The NAMA chairman (for the time being), Frank Daly, delivered an interesting progress update today to the Licensed Vintners Association (Dublin bar owners and operators). At some eight pages in length, the speech continued quite a number of snippets including
(1) NAMA has now absorbed €72.3bn of loans at nominal value in return for NAMA bonds of €30.5bn. This is up €1.1bn at nominal value from the February, 2011 update and up €0.3bn in terms of NAMA bonds which indicates that the latest AIB mini-tranche of €1.1bn of loans was acquired for €0.3bn or a 73% haircut, which is considerably more than the final estimate for AIB’s overall loans of 60%. NAMA has not provided a detailed update on tranches acquired since 23rd August, 2010. It is noteworthy that such a significant tranche of AIB loans attracted a 73% haircut.
(2) NAMA is directly managing the top 175 developers representing €61bn of loans at par value which means that the banks/Capita are managing the remaining 675 debtors representing €21bn of lending at par value.
(3) NAMA may acquire another €3.5bn of loans at par value, presumably representing Paddy McKillen’s €2.1bn of loans and €1.4bn of other objectors’ loans.
(4) “The Agency has already concluded its review of business plans from the largest 30 debtors which account for approximately €27 billion (40% of portfolio) of acquired loans.” This seems not to have moved for three months.
(5) Agreement in the form of Memoranda of Understanding has “been completed with eleven debtors” and “agreement is at a final stage with six more” and there are still negotiations with another eleven. In order for there to be an agreement NAMA has said that there will be three documents (1) Memorandum of Understanding (2) Heads of Terms and (3) Final Agreement and these documents will need be signed by (1) NAMA and (2) the developer and (3) potentially the developer’s wife. It is not clear if any agreement has seen all three documents signed by all three parties.
(6) NAMA has appointed receivers in 41 cases so far. These may have been appointed by the banks under NAMA’s direction. It appears that NAMA has appointed receivers in two cases itself, presumably referring to Bernard McNamara and Liam Carroll.
(7) NAMA has acquired loans which are secured by 83 hotels in Ireland – 30 in Dublin, 24 in Leinster (ex Dublin), 17 in Munster, 9 in Connaught and 3 hotels in Ulster. Three of these 83 hotels are closed and more are likely to close if they cannot demonstrate their viability
(8) NAMA thinks that the residential market had already dropped by 50% in November 2009 even though PTSB/ESRI said at that time that the drop from peak was less than 30%. Given NAMA’s position in the market, this is quite startling and frankly means that the ESRI has questions to answer if NAMA is correct. The ESRI is a partly government-sponsored body though presumably the PTSB index is produced on a commercial basis. Doubts in the accuracy of the house price series have been expressed on here several times because of the seemingly small sample sizes.
NAMA Wine Lake 
[…] been illustrated again via a speech given by NAMA’s Chairman Frank Daly (see NAMAWinelake here). Frank discusses NAMA’s assessment of residential sector as follows: On the residential […]
Not a lot here that we do not know already (especially if you read this blog).
In a nutshell:
They are accepting 175 developers into NAMA. The rest (some 700) will stay with AIB NAMA, ANGLO NAMA etc.
They have not actually signed a contractual agreement with ONE developer and are still “spinning” the press releases about partial agreements “completed”.
NAMA have not appointed 41 receivers. The PIs have – and presumably NAMA will inherit these in due course.
The dogs in the street know that residential properties were down by 50% by the end of 2009… well all except the dogs at the PTSB/ ESRI
Review of 30 business plans…. zzzz….zzzzz….zzzzz
The really relevant part of his job – the disposal process was not even mentioned.
I should qualify that last sentence. The aspiration was, as usual, there by the use of the term “approved sales” as was the promise of action soon. The actuality was conspicuously absent. A bit like the signed developers’ agreements really.
@WSTT, Frank did say “this disposal process will commence very soon and we expect that it will provide significant momentum to the property market” and in relation to some property “the only option is to sell the properties at whatever price purchasers are now willing to pay”
The NAMA model works best when the agency buys close to the bottom and a recovery takes place a short time later. NAMA did not buy at the bottom and God knows about the recovery – I think a 1.5% drop in commercial values this year is Pollyanna-ish, even ignoring the retrospective rent reviews, but who has a crystal ball? For residential there is little on the horizon to suggest a marked recovery for years (3+ according to the Central Bank). So either NAMA hoards property and you get a, em, NAMA wine lake or disposes at losses but at least provides the market with transactions.
Disposing into a distressed market with little credit or confidence will lead to fire sale prices and losses for NAMA. Hopefully someone at NAMA is drafting a strategy that walks the line between the differing alternatives but which tries to maximise NAMA’s profit.
“It looks like property has further to fall. Whether it falls further beyond 2011 or not isn’t the issue. All that matters is when it will begin to rise. And the answer is: not any time soon.”
http://www.sbpost.ie/themarket/the-inquisitor-55133.html