Media: NAMA chief delivers upbeat progress report

The_Conductor

http://www.irishtimes.com/business/economy/ireland/nama-chief-delivers-upbeat-progress-report-1.1336803

The National Asset Management Agency ’s income of €1.2 billion a year in rents proves that it has not sold off the most valuable, easiest-to-sell loans and properties on its books, its chief executive has said.

“The big charge would be that Nama is selling all the low-hanging fruit first, therefore we would be stuck with assets that are not income-producing. We have completely disproved that,” Brendan McDonagh told the Chartered Accountants of Ireland (London ) branch.

The monthly recurring income of €100 million per month is “quite amazing”, he said, given that Nama has so far sold off €7 billion worth of assets in London and surrounding regions.

Delivering an upbeat assessment of Nama’s future, Mr McDonagh went on: “We are in a very good position, maybe a lot better than people would think.”

One-fifth of its remaining assets are in London, 12 per cent lie elsewhere in Britain, and 3 per cent are in Northern Ireland. In Wales, Nama holds €160 million worth of assets, although just €7 million is development land.

“The rest is income-producing,” he said, adding that in Scotland Nama holds €500 million in assets – but just €14 million is development, with the rest producing rent.

People believe, he said, that Nama has “all these assets in bad locations in Ireland, but we actually don’t,” adding that 94 per cent lies in Dublin, surrounding counties, or in major cities.

“We have 19 per cent in offices, 19 per cent in retail, 8 per cent in hotels and leisure, 3 per cent industrial, residential 12 per cent, while development land – 9 per cent, and the riskiest part of all – is a lot less than anybody would think,” he said.

“Everyone says that we own every hotel in Ireland. Fortunately, we don’t – we have 188 of 900. They are in the better locations,” he told the chartered accountants.

Some 36 of the hotels are in Dublin: “We have been able to show the Competition Authority that we are not engaged in this common complaint of predatory pricing.

“We don’t let our hotels do that. We make sure that they are washing their face and if they are not, then effectively we don’t support them,” he claimed.

Dealing with other “myths about Nama”, as he termed them, Mr McDonagh said it was alleged that “every single unfinished housing estate is ours, not true” – saying that 160 of the 1,500 examples are on its books.

Defending the developers who are working with Nama, he said: “Everyone thinks that every developer in Nama is a bad person; he isn’t. They are big employers, they directly employ about 10,000 people.”

He went on: “Everyone says we are ruining the golf industry in Ireland. Four hundred clubs in Ireland, 200 of those happened in the boom – absolutely mad stuff. We have got 17 of them, mainly attached to four-star hotels.”

Minister for Finance Michael Noonan will be given details of Nama’s accounts next week, he said

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Sat, Mar 23, 2013, 10:10

Victor

People believe, he said, that Nama has “all these assets in bad locations in Ireland, but we actually don’t,” adding that 94 per cent lies in Dublin, surrounding counties, or in major cities.

“We have 19 per cent in offices, 19 per cent in retail, 8 per cent in hotels and leisure, 3 per cent industrial, residential 12 per cent, while development land – 9 per cent, and the riskiest part of all – is a lot less than anybody would think,” he said.

While development land may only be 9 per cent at current valuation, how much did they pay for it?

Villa05

smccarrick wrote: »

http://www.irishtimes.com/business/economy/ireland/nama-chief-delivers-upbeat-progress-report-1.1336803
“We have 19 per cent in offices, 19 per cent in retail, 8 per cent in hotels and leisure, 3 per cent industrial, residential 12 per cent, while development land – 9 per cent, and the riskiest part of all – is a lot less than anybody would think,” he said.
Sat, Mar 23, 2013, 10:10

Is there 30% unaccounted for or am I missing something

19 + 19 + 8 + 3 + 12 + 9 = 70%

The UK Portion amounts to 35% so that is not the missing 30%

and if they don't own most of the ghost estates, who does? and who foots the bill for completion/demolition

Villa05

On the rent side, from the Comptroller and Auditor General Report 2012
http://www.independent.ie/business/irish/nama-faces-challenges-in-clawing-back-32bn-toxic-loans-watchdog-26857105.html

More worryingly NAMA failed to budget for the costs of managing properties when estimating the rental income from NAMA-linked property.

Their probably liable for the property tax also

Still 1.2 billion rent roll is impressive considering Residential property prices have dropped over 30% since NAMA valuation in Nov 2009, Commercial by more

The_Conductor

Villa05 wrote: »

Is there 30% unaccounted for or am I missing something

19 + 19 + 8 + 3 + 12 + 9 = 70%

The UK Portion amounts to 35% so that is not the missing 30%

and if they don't own most of the ghost estates, who does? and who foots the bill for completion/demolition

I guess its to do with the way he's rounded everything up.
The UK figure is also too high (by my reckoning, given their divestments to date, by at least 3%.

Good question regarding the ghost estates- my guess is that receivers were appointed directly to a significant number of them, and many have been offloaded in the last year alone at Allsop/All of Space type auctions. Think of the 24 incomplete houses just off main street in Cavan town that made a combined total of less than 100k- the mind boggles........

The_Conductor

Villa05 wrote: »

On the rent side, from the Comptroller and Auditor General Report 2012
http://www.independent.ie/business/irish/nama-faces-challenges-in-clawing-back-32bn-toxic-loans-watchdog-26857105.html


Their probably liable for the property tax also

Still 1.2 billion rent roll is impressive considering Residential property prices have dropped over 30% since NAMA valuation in Nov 2009, Commercial by more

Only liable for property tax if the properties are habitable- and in addition, as a landlord, the property tax is tax deductable (from NAMA's perspective its basically a book-keeping exercise and not an actual cost- however they have significant costs associated with their portfolio that they haven't factored into their calculations.

RATM

Victor wrote: »

While development land may only be 9 per cent at current valuation, how much did they pay for it?

Exactly. Your man McDonagh is off his head with his assessments. In the same speech he reveals that NAMA has a monthly rent roll of €100m from all their properties. He calls this figure "amazing". What planet is this guy on, like seriously ?

The only thing that is "amazing" about it is that they paid sixty something billion for their 'assets' and they are now producing a paltry €1.2 billion a year in rent. At those levels the taxpayer will be waiting until well into 2050 and beyond to ever see a re-payment from this folly. The only amazing thing about it that the taxpayer got the worst possible deal here. But were dealing with FF/FG/Lab policy here so perhaps it is not that amazing that the taxpayer got a woeful deal, its pretty standard when it comes to that lot :rolleyes:

hfallada

RATM wrote: »

Exactly. Your man McDonagh is off his head with his assessments. In the same speech he reveals that NAMA has a monthly rent roll of €100m from all their properties. He calls this figure "amazing". What planet is this guy on, like seriously ?

The only thing that is "amazing" about it is that they paid sixty something billion for their 'assets' and they are now producing a paltry €1.2 billion a year in rent. At those levels the taxpayer will be waiting until well into 2050 and beyond to ever see a re-payment from this folly. The only amazing thing about it that the taxpayer got the worst possible deal here. But were dealing with FF/FG/Lab policy here so perhaps it is not that amazing that the taxpayer got a woeful deal, its pretty standard when it comes to that lot :rolleyes:

They only paid €31.8 billon for the loans and they have sold a far amount of the properties they once had. Meaning its not a bad yield considering people consider a lot of the loans as destressed. The monthly income would be higher if the pound to euro exchange rate was better since a lot of their loans are there

The_Conductor

RATM wrote: »

Exactly. Your man McDonagh is off his head with his assessments. In the same speech he reveals that NAMA has a monthly rent roll of €100m from all their properties. He calls this figure "amazing". What planet is this guy on, like seriously ?

The only thing that is "amazing" about it is that they paid sixty something billion for their 'assets' and they are now producing a paltry €1.2 billion a year in rent. At those levels the taxpayer will be waiting until well into 2050 and beyond to ever see a re-payment from this folly. The only amazing thing about it that the taxpayer got the worst possible deal here. But were dealing with FF/FG/Lab policy here so perhaps it is not that amazing that the taxpayer got a woeful deal, its pretty standard when it comes to that lot :rolleyes:

Well- they've sold 7.1 billion in assets (which they paid 5.4 billion for), leaving them with assets with a book value of 54 billion, which is generating just under 1.3 billion in rental income (mostly commercial) per annum- a poor return of under 2.5%, however looking at the ROI alone is ignoring the bigger picture.

They are generating a lot of cash, and are on track to make their 7.5 billion redemption later this year, even allowing for a 2 billion investment in their Irish portfolio. As of 31st Jan 2013- they were sitting on over 10 billion in cash.......

Its a funny organisation- and personally I'd find the fact that they're sitting on so much cash as criminal in its own right, but we have to look at what exactly their remit is, and whether they are fit for purpose when this is considered. The answer is a resounding, yes, they are maximising the return for the exchequer, despite the political meddling that they get humped at them.

In a perfect world- we would never have had to create a monster like NAMA- however it is a friendly monster with good intentions.

Lets see if the annual report is published, and what gems it contains.......

StillWaters

As a taxpayer and citizen I have to say I give a cautious thumbs up.

carpejugulum

So what's the current realistic value of their entire portfolio?

RATM

smccarrick wrote: »

Well- they've sold 7.1 billion in assets (which they paid 5.4 billion for), leaving them with assets with a book value of 54 billion, which is generating just under 1.3 billion in rental income (mostly commercial) per annum- a poor return of under 2.5%, however looking at the ROI alone is ignoring the bigger picture.

They are generating a lot of cash, and are on track to make their 7.5 billion redemption later this year, even allowing for a 2 billion investment in their Irish portfolio. As of 31st Jan 2013- they were sitting on over 10 billion in cash.......

Its a funny organisation- and personally I'd find the fact that they're sitting on so much cash as criminal in its own right, but we have to look at what exactly their remit is, and whether they are fit for purpose when this is considered. The answer is a resounding, yes, they are maximising the return for the exchequer, despite the political meddling that they get humped at them.

In a perfect world- we would never have had to create a monster like NAMA- however it is a friendly monster with good intentions.

Lets see if the annual report is published, and what gems it contains.......

I can't agree Stephen, I just see NAMA as one of the biggest scams ever leveled on the Irish people. I agree with you that something had to be done but effectively what was done was failed businessmen got a bail out- we saw as much when Harry Crosbie admitted that he would never have to pay the portion of the loan that was written down. He got bailed out to the tune of some €250m by the Irish taxpayer and then had the gall to go campaigning for a new Childrens Hospital, you just couldn't make it up.

NAMA breaks the rules of capitalism and throws moral hazard out the window- people like Crosbie fcuked up so their assets should have been liquadated and sold on to someone who could at least make proper business decisions. That's how capitalism works at the end of the day but NAMA is a force that is there to disrupt the invisible hand of the market. By attempting to put an artificial floor in the market their activities are prolonging this property crash not bringing an end to it

I have no doubt in my mind that there is plenty of scandal yet to come from NAMA too- I'd easily predict by the time this is all over that we'll have scandals involving insiders getting to buy their properties back at vastly reduced rates. We've already seen this happen with an ex-NAMA employee buying a house in Lucan from NAMA at discounted rates and unknown to the wider market, where it might have received a better price. My guess is that this practice is widespread and it'll all come out in a tribunal/inquiry years from now.

When the Irish public were sold NAMA we were sold the successful Swedish good bank-bad bank model. But what NAMA is now is as far away from that model as you could possibly get. For one the Swedes had their NAMA open and closed again within 5 years, there isn't a hope in hell that NAMA will be closed when they say it should.

The whole thing is a mess and at this stage I've given up reading Namawinelake as it is just depressing stuff to read, fair play to your man behind it though, he is a lone voice of reason to counter the compliant mainstream media and their reporting on NAMA.

NinjaTruncs

It'd be interesting to know what their running cost are. It's all well and good taking in the sums they have mentioned but it's a different thing once running costs are factored in.

Villa05

smccarrick wrote: »

I guess its to do with the way he's rounded everything up.
The UK figure is also too high (by my reckoning, given their divestments to date, by at least 3%.

There is a breakdown of their assets for the end of 2011 on their website
http://www.nama.ie/about-our-work/key-figures/

Looks like the 30% is made up of Land (Non development) and other Investment Property

These make up 19% and 15% respectively in the 2011 figures.

The discount applied on the loan book (57%) should mean that they could break even easily, as property has not fallen by that much yet (with the exception of development land, some commercial).

NAMA's running costs would be a major concern reported to be €1million per day in 2012

The_Conductor

Villa05 wrote: »

The discount applied on the loan book (57%) should mean that they could break even easily, as property has not fallen by that much yet (with the exception of development land, some commercial).

Residential property- has fallen by far more than 57%, apartments in even reasonable locations in Dublin are down at least 70% and possibly as high as 80%. If you look at housing estates in places like Cavan- they achieved a miserable 100k for 24 houses just off main street- while in the boom any single house would have been more than this.

NAMA's saving grace is that contrary to all common beliefs- the bulk of their portfolio is commercial, offices and indeed utilities- residential property is only a very minor 14% of their holdings (and this includes Scotland).

57% may very well not be sufficient for the organisation to break even over its life- they have said as much themselves.

Yes- their running costs are exorbitant- and warrant ongoing monitoring and investigation by the likes of the PAC- who should be given the teeth they need to bring them to task.

NAMA should never have come into being- and is a monster, but its a monster that we're going to have to live with for some time to come. The very best we can hope is that they break even- the headline 'profits' they've made thus far have been low lying fruit unlikely to be repeated, whatever they say about their annual 1.2-1.3 billion in rental income from their performing assets.

I don't like NAMA- but I do feel they are following the mandate they have been given to the best of their abilities, albeit with cost overruns and running expenses that are out of control.

The_Conductor

carpejugulum wrote: »

So what's the current realistic value of their entire portfolio?

That question is a bit like asking how long a piece of rope is. If they had to liquidate their entire portfolio in a hurry- they'd get firesale prices for even their trophy properties- whereas if they play a waiting game, potential buyers may hopefully have the opportunity to access finance that has all but dried up at the moment.

Their assets have a book value of 54 billion- and this is a written down book value. Their residential properties are probably worth at very least 1.5-2 billion less than their book values. On the other hand- their commercial property in London is probably worth 3-4 billion more than its book value. Its Irish portfolio- is probably overvalued by 8-10 billion (in todays prices)- but by and large has the potential to increase in value (residential and development properties aside).

All in all- a current value of perhaps 44-45 billion, sounds reasonable- which means if they were wound up tomorrow- we'd be in hock for another 10-12 billion on top of everything else (the expectation is that over time this will reduce and possible turn a profit- but who knows, their forecasts haven't been the most reliable now, have they!)

JoeB-

I'd encourage people to read NAMAwinelake religiously if they want to be kept in the loop as regards NAMA.
http://namawinelake.wordpress.com/

There's a huge amount of secrecy over at NAMA, and, dare i say, corruption. I personally think it's just a vehicle to move billions of taxpayer money into the pockets of the favoured and elite classes.

850 developers benefited to the tune of (an approx average) 50 million euros each. Quite a bailout. And all done in very secret and hurried ways. Personal guarantees ripped up and not enforced despite assurances by Lenihan to the contrary. We can see how the government intends to chase the little guys to the ends of the earth, and prescribe every little outgoing and expense, in the new Personal Insolvency legislation. It doesn't seem to solve all problems and I'd suggest Irish people would be better off going bankrupt in the UK.


Anyway, the thread title is 'NAMA chief delivers upbeat progress report'. I suppose what he says depends on his audience. As NAMAwinelake report

NAMAwinelake, quoting NAMA chief Brendan McDonagh wrote:

As Brendan told his Spanish audience last week, “the Irish market is very difficult, the economy is taking longer to recover than anybody expected and the financial institutions not in Nama are deleveraging as well. It’s a very competitive marketplace”

gaius c

JoeBallantine wrote: »

I'd encourage people to read NAMAwinelake religiously if they want to be kept in the loop as regards NAMA.
http://namawinelake.wordpress.com/

Unfortunately Namawinelake is now gone.

The_Conductor

gaius c wrote: »

Unfortunately Namawinelake is now gone.

What happened Namawinelake?

RATM

Can't believe Namawinelake is gone, he was the only true source of truth as to what is going on in that organisation. Its a bad day for citizen journalism. I am also just hoping that his ending of the blog had nothing to do with the solicitors letters sent to him on behalf of Nama themselves.

gaius c

RATM wrote: »

Can't believe Namawinelake is gone, he was the only true source of truth as to what is going on in that organisation. Its a bad day for citizen journalism. I am also just hoping that his ending of the blog had nothing to do with the solicitors letters sent to him on behalf of Nama themselves.

No mention of it in his last post but the suddenness and timing is going to raise eyebrows. Such a shame he has been silenced because we're stuck with establishment media (and their property supplement VI's) now.

RATM

gaius c wrote: »

No mention of it in his last post but the suddenness and timing is going to raise eyebrows. Such a shame he has been silenced because we're stuck with establishment media (and their property supplement VI's) now.

If they have silenced him with legal threats then they have done a good job because he doesn't strike me as someone who would go quietly.

I just had a quick look at the 2009 Nama Act under the Offences heading. In relation to NAMA's confidental information any breach of the law is punishable by a fine of up to €20 million and/or up to five years in prison. Whoever wrote that Act wanted to make sure that any pesky journalists who went snooping around Nama's business could be financially ruined for handling any leaks coming from Nama. And also have the threat of prison hanging over them. My guess is that the legislation has proved to be very effective against Namawinelake but we don't know that for certain yet. The timing of his withdrawal, just a couple of weeks after Nama sent him solicitors letters, definitely stinks to high hell.

When I see things like this happen I really give up having much hope for this country.