Someone should enlighten NAMA about so-called SMART objectives, with SMART standing for Specific, Measurable, Achievable, Realistic and Time-specified. Then we might get something less wishy-washy than the objectives for the Agency published this afternoon – available here. This summarises the main points
“Ensuring the implementation of schedules for asset sales that have been agreed with debtors.
Optimising cashflow to NAMA from loans and debtors with a view to paying down 25% of the Agency’s debts (€7.5 bn) by end 2013.
Adopting an active strategy and establishing a panel for selling loans.
Establishing mechanisms to attract international investor capital, such as Qualifying Investor Funds (QIFs).
Development of the Deferred Mortgage initiative for residential properties.
Rollout of vendor finance on the commercial property portfolio.”
It is heavily process-focussed which is typical of the Irish civil service, rather than objective-focussed. Okay the Agency says that it will “optimise” – in other words, “try its best to achieve” – cashflow so as to pay down 25% of Agency debt by the end of 2013. This is a self-imposed target and although the document makes reference to quarterly oversight by the bailout troika and even though NAMA chairman, Frank Daly has previously talked about the target being “copper-fastened” into agreements with the Troika, NAMA has not been able to point to specific wording in any agreement to support that claim. So to restate that objective – “NAMA will do its best working with loans and debtors in order to achieve a self-imposed and flexible target next year” As for 2012’s contribution to that target, who knows.
The “development of the deferred mortgage initiative” has been in the pipeline for at least eight months and the current position is the “initiative” is expected in the next month, NAMA has appointed a project team, but reading today’s report, the matter may lie in the hands of the European Commission to approve in competition terms.
“Rollout of vendor finance on the commercial property portfolio”, otherwise called staple financing was actually achieved in September 2011 when NAMA offered One Warrington Place for sale with upto 70% “staple financing” available. In the event, the buyer Prudential, didn’t opt for staple financing – perhaps it felt the 2.5% markup NAMA is making on its staple financing loans is excessive. But here you have NAMA stating an objective which was achieved four months ago!
And many of the objectives are outside the Agency’s control eg getting approval from the European Commission to a mortgage initiative about which there are serious competition concerns.
So no profit target, no cashflow target for 2012, no numbers for approval of business plans and a bunch of woolly unspecific, process-focussed, time-unknown objectives – “we’ll try our best”.
great line…if its good enough for the big boys..im going to use it!..in response to any further pressure that the banks put me under…ill quote..as nama says”we will try our best”
After cherry picking loans and assets to sell they hope to pay back 25% of what we owe? As time goes on the returns are likely to be ever diminishing what they will do is simply dump gigabytes of their loan book to parasitic investment funds. Something the banks could have done themselves more successfully than NAMA.
At least we can be assured that they ” will do their best”. Well, as you can imagine, I am not at all assured, in fact I am alarmed by their dodgy plans to get the market going again by “guaranteeing” loans against negative equity.
Can Mrs Bourke do the same I am thinking of buying her property?
While they doing the SMART analysis they may as well do a SWOT strengths, weaknesses, opportunity, threats analysis. The type of management I would like to see implemented is MBO management by objectives and if they fail to meet those objectives they go. Of course if they were practicing this type of management they would already have had to wind themselves down! I think the European Competition Authority was seriously wrong to ever allow Ireland to establish NAMA as it effectively ended all possibilities and competition in the property market.
I nearly split my sides laughing at this priceless pious hope – “Rollout of vendor finance on the commercial property portfolio.”
The first attempt in Warrington Place was a farce. The staple finance consisted of asking BoI and AIB to provide loan terms to some of the bidders. AIB’s offer was derisory and nobody took up BoI’s terms.
Then we have the Hines / Macquarie Bank bid for Treasury which was based on €200 million of equity and €400 million of staple finance from NAMA. It was rejected. Most pundits believe it failed because it required staple finance.
In fact any approaches to purchase portfolios from NAMA that look for staple finance have either been given “the deaf ear” or rejected because the inmates of the agency belief that “If they’re looking for staple finance then they have no cash and can’t afford to buy it.”
Still a long way to go on the learning curve, guys…. Keep it up for the next couple of months and the politicians will get royally p*ssed with you. It will even dawn on them that you don’t have a clue and have no idea what you are doing.
The document is interesting for its projection of the total amount of assets that it intends to take enforcement action against in 2012.
Indirect costs relating to recovery and insolvency amount to €75 million. Note number 4 on page 12 states that this is: “Based on an average cost of up to 1.5% of the asset value of projected 2012 enforcements.”
So NAMA sees itself enforcing against €5 billion of property assets this year.
Is that at par or written down value? Perhaps Brian might ask the question?
; -)
Romney looking good in Florida,those visas are on their way!
Staple financing,converts non performing loans to performing,they can be structured in so many creative ways,interest only,bonus if paid off early,etc.
What’s not to like.This is actually the perfect time in the RE cycle,to load up on as much cheap debt as possible.Buyers with cash will seek out liquid markets or staple financed deals.
Also,assuming the boys and girls can underwrite or worst case loan to own,nice profit center too,positive arbitrage.