Archive for September 24th, 2010

Earlier this week NAMA’s Head of Lending, Graham Emmett, gave a speech to  the Associaton of Property Bankers in the UK. Even between two English-speaking nations concepts get muddied and Graham used his speech to compare NAMA to a giant REIT (Real Estate Investment Trust) which would manage property and pay a dividend to the Exchequer.

On a more practical level, Property Week report that Graham stated that NAMA controlled 6,000 built flats within the M50 motorway in Dublin plus a further 10,000 units zoned for development. The jist of the story is that for the time being there is a limited market for the purchase of property but the rental market is functioning and Graham told his audience that rental prices in Dublin are comparable to London (not at all sure about that) and that the strategy was for NAMA to rent these properties and deliver an immediate return.

There might be a few issues with this strategy. At present substantial state social assistance is propping up rental values. The State has signalled that it needs save €3-4bn from its spending in 2011 and I would have thought that this  market-distorting payment is at severe risk. Secondly there is no suggestion that there is a shortage of  rental property in Dublin, a city which saw a 0.3% decline in population in the year to April 2010 according to recent estimates by Ireland’s Central Statistics Office. The short term prospect for income levels is also not good with additional taxes and levies in prospect. This is hardly the future that makes Graham’s strategy attractive though when compared with firesales it might be the best of ugly choices.

Elsewhere in the speech, we find out that 500 people are employed in the NAMA project (excluding the armies of lawyers, valuers and others engaged on tendered contracts) with 100 in NAMA and 400 in the PIs (Participating Institutions in NAMA’s lingo – AIB, Anglo, BoI, EBS, INBS). He reminds us that the NAMA CEO said a fortnight ago that NAMA was in “advanced discussions” on disposals worth €500m (he avoids specifying whether that €500m of loans or of property). He says that Tranche 3 will transfer by the end of September, 2010 – just another week and we all eagerly await this tranche because it includes smaller-scale developers and the haircuts used might give a useful indication of haircuts in the remainder of the NAMA tranches. Oddly enough he singles out NAMA’s ability to appoint a statutory receiver which can’t be contested by the developer as a particularly significant NAMA power.

Graham’s full presentation is available here.


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This week Mr Justice Frank Clarke has been dealing with case management issues for the forthcoming showdown between Paddy McKillen and NAMA (and the State and Attorney General). The case is scheduled to be begin on the first day of the Michaelmas term, 5th October 2010 and is pencilled in for two weeks (though reporting in the Irish Times today suggests just four days).

Aside from the usual procedural matters decided in any case management hearing, Mr Justice Frank Clarke has been asked to consider whether Paddy McKillen can amend his application to include the kerfuffle started last week when Senator Eugene Regan claimed he has received correspondence from the EC which made it clear that unimpaired borrowers were not to be included within the ambit of NAMA. This matter is dealt with in a separate entry last week but yesterday Paddy’s people wanted the correspondence admitted and Paddy’s claim to be expanded.

The State, NAMA and Attorney General have resisted Paddy’s attempts and the judge is set to rule on the matter this afternoon. My view is that the EC letter referred to is a storm in a teacup and doesn’t advance Paddy’s case at all but Paddy’s battle to have it included demonstates that he is leaving no stone unturned in what is set to be one of the legal battles of the decade assuming the judges accept the challenge in the first place.

Remember for the background to the Paddy McKillen case plus all the most up to date news, there is a separate tab devoted to this one legal challenge.

UPDATE: 24th September, 2010 – RTE is reporting that Paddy McKillen has succeeded in his attempt to expand his claim and include the EU letter reported here last week in the substantive hearing.

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