RTE’s new season of Prime Time continues with a NAMA special this evening. Presented by former Sunday Business Post chief news correspondent, Ian Kehoe, it will be the first major RTE documentary on NAMA since Rita O’Reilly’s special last December 2010 which questioned why so-called bust developers still enjoyed wealth (that was the Prime Time Investigates programme which famously featured secret filming of Gerry Gannon and the wife stuffing the boot of a Range Rover with Brown Thomas shopping bags).
According to Ian Kehoe’s blog in advance of tonight’s broadcast, the programme set out to answer two simple questions – what is NAMA and is it working?
With respect to the first question, I hope we get a more considered answer than would be suggested with Ian’s claim that NAMA is “the largest property company in the world”. NAMA is no such thing. NAMA is an asset management company with approximately €30bn of loan assets under management. In a small number of cases, NAMA has foreclosed the loans and appointed receivers but the 887 properties currently foreclosed represent but a fraction of the 16,000+ properties securing NAMA loans. So at best NAMA is a property loans focussed asset management agency. There are a great many property asset companies whose physical property assets run into many billions – GE Capital Real Estate claims to have USD $68bn (€50bn) of property under management. And in terms of managing property loans which represent most of NAMA’s assets currently, as we painfully know many of our banks have equally large property portfolios. So let’s kill off that “largest property company in the world” rubbish – NAMA isn’t, and that fact may well be an important consideration if NAMA is broken up in future (remember FG’s manifesto and its proposal to offload NAMA’s assets to 3-4 asset management companies?)
Ian’s blog indicates this evening’s programme will deal with NAMA’s treatment of developers and asks “while the country is facing austerity, why are many developers are being paid six-figure salaries by NAMA, and are even being offered a cut of profits on deals” NAMA claims that paying a developer is cheaper than appointing a receiver and given that property receivers in Ireland typically cost €200+ per hour (and up to €800+ per hour for share receivers), paying a developer might represent value for money. NAMA has not confirmed salaries on offer – from recollection the only statement from NAMA which directly addressed the issue was about the rejection of a €1.5m salary request – but sources have claimed that salaries in the €192-200,000 a year range are on offer. The profit share issue was examined on here recently and is controversial, but NAMA claims it incentivises developers who are entrepreneurs at heart to over-deliver on projects being managed, and NAMA takes the lion’s share of the over-delivery.
The programme will also examine what it terms a “so-called cultural dividend” about which “we heard much” when NAMA was being established. I must say that I can’t recall hearing the term “cultural dividend” at all when NAMA was being established. Nor has Google, so if you search for “cultural dividend” + NAMA, you get nine results, only seven of which are to do with Ireland’s NAMA and none of these entries predates 2011. The programme will focus on one venue, The Complex in Smithfield and pose questions about NAMA’s non-commercial remit. The blog claims that “the agency is obliged by law to provide a social dividend” which seems like a bold statement presumably based on section 2 (b) (viii) of the NAMA Act which says one of the purposes of NAMA is “to contribute to the social and economic development of the State” – it’s a bit of a leap from that to say that NAMA is “obliged by law” to provide a social dividend and one heck of a leap to claim that NAMA is required to provide subsidized rents to specific arts facilities.
There’s an inevitable temptation on here to be sniffy about RTE’s presentations on NAMA. In the past they have been riddled with basic factual errors which made for laughable factual programming. Rita O’Reilly’s programme last December 2010 was a step-change for RTE and seemed to get its facts right and there was no doubt that it delivered visually iconic programming. Though in the end, the programme didn’t really provide very much information that wasn’t already in the public domain. I can’t immediately see from RTE’s annual report, the cost of an hour of RTE 1 current affairs programming but I’d expect you’d be looking at well over €100,000, particularly for a programme that has apparently been months in the making – “we have spent the past few months journeying deep into NAMA-land. We have gained exclusive access into NAMA HQ, and over a number of months, conducted a series of interviews with the people who run the agency” – so let’s see what €50,000+ of our money gets us in terms of information. And to what extent you will have learned “what is NAMA and is it working”
RTE Prime Time NAMA-land is on RTE 1 this evening at 9.35pm and should be available online, both as a simulcast and for future viewing.
UPDATE (1): 7th September, 2011. The programme is now available online here (click the “latest video” on the right hand side to start streaming)
UPDATE (2): 7th September, 2011. First up it should be remembered that Prime Time typically has an audience around the 500,000-mark. From recollection Rita O’Reilly’s special on developers last December 2010 attracted about 700,000 viewers. So that’s about 25% of all adults in the country. If you’re reading this blog then the chances are that you have a good idea of what NAMA does and be aware in some detail of the issues surrounding the agency but Prime Time has to cater for a wider audience that might have little or no idea of what NAMA does. So I think the programme can be forgiven in respect of some accusations of being lightweight and shallow.
But having said all of that, the programme should have had a purpose, a message to communicate, a theme. And from the perspective of my armchair, the programme failed in that respect, it had the appearance of throwing lots of different mud at a wall hoping some would stick. Non-sequitur followed non-sequitur and it was difficult to see any train of cohesive thought leading the programme on.
Specifically, I had hoped the programme would answer the questions
(1) What is NAMA
(2) Is it working
We received a partial answer to “what was NAMA” in the sense that we got a potted history of its operations. But over its 10-year lifespan, loan acquisition and moving against developers will be a footnote to what is a large asset management company – developments, disposals, demolitions will be the stuff of its operations, profit will be its ultimate financial metric, minimising interference in the normal operation of the market will be an aspiration. And I must say that the programme seemed very limited in its coverage of these issues.
In respect of the second question – is NAMA working – you’d expect the programme to have set out some metrics by which NAMA might be judged. Profit, operations, business plans, disposals, developments, distortion of the market – but again as far as I could see there wasn’t even an attempt to provide any sort of objective measurement.
So what did we get for 40 minutes which probably cost us in the region of €100,000 to produce? A sense of the size of NAMA certainly, graphically illustrated by a rooftop panorama from a central Dublin rooftop which identified some of NAMA’s most high profile assets (Liam Carroll’s Anglo HQ, Bolands Mill, the Gasworks though I’m not sure Treasury’s National Convention Centre is in NAMA).
A few developers cropped up. Ray Grehan who along with brother Danny was on the wrong end of a NAMA receivership in May and a subsequent action at the High Court which is ongoing. The RTE interview with Ray was apparently conducted before the High Court action, and the thought crossed my mind that NAMA’s legal action might in part have been prompted by the interview. Certainly the Grehan foreclosure seems to be a very bad-tempered affair with claims that Ray can’t set foot on his former pride and joy, the Glenroyal hotel. I wonder if, upon mature reflection, Ray would have a different take on his future dealings with NAMA.
Ulick McEvaddy, more an aviation businessman than a developer but involved with Gerry Gannon, offered the view that NAMA’s 10-year maximum lifespan doesn’t sit with his view of traditional property holdings which might be double that.
Niall Mellon who owes NAMA €300m according to the programme called for debt forgiveness for ordinary mortgage payers and developers. Michael O’Flynn said that NAMA was tougher on developers than the banks and that NAMA has been learning on its feet rather than through design, and more generally that there was an urgent need for funding for the property industry to get back on its feet.
British Liberal Democrat MP, John Hemming offered the view that managing for value was preferable to fire sales. Housing minister Willie Penrose spoke about NAMA’s involvement in site resolution plans for ghost estates. Phil Tily of IPD claimed that proposed changes to Upward Only Rent Review commercial leases were stagnating the market here – he expressed the view that the proposed changes are “using a sledgehammer to crack a nut”. John Corcoran’s Korky’s shoe-shop on Grafton Street complete with new banner reminding FG of its manifesto commitment was pictured.
Economist Peter Bacon expressed disappointment at what he sees as the incarnation of NAMA as a debt collection agency rather than an asset management agency. Economist Ronan Lyons claimed that NAMA had failed in its primary objective of reinvigorating the banks and that the agency has the potential to seriously damage the Irish economy in its pursuit of profit. Economist Michael Taft claimed that by reference to NAMA’s original objectives the agency had failed.
Journalist Fintan O’Toole encapsulated the apparent unfairness of developers making an “excellent living” and “doing pretty fine” out of NAMA whilst the economy and population generally suffers. Journalist Neil Callanan suggests that there will be further examples of developers filing for bankruptcy in theUK, in the steps of the pathfinder, John Fleming.
A funny old breakfast club meeting with Peter Mathews, Carol Tallon, Nick Leeson and Richard Curran seemed like an odd gathering though the conclusion from the cacophony seemed to be that NAMA was playing for time and was still capable of being reversed.
The only piece of news that I noticed was: (from 15:00 approx) “Amazing as it may seem, Prime Time has learned that banks have not yet handed over the due diligence, that basic paperwork behind any loan transaction for €17bn of loans. That means that many of them may be entirely unenforceable, more billions we may never see again” It’s not clear what NAMA has paid for these loans and if there will be any potential future adjustment to NAMA’s acquisition costs or profitability.
The programme concluded with a remark from the NAMA Chairman, Frank Daly
“I have spent all of my life, fortunately or unfortunately, collecting money on behalf of the citizens of this state I didn’t think I’d be doing it but I will probably be doing it again for another few years at NAMA but I am absolutely confident that it can be done and that it will be a success”