North Africa.

I have asked this on another thread, why do we still need the involvement of these developers ?

They are figureheads, failed business people and failed entrepreneurs.
It is not as if they are architects, chippies, site engineers nor even project managers.
Those people are necessary to complete the actual work, but what do we really get for giving johnny ronan a few hundred thousand a year ?

If they cannot repay their loans, and most of them can't, then tough luck bye bye.

If in any other walk of life a company goes bust, which effectively all of these guys have, the receiver or administrator does not keep the head honchos around at inflated salaries to try and get the company out of trouble.
In fact they are the first to exit.

I am sure there are plenty of out of work multi million euro project managers out of work around the world (hell the guys that project managed soccer stadiums in SA are probably available) that could manage these projects so why still have involvement of these leeches.

But of course just like Ireland's economy and building bubble was different, so is the necessity of these developers to oversee all these ego projects. :rolleyes:

This really needs to be hammered home.

Scofflaw

jmayo wrote: »

The developers living expenses might be part of the running costs of the company, which often is their personal company, but would that not be when the company was actually making money, not reliant on handouts from the taxpayers ?

Yes - but then NAMA hasn't said it will be funding lavish expenses.

jmayo wrote: »

Jeeze no wonder our banks went bust if they not alone lent 500,000,000 for the actual cost of the project, but also lent a few million so that poor ould johnny could have a big 21st brithday bash for one of the kids and could fly a few so called Irish supermodels off to North Africa.

True, but that seems to have been how they rolled.

jmayo wrote: »

I have asked this on another thread, why do we still need the involvement of these developers ?

They are figureheads, failed business people and failed entrepreneurs.
It is not as if they are architects, chippies, site engineers nor even project managers.
Those people are necessary to complete the actual work, but what do we really get for giving johnny ronan a few hundred thousand a year ?

If they cannot repay their loans, and most of them can't, then tough luck bye bye.

If in any other walk of life a company goes bust, which effectively all of these guys have, the receiver or administrator does not keep the head honchos around at inflated salaries to try and get the company out of trouble.
In fact they are the first to exit.

I am sure there are plenty of out of work multi million euro project managers out of work around the world (hell the guys that project managed soccer stadiums in SA are probably available) that could manage these projects so why still have involvement of these leeches.

But of course just like Ireland's economy and building bubble was different, so is the necessity of these developers to oversee all these ego projects. :rolleyes:

The difference is, I suspect, actually legal. It's quite possible that in some cases the name on the loan is the developer's - but even if that's not the case, NAMA in the course of taking over a loan does not thereby gain the legal power to dictate regime change in the company they're lending to.

Not only that, but from our - the taxpayer's - perspective, it might actually be better to have the developers still in place. If we go for the whole "hire in new managers" option, how much will we have to pay for 'top flight managers', and will they actually be any good? Think about the track record of the Irish banks and the Irish government in hiring good managers cheaply...

cordially,
Scofflaw

jmayo

Scofflaw wrote: »

Yes - but then NAMA hasn't said it will be funding lavish expenses.

Ah but do you believe anything that comes out from NAMA or the NAMA creators ?

Scofflaw wrote: »

The difference is, I suspect, actually legal. It's quite possible that in some cases the name on the loan is the developer's - but even if that's not the case, NAMA in the course of taking over a loan does not thereby gain the legal power to dictate regime change in the company they're lending to.

Not only that, but from our - the taxpayer's - perspective, it might actually be better to have the developers still in place. If we go for the whole "hire in new managers" option, how much will we have to pay for 'top flight managers', and will they actually be any good? Think about the track record of the Irish banks and the Irish government in hiring good managers cheaply...

cordially,
Scofflaw

If the loan is in the developers name, then all the better since he is personally liable for the loan and his personal assets should be frozen.
But of course I know that it is not that easy as can be seen with mr drumm who conveniently has put assets in his spouses name.

This whole area may require law changes and I somehow don't see this current government having the bottle to initiate those changes.
IMHO any assets purchased for or transferred to family members should be confiscated as part of the outstanding loan repayments.

Most of these loans cannot be repaid and if the developers cannot service them then they should be removed from the equation.
The little difficulty arises where the idiotic banks gave sweet deals where they were not obliged to repay anything until project completion, etc.

Because these are extraordinary circumstances, I believe the law should be changed and legislation enacted to allow compulsory acquisitions and extra powers for NAMA so that they can affectively strip the developers/developers' companies.
The nagging doubts are about the ability of the ones running NAMA and the connectiuons of their political masters.


True the selection of public sector managers and financial institutions managers have been nothing to write home about.
Then again look at the current heads of IFSRA and CB.
Note I did not incldue chairman of Anglo.

But there are excellent project managers/project management companies out there who have completed massive infrastructure projects who may now be available due to world downturn.

oceanclub

jmayo wrote: »

Jeeze no wonder our banks went bust if they not alone lent 500,000,000 for the actual cost of the project, but also lent a few million so that poor ould johnny could have a big 21st brithday bash for one of the kids and could fly a few so called Irish supermodels off to North Africa.

I'm reminded of the following article from the heady days of 2006 about failed developer (now Sindo columnist) Simon Kelly:

http://archives.tcm.ie/businesspost/2006/01/01/story10690.asp

The latest addition to the Kelly family's portfolio is Thomas Reads, the Dublin pub chain which includes The Bailey and Ron Blacks in Dublin city centre.

“We build a lot of pubs in our schemes and we find that if we can be our tenant and landlord at the same time, it's much easier,” he said.

The company has debts of about €20 million but Kelly said that this was not a problem. “Thomas Reads turns over €30 million-plus a year, so it can take a bit of debt

It was grand, y'see. The money was never going to stop rolling in.

P.

Scofflaw

jmayo wrote: »

Ah but do you believe anything that comes out from NAMA or the NAMA creators ?

I suppose the best way of putting it is that when I don't have any evidence to the contrary I suspend my disbelief.

jmayo wrote: »

If the loan is in the developers name, then all the better since he is personally liable for the loan and his personal assets should be frozen.
But of course I know that it is not that easy as can be seen with mr drumm who conveniently has put assets in his spouses name.

This whole area may require law changes and I somehow don't see this current government having the bottle to initiate those changes.
IMHO any assets purchased for or transferred to family members should be confiscated as part of the outstanding loan repayments.

I'm pretty sure we wouldn't want that as legislation going forward...if you can think of a way that it can be applied just to the NAMA situation without being unconstitutional, fire away. Otherwise, no thanks!

jmayo wrote: »

Most of these loans cannot be repaid and if the developers cannot service them then they should be removed from the equation.
The little difficulty arises where the idiotic banks gave sweet deals where they were not obliged to repay anything until project completion, etc.

The other little difficulty is that we don't actually know which ones won't work out.

jmayo wrote: »

Because these are extraordinary circumstances, I believe the law should be changed and legislation enacted to allow compulsory acquisitions and extra powers for NAMA so that they can affectively strip the developers/developers' companies.

Where that's useful, maybe - but most development companies have as assets only uncompleted developments, and stripping those would be counter-productive.

jmayo wrote: »

The nagging doubts are about the ability of the ones running NAMA and the connectiuons of their political masters.


True the selection of public sector managers and financial institutions managers have been nothing to write home about.
Then again look at the current heads of IFSRA and CB.
Note I did not incldue chairman of Anglo.

But there are excellent project managers/project management companies out there who have completed massive infrastructure projects who may now be available due to world downturn.

Maybe - but the developers have the advantage that there's public pressure for their salaries to be kept within bounds.

cordially,
Scofflaw

oceanclub

Scofflaw wrote: »

I suppose the best way of putting it is that when I don't have any evidence to the contrary I suspend my disbelief.

We were told that NAMA was originally simply for bad debts. Now we are being told that NAMA will be actively loaning out money to developers who already have a proven bad track record. You're not even skeptical?

but the developers have the advantage that there's public pressure for their salaries to be kept within bounds.

When has public pressure changed anything about this process? The most unpopular Fianna Fail government in the history of the State has implemented this scheme. NAMA isn't covered by the Freedom of Information and indeed the only penalties brought in were _against_ whistleblowers who give information about developers or their loans. The idea that NAMA will be subject to any kind of public pressure is ludicrous.

P.

Scofflaw

oceanclub wrote: »

We were told that NAMA was originally simply for bad debts. Now we are being told that NAMA will be actively loaning out money to developers who already have a proven bad track record. You're not even skeptical?

The first thing I did was read the "NAMA by NAMA" presentation, and then the legislation as soon as it became available - so, no, I'm not surprised by this. It's always been part of the deal.

Whether I'm sceptical about NAMA or not has little to do with what the papers are writing about it, or what's repeated by those who have fixed their views on it being a developer buyout.

oceanclub wrote: »

When has public pressure changed anything about this process? The most unpopular Fianna Fail government in the history of the State has implemented this scheme. NAMA isn't covered by the Freedom of Information and indeed the only penalties brought in were _against_ whistleblowers who give information about developers or their loans. The idea that NAMA will be subject to any kind of public pressure is ludicrous.

Unfortunately, that looks exactly like another version "I know this is a developer buyout, therefore it will operate in such and such a way". I prefer to take things on the basis of what's happening - and there's been little public pressure over NAMA (compare it to the Learner Driver reaction).

NAMA certainly has the potential to be a bailout, but so far it has done exactly what it said it would do - bar the haircut being more than originally expected. As I said, if you listen to the media, you might well be surprised by things that have been part of it all along.

cordially,
Scofflaw

Scarab80

oceanclub wrote: »

We were told that NAMA was originally simply for bad debts. Now we are being told that NAMA will be actively loaning out money to developers who already have a proven bad track record. You're not even skeptical?

Funding to complete developments has always been a part of the NAMA structure. From the original draft legislation...

148.—(1) Where this Chapter applies, NAMA may enter into an agreement (including an agreement with the person who was the debtor in relation to the bank asset concerned) for the purpose of developing the land.
(2) NAMA’s objective in entering into an agreement under subsection (1) shall be the orderly development of the land concerned to secure the best return reasonably possible.

oceanclub wrote: »

When has public pressure changed anything about this process? The most unpopular Fianna Fail government in the history of the State has implemented this scheme. NAMA isn't covered by the Freedom of Information and indeed the only penalties brought in were _against_ whistleblowers who give information about developers or their loans. The idea that NAMA will be subject to any kind of public pressure is ludicrous.

It doesn't need to be subject to public pressure. The private investors in the NAMA SPV have a direct financial interest in obtaining the maximum return possible.

Sleepy

A bit tied up at the mo but am I right in assuming that this is a bit of media hype?

Presumably any salaries being paid to the developers as part of the running costs funded under NAMA loans to enable completion would be heavily scrutinised by NAMA before the loan applications would be approved?

I can, however, see the argument that no salaries should be paid to directors of the development companies availing of such loans until the company returns to profitability though.

Welease

oceanclub wrote: »

€500,000 a year salary is not "lavish"?

P.

????

Of course it is.. and my understanding is that NAMA has said they WILL NOT FUND salaries of 500K to developers... where's the problem wit that?

SkepticOne

In theory there's nothing wrong with NAMA, now that they own the loans, funding the completion of projects. However it has to be recognised here that this is public money being spent on projects that the market would not dream of touching.

Would you pay for the completion of a shopping centre when you know that many shopping centres are half-empty right now? I think the answer is that even if you were a supporter of NAMA, you might be in favour of other people's money going into it but you would probably not volunteer your own money in such a speculative investment.

The reason why it is no problem for NAMA is that it is public money not the money of private investors that is involved. The public have no say in the matter. If it all goes wrong then the directors are indemnified.

Of course this has been part of the business plan of NAMA from the early days. This is why it is more depressing than surprising.

Scarab80

SkepticOne wrote: »

In theory there's nothing wrong with NAMA, now that they own the loans, funding the completion of projects. However it has to be recognised here that this is public money being spent on projects that the market would not dream of touching.

Would you pay for the completion of a shopping centre when you know that many shopping centres are half-empty right now? I think the answer is that even if you were a supporter of NAMA, you might be in favour of other people's money going into it but you would probably not volunteer your own money in such a speculative investment.

The reason why it is no problem for NAMA is that it is public money not the money of private investors that is involved. The public have no say in the matter. If it all goes wrong then the directors are indemnified.

Of course this has been part of the business plan of NAMA from the early days. This is why it is more depressing than surprising.

Once again, why would the private investors who have put €51m into the SPV fund projects which are not saleable. You are right it is public money that is being invested in the projects however any gains or losses in this public money is reflected as gains or losses in the 51m SPV investment.

SkepticOne

Scarab80 wrote: »

Once again, why would the private investors who have put €51m into the SPV fund projects which are not saleable. You are right it is public money that is being invested in the projects however any gains or losses in this public money is reflected as gains or losses in the 51m SPV investment.

There seems to be the suggestion here that private investors would just love to invest in the completion of shopping centres, hotels, apartment and office developments in the current climate but are being prevented from doing so because of NAMA. This is not a credible point of view. The whole reason for NAMA in the first place is because private investors ran from funding this sort of thing causing a collapse in the market. If it were the case that private investors were queueing up to fund these projects there would be no need for NAMA.

JRant

Scarab80 wrote: »

Once again, why would the private investors who have put €51m into the SPV fund projects which are not saleable. You are right it is public money that is being invested in the projects however any gains or losses in this public money is reflected as gains or losses in the 51m SPV investment.

Because said investors in these SPV's have a state guaranteed return on their investments. NAMA was created with the sole intention of not allowing the market to find its own equilibrium. Thereby, whether indirectly or not, it is a bail out for the developers. The truly frightening part is because this SPV was set-up, NAMA will be able to hide behind company law and the citizens of this land will be in the dark on many of the matters at hand, including salaries that may be paid to developers to finish these projects.:mad:

Scarab80

SkepticOne wrote: »

There seems to be the suggestion here that private investors would just love to invest in the completion of shopping centres, hotels, apartment and office developments in the current climate but are being prevented from doing so because of NAMA. This is not a credible point of view. The whole reason for NAMA in the first place is because private investors ran from funding this sort of thing causing a collapse in the market. If it were the case that private investors were queueing up to fund these projects there would be no need for NAMA.

The private investors in the NAMA SPV have one mandate, which is to maximise the return on NAMA loans. If they pump money into a development which can not be sold they will make a loss on their SPV investment. Therefore only viable projects will be funded, others will be mothballed. If it made commercial sense not to provide any funding to complete developments then that is what would be done.

I understand what you are saying - that if these projects were worthy of financing they would already have received it, however we are in an environment with constrained credit lines, banks are simply not in a position to provide funding to major development projects.

Scarab80

JRant wrote: »

Because said investors in these SPV's have a state guaranteed return on their investments. NAMA was created with the sole intention of not allowing the market to find its own equilibrium. Thereby, whether indirectly or not, it is a bail out for the developers. The truly frightening part is because this SPV was set-up, NAMA will be able to hide behind company law and the citizens of this land will be in the dark on many of the matters at hand, including salaries that may be paid to developers to finish these projects.:mad:

SPV investors only receive a return on their investment if there is sufficient funds in the SPV. It is not state guaranteed. If NAMA makes a loss, they make a loss.

SkepticOne

Scarab80 wrote: »

The private investors in the NAMA SPV have one mandate, which is to maximise the return on NAMA loans. If they pump money into a development which can not be sold they will make a loss on their SPV investment. Therefore only viable projects will be funded, others will be mothballed. If it made commercial sense not to provide any funding to complete developments then that is what would be done.

I understand what you are saying - that if these projects were worthy of financing they would already have received it, however we are in an environment with constrained credit lines, banks are simply not in a position to provide funding to major development projects.

The SPV is just a legal mechanism to allow the tens of billions that NAMA is racking up to be places "off balance sheet" so that it not included in Ireland's national debt.

Scarab80

SkepticOne wrote: »

The SPV is just a legal mechanism to allow the tens of billions that NAMA is racking up to be places "off balance sheet" so that it not included in Ireland's national debt.

That is obviously a major part of it, however it is undeniable that...

1) there is €51m of private sector investment in the SPV

2) these private sector investors will be involved in the purchase, managment and disposal of NAMA loans

3) the return on this private sector investment is wholly determined by the performance of NAMA loans acquired

4) the investment is not guaranteed and the equity is "at risk"

http://ec.europa.eu/community_law/state_aids/comp-2009/n725-09.pdf

(38) The Master SPV will be run with the objective of making a profit on the purchase and management of the assets. The profits earned by the SPV will be distributed to the shareholders according to the following arrangement, which reflects the fact that the debt issued by the Master SPV will be guaranteed by the Irish Government:
• The equity investors (NAMA and private investors) will be entitled to receive an annual dividend linked to the performance and profitability (taking account of all direct and indirect costs) of the Master SPV, capped at […].
• Upon the winding-up of the Master SPV, the equity investors (NAMA and private investors) will only be repaid their capital if the Master SPV has the resources. The private investors will receive a further equity bonus of maximum […] of the capital (capped at EUR […]) if the Master SPV makes a profit.
• All other profits and gains of the Master SPV will accrue to NAMA.

(39) If the Master SPV makes a loss in its lifetime or is wound-up, the equity invested in the majority private-sector owned Master SPV and any associated dividends will be lost.

Now why would these private sector investors provide funding to complete projects which can not be sold?

SkepticOne

Scarab80 wrote: »

That is obviously a major part of it, however it is undeniable that...

1) there is €51m of private sector investment in the SPV

2) these private sector investors will be involved in the purchase, managment and disposal of NAMA loans

3) the return on this private sector investment is wholly determined by the performance of NAMA loans acquired

4) the investment is not guaranteed and the equity is "at risk"

http://ec.europa.eu/community_law/state_aids/comp-2009/n725-09.pdf

Now why would these private sector investors provide funding to complete projects which can not be sold?

Are you not confusing the SPV and the funds it manages here? Private investors will be buying 51% of the SPV but the SPV will be managing tens of billions of funds.

The legislation says that investors will be paid back their investment if there's sufficient funds controlled by the SPV to do that. But this is not the same as saying that NAMA needs to make a profit.

How much is the SPV actually worth going forward? 100 million is going into it and it will be managing (at least technically for the purposes of off balance sheet accounting) tens of billions of assets.

If NAMA loses, say, 30% over ten years, how much is the SPV worth? 70 million? Where is this specified?

Scarab80

SkepticOne wrote: »

Are you not confusing the SPV and the funds it manages here? Private investors will be buying 51% of the SPV but the SPV will be managing tens of billions of funds.

The legislation says that investors will be paid back their investment if there's sufficient funds controlled by the SPV to do that. But this is not the same as saying that NAMA needs to make a profit.

How much is the SPV actually worth going forward? 100 million is going into it and it will be managing (at least technically for the purposes of off balance sheet accounting) tens of billions of assets.

If NAMA loses, say, 30% over ten years, how much is the SPV worth? 70 million? Where is this specified?

€100m is the shareholders equity, so if you want to imagine a simplified balance sheet you will have...

Dr. Assets (NAMA Loans at MV) €40.0bn
Cr. Liabilities (NAMA Bonds) €39.9bn
Cr. Shareholders Equity €0.1bn

In much the same way as say Bank of Ireland have 6.4bn in shareholders equity but manage loans worth 181bn and have liabilities of 174bn.

The SPV is NAMA essentially, it will hold all of the loans and issue all of the bonds (though obviously these are guaranteed by the State), therefore if NAMA makes a 100m loss it will wipe out the shareholders equity.

(39) If the Master SPV makes a loss in its lifetime or is wound-up, the equity invested in the majority private-sector owned Master SPV and any associated dividends will be lost.

If the SPV/NAMA makes a profit, the investors will receive annual dividend payments and a bonus on wind up capped at as yet unknown amounts.

The NAMA draft business plan projects positive cash flows of 5.5bn over the term of the agency, however optimistic this is it shows projected cash flows on a year by year basis so it will be interesting to see how results match up.

I believe the first NAMA quarterly report is due out within the next week, there won't be too much information regarding loan repayments as it covers the period to 31 March 2010 and only €370m of loans had transferred in at that stage, but there might be some interesting additional information attached.

Scofflaw

Scarab80 wrote: »

I believe the first NAMA quarterly report is due out within the next week, there won't be too much information regarding loan repayments as it covers the period to 31 March 2010 and only €370m of loans had transferred in at that stage, but there might be some interesting additional information attached.

Which will be used to manufacture some more dramatic headlines, I suspect.

cordially,
Scofflaw

Welease

Welease wrote: »

????

Of course it is.. and my understanding is that NAMA has said they WILL NOT FUND salaries of 500K to developers... where's the problem wit that?

The problem is a lack of trust. That certain people are meeting in fancy restaurants to work out lovely little deals with their 'mates'.

500k might be too much, but is 400k just right? How about 200k? Just so we can have these chaps wine and dine Irish "models" (aka promotions girls).


Of course it might all work out fine and "fair" for taxpayers, but you surely have to understand that we would be absolute fools to straight up trust them to do the right thing.

Welease

Rojomcdojo wrote: »

The problem is a lack of trust. That certain people are meeting in fancy restaurants to work out lovely little deals with their 'mates'.

500k might be too much, but is 400k just right? How about 200k? Just so we can have these chaps wine and dine Irish "models" (aka promotions girls).


Of course it might all work out fine and "fair" for taxpayers, but you surely have to understand that we would be absolute fools to straight up trust them to do the right thing.

Absolutely.. but wouldnt it be prudent to wait until some details are actually produced before diving headlong into accusations of NAMA paying for private jets for holidays for developers..

At present (as I understand it).. some developers asked for 500K, and NAMA said No.. Thats it.. Anything else is media spin, hype and baseless assumptions at best.

oceanclub

Welease wrote: »

Absolutely.. but wouldnt it be prudent to wait until some details are actually produced before diving headlong into accusations of NAMA paying for private jets for holidays for developers..

At present (as I understand it).. some developers asked for 500K, and NAMA said No..

Where did they say "no"? They commented that they may support "modest living expenses" (a completely subjective term), then refused to comment about reports that "builders could receive wages of hundreds of thousands of euro".

Of course we, the little people, are meant to place our trust in the institutions of the State after the fine job they've done so far, and wait until _after_ we're screwed before we dare comment.

P.

Welease

oceanclub wrote: »

Where did they say "no"? They commented that they may support "modest living expenses" (a completely subjective term), then refused to comment about reports that "builders could receive wages of hundreds of thousands of euro".

Of course we, the little people, are meant to place our trust in the institutions of the State after the fine job they've done so far, and wait until _after_ we're screwed before we dare comment.

P.

From your own link.

"BAILED-OUT developers are set to receive salaries and expenses from NAMA, it has emerged, but the toxic bank last night insisted it would not be supporting lavish lifestyles."

" While we may support modest living expenses of the relevant individuals, there is no question whatsoever of support extravagant lifestyles of any developer."

""Any requirements like that will have to be very modest, will have to reflect the very weakened state that the businesses are in and there is no question of NAMA approving business plans which support high-flying salaries."

"Some business plans submitted to NAMA have already been rejected or returned, it was confirmed yesterday."

Seems pretty clear cut to me that if the concern is about 500K salaries, NAMA has said categorically that it won't pay them..

Do you have any proof, facts or links to information that shows NAMA will be paying lavish salaries?

oceanclub

Welease wrote: »

lavish lifestyles

Subjective.

modest living expenses

Subjective.

extravagant lifestyles

Subject... oh, you get the drill.

Do you have any proof, facts or links to information that shows NAMA will be paying lavish salaries?

No, because as you know, NAMA was set up with secrecy in place to avoid such disclosures. One wonders why such secrecy is necessary if NAMA is as innocuous as the supporters here suggest.

P.

Welease

oceanclub wrote: »

Subjective.



Subjective.



Subject... oh, you get the drill.



No, because as you know, NAMA was set up with secrecy in place to avoid such disclosures. One wonders why such secrecy is necessary if NAMA is as innocuous as the supporters here suggest.

P.

So to sum up, no you don't actually know what they are being paid.. and therefore the thrust of your arguement that we will be paying for jets cannot be proven?

oceanclub

Welease wrote: »

So to sum up, no you don't actually know what they are being paid.. and therefore the thrust of your arguement that we will be paying for jets cannot be proven?

Well, to sum up, some here trust Fianna Fail and the institutions they have set up to bail out their friends and think everything is fine until proven otherwise, even when proof is hard to get because Fianna Fail have put in place extraordinary secrecy measures criticised by the NUJ:

http://www.irishtimes.com/newspaper/ireland/2010/0504/1224269639323.html

Please tell me how we're supposed to "prove" anything in this climate.

P.

Welease

oceanclub wrote: »

Well, to sum up, some here trust Fianna Fail and the institutions they have set up to bail out their friends and think everything is fine until proven otherwise, even when proof is hard to get because Fianna Fail have put in place extraordinary secrecy measures criticised by the NUJ:

http://www.irishtimes.com/newspaper/ireland/2010/0504/1224269639323.html

Please tell me how we're supposed to "prove" anything in this climate.

P.

Thats the point.. You can't prove it, so people should stop making absolute statement..

The only fact we know about this is apparently there were requests for 500K salaries from developers.. NAMA did not agree to those requests..

That seems good sound decision making from NAMA...

Anything beyond that (and what you are proposing in your original post) has no basis in fact. People will try to spin it as a positive or a negative depending on their view on NAMA.. the one underlying fact is, both sides have absolutely no facts with which to support their further assumptions.

jmayo

Welease wrote: »

Thats the point.. You can't prove it, so people should stop making absolute statement..

The only fact we know about this is apparently there were requests for 500K salaries from developers.. NAMA did not agree to those requests..

That seems good sound decision making from NAMA...

Anything beyond that (and what you are proposing in your original post) has no basis in fact. People will try to spin it as a positive or a negative depending on their view on NAMA.. the one underlying fact is, both sides have absolutely no facts with which to support their further assumptions.

And thanks to the way the NAMA creators and supporters have setup the whole thing we will not know any real facts, now will we ?


Now does that worry anyone ?

It worries the sh** out of me since these same gombeens, shysters, theives, liars and cute hoors who are now prounouncing "trust us we know best", are the ones that helped get us into the mess in the first place.

oceanclub

jmayo wrote: »

And thanks to the way the NAMA creators and supporters have setup the whole thing we will not know any real facts, now will we ?

I keep repeating this Catch 22 point ("You can't complain about NAMA 'til you know the facts" "But NAMA was set up to prevent us knowing the facts!" GOTO LINE 1) , but it doesn't seem to be getting through to some people.

P.

Welease

oceanclub wrote: »

I keep repeating this Catch 22 point ("You can't complain about NAMA 'til you know the facts" "But NAMA was set up to prevent us knowing the facts!" GOTO LINE 1) , but it doesn't seem to be getting through to some people.

P.

There is a BIG difference between complaining about the lack of transparancy in NAMA, and stating "We'll be paying for Johnny to jet to Marrakesh. Fantastic."

oceanclub

Welease wrote: »

There is a BIG difference between complaining about the lack of transparancy in NAMA, and stating "We'll be paying for Johnny to jet to Marrakesh. Fantastic."

Oh jeez, dammed for using humour. Oh, remove the "to jet to Marrakesh" bit if you're still hung up on it after 4 pages.

P.

Welease

oceanclub wrote: »

Oh jeez, dammed for using humour. Oh, remove the "to jet to Marrakesh" bit if you're still hung up on it after 4 pages.

P.

Well here's a suggestion.. If your problem is about transparancy in NAMA then create a thread about that.. If you are going to create threads about how much developers are being paid then people will respond to that