National Asset Management Agency

so what is affordable/social housing under name and how much will be provided?
What new land zonings have they invented?

over to grace the ace!~ where is the nama land bank map?

Interesting break down of the figures; I respect his honesty in saying that he like others have no idea where residential land values are going. I do however dispute his views that foreign assets have further to fall; European long term yield averages are roughly 5%; the figure used by Nama was 6%; what caused the crash was not 6% yields or even 5% yields it was the wall of money that was lent to investors from many countries at sub 4% yields. Those sub 4% valuations will not come back any time soon except in few selected markets such as Hong Kong.

I would also look at residential yields which at 3% are below European averages of 4% -5%; residential yields will almost always be lower on the basis that lot sizes are so much smaller which makes investing in a couple of flats a lot more accessible than buying an office tower or shopping centre. Residential property is always much less risky in that finding tenants generally is easier and if you at a difficult point of the cycle do a pragmatic letting below long term value you can adjust the rent back up in a year and not 5 years as is the case with commercial lettings.

Thankfully a stable platform has now been put under the banks; the taxpayer can now appoint expert staff to maximise value of the holdings through active asset management of the portfolio. What long term economic value turns out to be will have little to do with the holdings and has everything to do with how the wider economy performs with particular reference to employment levels and salary levels.

I find Noel Whelan’s article bizarre; lets look at Noel’s background he was the first in house quants based political analyst, a role for which his analysis won universal respect. His attempts at Dail Eireann foundered in John Gormley’s constituency and no doubt Noel is convinced that the first past the post system would have of course returned Noel straight to the Dail; the tone of his article suggests that anything less than mathematical carve up of decision making based on mathematics is scientifically unfair. The conclusion of the moral tone taken in the article is that the majority party would protect their electoral superiority and assert their numerical superiority at the ballot box. I would ask Noel to run the quants on an election next February or get off his soap box. We get the government we elect and in this case it is fair to say that the Green party have signed off a number of policy agendas in areas such as road transport that they would not have had in their manifesto; whilst I disagree with them taking the decision outside their parlimentary party it is their right to do so. I would also suggest that Noel’s quants analysis would be equally accurate with their re-election chances if they took the moral high ground on a single issue.

In respect of the presumption that Gerry Robinson that ministers run multi-billion asset management / delivery programmes. I find this to be wrong outside the delivery of road and other physical infrastructure programmes which excluding the odd toll road produce assets that are of no interest to the private sector. Even in cases of the NRA/CIE/RPA there are civil service sub-departments which are charged with moulding and scoping the projects albeit that they need ministerial and cabinet sign off to receive the funding.

What makes Nama fundamentally different from running programmes is that in the remit of Nama is manage loans and not projects. Much of the portfolio deals with built assets that are in all reality semi-liquid property investments; the only decision to be made on these is whether the government instruct a policy of liquidating assets in breach of their lending covenants the second LTV or interest cover is breached or do they encourage a position of restructuring those loans to enable them to be perform to softer tests until medium term values return.

Another significant portion of the portfolio relates to what you would call the half built or untenanted properties; no government is qualified to make calls on what terms would be required to get tenants into empty buildings or which half built projects should receive further funding to be completed.

A decision needs to be made as to who makes decisions; do they hire a team made up of planners, construction managers, loan assessors and property fund managers to make those decions on their behalf or do they hand a fixed term contract to a consultancy(ies) to make those calls. Please do not try to tell me that either John O’Donaghue or the more successful Minister for Fun Michael D Higgins managed the Irish film industry; they both in their very different styles listened to the civil servants who from their professional backgrounds knew exactly where the fault lines were in every decision.

The government has made an in principal decision to invest c€54bn of taxpayers money; clearly the government are doing this to preserve the well being of the domestic banking sector.

The Govt has made this decision following advice and come to the conclusion that they are receiving a portfolio of loans worth €47bn for the portfoio’s current value plus an estimated top slice of €7bn on the development land holdings which is estimated to be realisable when the unprecedented overhang of development land which would be offered onto the market if the banks forclosed on all loans in breach of one loan covenant or another is removed.

It is an act of faith in their ability to manage the macro economy through the current downturn and restructure the economy away from one that relied what in hindsight was at national level too high a reliance on real estate as creator of wealth and at consumer level perceived to be a one way bet that was only up for the 14 years to 2007 and only down for the past 2; in about 2 years; one would assume that subject to the productive sector retaining International competitiveness; something approaching equilibrium sentiment will return.

There are three ways that this can play out; firstly if the government issues bonds and transfers €54bn to the qualifying institutions and simply waits for the sums to be repaid or the government gets activily involved in managing the holdings via NAMA.

If it is the former clearly the original borrowers or the financial institutions who pre NAMA hold the assets will continue to hold the assets, these borrowers in many cases have no capacity to raise additional finance and these borrowers will receive all the upside. In the second scenario the banks will take over the assets and it is clear that the banks even post NAMA will be repairing their balance sheets for a number of years to come; they will not want to extend their exposure to the property sector for a number of years to come.

In the third scenario where NAMA takes greater control there would be much easier access to credit markets to procure development finance for selected projects under government guarantees where the original developer could receive a project managment fee of say 3% – 5% to act as a consultant or if the firms were to be preserved say 8% – 12.5% if the QS function were undertaken in house.

Alternatively NAMA could select a joint venture partner where the land would act as the NAMA investment stake and the selected JV partner would supply development expertise and the sums required to plan, construct and market the development; using that model the upside would be shared.

If the money is transfered and there is no downside for the original borrowers then clearly the taxpayer is getting a very bad deal and NAMA other than needing a few fund accountants to mark the value of the securities to market will be non-existant. However it could be much more but a significant level of control over the portfolio would need to transfer to NAMA.

LUXURY goods maker Hermès is set to acquire the Bond Street store occupied by prestigious jeweller Asprey for £73.5m.

The French fashion house is buying the property, designed by Foster & Partners, from Quinlan Private, the Irish property investment firm that also owns landmark London hotels including Claridge’s and the Connaught.

Hermès is keen to expand its retail empire and is said to be interested in taking over occupation of the store for its own brand. The business is performing well despite the global recession.

Its last set of half-year financial results showed that turnover had increased by 7.6% to €875m (£802m).

In common with other property investors, Quinlan Private has seen the value of many of its holdings fall over the past year, but it has made almost £25m profit from its investment in the Asprey site.

It has owned the store since 2005, when it paid £50m to acquire the property.

In contrast to Hermès, Asprey has been finding the going tougher, racking up losses in each of the past two years, although these have been falling.
http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6851166.ece

Deal of the year by a distance; just proves that extreme quality can provoke special situations

With a jingle jangle the auld triangle

by the banks of the union canal

@Pot Noodle wrote:

I think there are Vestive Interest on here

Like this?

http://www.thesun.co.uk/sol/homepage/showbiz/bizarre/article2043330.ece

SPV!

How come nobody saw this coming?

This off-the-national-balance-sheet thing apparently requires the establishment of an SPV, a ”special purpose vehicle”. The SPV will be responsible for the purchase, management and disposal of loan assets identified and valued by Nama.

The SPV will be a separate legal entity jointly owned by private investors (51%) and Nama (49%)! . . . . . Who are these private investors?

This device is designed to keep the national balance sheet looking reasonably sane, so that the people we borrow money from won’t jack up the interest rate because we’re a financial basket case, . . . . but surely these people read the papers and know we’ve got this other €54 billion mortgage!

Who are these private investors, does anyone know?

I don’t want to start hearing in a few months time the old familiar names again. There has to be a case for establishing a register of the people, companies and institutions etc. whose reckless trading* got us into this mess in the first place and certainly no one on that register ought to be allowed become an investor in this new SPV.

* When an experienced property developer pays outragous prices for development land, with money borrowed from an experienced bank, how is that not reckless trading?

Heard George Lee’s take on the Nama/SPV double act on Vincent Brown last night. Apparently it really is all smoke and mirrors, which is fine, except we’re paying for the smoke and we’re buying the mirrors.

As a couple of radio commentators have already pointed out, the interesting thing about the Nama positions, advertised today, is the inclusion of: “urban and land planning”, and “social housing and community development”, as areas where ‘expressions of interest’ are invited!

Obviously these positions could be just a fig leaf, which will be dropped once the real business of rogering the taxpayer begins, but if they are intended to be appointments to genuine positions that will be on an equal footing with the accountants, in a genuine attempt to address our dismal failures during the property bubble to really urban plan and to develop housing that is social and promotes community, then the whole Nama process will have been worth the pain in the backside.

I know we risk bringing johnglas into the discussion with imagery like this 🙂

@gunter wrote:

Heard George Lee’s take on the Nama/SPV double act on Vincent Brown last night. Apparently it really is all smoke and mirrors, which is fine, except we’re paying for the smoke and we’re buying the mirrors.

As a couple of radio commentators have already pointed out, the interesting thing about the Nama positions, advertised today, is the inclusion of: “urban and land planning”, and “social housing and community development”, as areas where ‘expressions of interest’ are invited!

Obviously these positions could be just a fig leaf, which will be dropped once the real business of rogering the taxpayer begins, but if they are intended to be appointments to genuine positions that will be on an equal footing with the accountants, in a genuine attempt to address our dismal failures during the property bubble to really urban plan and to develop housing that is social and promotes community, then the whole Nama process will have been worth the pain in the backside.

I know we risk bringing johnglas into the discussion with imagery like this 🙂

Totally agree. If these positions are more than just lip service, Nama could be a vehicle for repairing some of the damage we’ve done over the last ten to fifteen years. Using the land to provide district centres, community facilities and introducing a sense of proper urban planning could be a major claw back.