NAMA Myths

JohnGrace2007

Had this debate with a man today in relation to a receivership action
Myth: NAMA is paying a maximum of €200,000 salary in three instances.

Reality: I’m willing to bet that Sean Mulryan, whose assets in NAMA are said to worth billions, wouldn’t get out of bed in the morning for €1,000 a day gross which is what €200,000 a year represents once you deduct weekends, holidays and normal absence from work. But what he will get out of bed for, I would bet, is a bonus if his assets are sold for a price in excess of NAMA’s target. So Sean Mulryan may well have to do with just €200,000 for the time being, but he may be in line for millions, if not tens of millions and possibly even hundreds of millions if he reaches certain target

Myth: At 8am on any given morning of the week, you could go down to the Boardwalk at O’Connell Bridge in Dublin, pick up any random heroin junkie waiting for the methadone clinics to open, give him a shower, a suit and a mobile phone and a couple of hours of training and by 5pm, hey presto! you’d have a property developer. Shure what is there to it?

Reality: Take a look again at the Prime Time Investigates special on developers which was broadcast in December 2010. Take a look at Cork developer Michael O’Flynn filmed taking off in his helicopter from his palatial home to go to the races and watch how his horse performs. Scandalous, isn’t it? Take a closer look, and you’ll see Michael and indeed most of the other developers in the programme with a mobile phone constantly glued to their ears. Now of course, they might be talking to the proverbial bookmaker or mistress, but the betting is they’re working. And that’s a mystery in the whole Irish property boom and collapse – how the public was never provided with real information on what the business of a property developer involves. Planning, construction, economics, financing, accountancy, tax, law, marketing, sales, architecture, personnel selection and hiring and firing, design, asset-management, project-management, politics, history and geography are SOME of the disciplines which developers need – or at least need be able to call on, thus the glue-on mobile phones – to be consistently successful on a large scale. Yes, anyone can buy a field in a rising market where credit is freely available, and maybe even build a dozen houses on an estate though even that requires some ability, but to build multi-billion euro businesses requires a lot of smarts. And that has never been really publicly recognised in this country. But nonetheless, the myth remains that ANYONE can do property development – ANY type of property development, residential, commercial, public in ANY location, Cork, Dublin, Ballyjamesduff, Beijing. Just try it.

My Question is

Is so don’t pay developers, appoint receivers who charge 1.5% of the asset value – for a €1bn portfolio at today’s values, thats €15m per annum. So pay Ernst and Young, PwC, Grant Thornton, FGS or the rest €15m per annum for managing a €1bn portfolio. Or pay the NAMA developer €200k plus overheads plus profit share. Or head on down to O’Connell Bridge…