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Archive for July 19th, 2012

It will be next Thursday 26th July 2012 when NAMA will publish its annual report and audited accounts for 2011, and we’re all looking forward to that. Today, NAMA’s parent organisation, the National Treasury Management Agency (NTMA) published its own annual report for 2011. The NTMA has a range of functions but principal among them is management of the national debt, and most observers would say that it has been on cruise-control since the Troika bailout in November 2010 with permission slips needed from the EU, ECB and IMF if the country wants to even take a bathroom break. The NTMA however would have you believe that it has been a hotbed of activity in 2011, trying to convince Arabs, Sikhs and Jesus freaks to invest in Irish bonds as the country plots a return to the traditional bond markets in the next 18 months. How well the NTMA has made new friends remains to be seen

A separate annual report was published this morning for the National Pension Reserve Fund (NPRF) which was originally intended to provide a temporary rainy day fund until it would be deployed in the third decade of this century to fund pensions. As it happens, the NPRF was raided to bail-out two of the banks, AIB and Bank of Ireland, and there will be intensive focus on the NPRF in coming months as Ireland is expected to try to get the European bailout fund, the ESM, to buy our stakes in these two banks. Despite pumping €25bn into both banks, the NPRF is valuing those stakes at €8bn today (see table below). I have just ploughed through over 200 pages in the two annual reports, and can say that the only detail is that the NPRF engaged Goodbody Corporate Finance to value the stakes and the NPRF used the “advice” of Goodbody to arrive at its own valuation. There is absolutely NO DETAIL WHATSOEVER on how Goodbody valued the preference shares in AIB and Bank of Ireland which comprises 90% of the €8bn valuation shown in the accounts – Note 10 in the NPRF’s accounts on PDF page 60 details the history of the AIB/BofI shareholdings. Yet there are scores of pages given over to the most mundane trivia.

Another sinister omission is any detail of the rocketing legal and consultancy fees incurred by the NTMA of €36m in 2011, and there is reference to a €14m legal settlement without more detail being provided.

For the NAMA audience, we learn the Agency now has 214 employees, that NAMA’s John Mulcahy is advising the NPRF on its property investments, the NPRF has €507m of property investments and last year they returned 9%. A measly €51m of property investment is in Ireland. Remember Northwood may be earning 20% per annum on its first Irish property purchase at One Warrington Place, yet the NPRF seems to be giving Irish property a wide berth. If NAMA is so confident in the “stabilisation” of Irish property, how come its John Mulcahy is not able to steer the NPRF’s investments towards domestic shores?

It’s like poking a caged, starved mutt with a stick, but since we’re three days before the Sunday Independent can serve up another smorgasbord of rage-inducing fare, I’ll leave you with the NTMA CEO’s rewards for last year – €490,000 basic plus nearly €29,000 for car and health. And his pension? Who knows, all the accounts say is “The Chief Executive’s pension entitlements are within the standard entitlements in the model public sector defined benefit superannuation scheme” ! John did waive any bonus that might have been payable in 2011 and his deal provides for a bonus of up to 80% of salary, and it should be said that John has agreed to waive 15% of his salary for one year in 2012.

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It may be a couple more weeks before the Office of Public Works produces its annual report on rent payments made by State agencies to private landlords, but in the Dail on Tuesday, it was revealed that we are paying approximately €30m per annum to NAMA and its developers, and that sum compares with the €129m in total paid to all private landlords in 2010 – in other words, nearly one quarter of all rent payments by the State are going to NAMA.

Surprising? I actually thought it would be a higher proportion. Remember that NAMA paid €9.25bn for Irish commercial property loans by reference to November 2009 values.  And given the propensity for landlords to release equity in their property during the boom for further development/speculation, I would have expected far more than a quarter of all State rent payments to have been to NAMA and its developers. But even 25% shows the colossal role NAMA has in the commercial property market in this State.

Alas, there will now not be any more Parliamentary Questions until September 2012. with the Dail breaking up for the Summer recess today, but it would be interesting to know what percentage of the €30m is actually paid to NAMA or to NAMA’s benefit. Recently at the public accounts committee hearing, NAMA disclosed that more than two years after it started acquiring developers’ loans, only 86% of rents received by developers were in fact paid over to NAMA or to NAMA’s benefit. NAMA says that it hopes that by the end of this year, that will have risen to 100%.

Information detailing the properties rented by the State from NAMA and its developers arose from a question from Deputy Pat Deering to Minister for Finance Michael Noonan. The full exchange is here.

“Deputy Pat Deering:  further to Parliamentary Question No. 50 of 6 June 2012, if he will provide the number of properties owned by the National Asset Management Agency that are rented by the State; and the total amount of rent paid annually on a county basis. [34483/12]

Minister for Finance, Michael Noonan: I am advised by NAMA that it does not own nor does it manage properties securing its loans and that the properties to which the Deputy refers are under the control of its debtors and receivers. NAMA advises that the income arising from the rental by state bodies of approximately 82 NAMA debtor and receiver properties is of the order of €30 million per annum. NAMA advises that 48 properties are located in Dublin and the neighbouring counties of Wicklow, Kildare and Meath; these account for 76% of total annual rental income. There are 24 properties located in counties Limerick, Cork and Galway and these account for a further 21% of total income. The residual 10 properties are located throughout the rest of Ireland and account for 3% of rental income. The further breakdown by number and county sought by the Deputy would lead to the identification of specific properties, breaching Sections 99 and 202 of the NAMA Act, under which NAMA is prohibited from disclosing confidential details relating to its debtors or their properties, and the obligation on its debtors and receivers to uphold the confidentiality of agreements entered into with third parties.”

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