NAMA reveals it expects to slow down its disposal of assets

It came as a surprise a fortnight ago to see in the IMF staff report on Ireland that NAMA had a target for asset disposals in 2011 – €3.1bn – which the Agency comfortably exceeded by generating €4.4bn of sales. It now appears that NAMA has disposal targets in both 2012 and 2013. Yesterday in the Dail, Minister for Finance Michael Noonan responded to a question from Sinn Fein’s Gerry Adams in which he said

“NAMA does not have specific annual targets for approved sales for each year up to 2013. However, NAMA advises that it has developed expected levels of cumulative approved sales as broad internal guidelines to ensure that it can reach its target of repaying €7.5bn of debt by 2013. These cumulative levels of expected approved sales are set at €7bn for end-2012 and at €9bn for end-2013.Levels of approved sales at year end will differ from actual sales at year end as in the property market there is typically a lag of about six months between sales approval and sales completion.”

For a man whose communication skills are sublime, this is a confusing answer from Minister Noonan. We can tell from the above that NAMA has an “level of expected approved sales” of €2bn in 2013, that is €9bn minus €7bn. But what is the “level of expected approved sales” in 2012? Because the Minister has bizarrely given his answer as a cumulative despite being asked for annual numbers, we have to form a view of cumulative approved sales at the end of 2011, so that we can subtract that from the €7bn at end-2012.

According to the NTMA which ran an investor road-show in January 2012, NAMA had approved sales of €6.6bn at the end of 2011. So that would imply a “level of expected approved sales” of just €0.4bn in 2012, that is €7bn minus €6.6bn.

No wonder this Government seems at sea in its negotiations on Anglo’s promissory notes if the above ministerial response is typical of the clarity of communication and understanding of concepts displayed by senior Irish politicians.

However what the above does seem to demonstrate is that NAMA is now going to slow down its disposal of assets – in 2010 and 2011 it generated €6.6bn apparently and is only going to generate an additional €2.4bn in 2012 and 2013. Critics have claimed that NAMA was disposing of the “low-hanging fruit” in its initial phase and that the Agency would imminently be left with “unsaleable crap”. If you tease apart the Minister’s response yesterday, that criticism seems to get support.