“NAMA, of course, is not a spectator; nor is it the hurler on the ditch who has the luxury of deriding the players on the pitch.” NAMA CEO Brendan McDonagh addressing the Construction Industry Federation conference in Dublin this morning
The NAMA CEO Brendan McDonagh delivered a speech to the Construction Industry Federation (CIF) this morning, the transcript of which is available here. There is nothing really new in the nine pages and Brendan continues to beat the drum as best he can to instill a sense of confidence in the Irish residential and commercial property markets. As he says, it is easy for those on the sidelines to comment (!) but NAMA has the responsibility of delivering.
What’s new? The regular audience here might be interested to see that Brendan is now using the yields on Irish sovereign bonds to emphasise the attractiveness of Irish commercial property. With the 5-year bond at 3% and yields in commercial property in the 8% zone, sure you’d be mad not to buy Irish property. It’s as good a contribution as any I suppose, but having this morning re-examined the crapola spewed forth in 2009 about historically high yields presaging the imminent bottom of the commercial property market, you might remain cynical. A yield is simplistically rent divided by value, and when both rents and values are unstable, then yield analysis is little better than scrying tealeaves.
A few other snippets,
(1) the launch of NAMA’s Qualified Investment Funds will be “shortly” and speaking of which, the Sinn Fein finance spokesperson this week asked the Minister for Finance Michael Noonan about progress with introducing the QIFs – the parliamentary questions are at the bottom of this blogpost.
(2) NAMA’s provision of €2bn of staple financing is, coincidentally, over the same period as its €2bn investment in Irish developments – four years! And NAMA says that “most of” the staple financing will be in Ireland though when Brendan says “NAMA will be investing of the order of €4 billion in the Irish economy over the next few years through our loan and vendor finance.”, you get the impression that most of the €2bn staple financing is earmarked for here. NAMA says the Irish commercial investment market was worth €200m in 2011, so you can see that NAMA’s presence in this market is dominant.
(3) NAMA will “shortly” be rolling out its deferred mortgage initiative to 750 homes on its portfolio.
(4) NAMA is examining commercial development in Dublin’s “central business district” in light of comments from the IDA about imminent shortages of HQ-sized offices in central Dublin.
(5) NAMA says Dublin residential property prices are down 60%, that there is some sort of stability returning to the market evidenced by the CSO’s index, but that there is unlikely to be any short-term recovery. NAMA says most of its portfolio is in and around major population centres and there is evidence of imminent shortages in some places.
(6) NAMA will demolish property on “health and safety” grounds. NAMA seems happy with its demolition of the apartment block in Longford. NAMA is investing €3m in finishing ghost estates and says that NAMA’s involvement in such estates is limited at 10% of the total.
Deputy Pearse Doherty: To ask the Minister for Finance when the National Asset Management Agency expects to make an appointment for the provision of investment management services for its proposed qualified investments funds, the tender for which was issued on 25 January 2012 with a closing date for bids of 6 March 2012.
Deputy Pearse Doherty: To ask the Minister for Finance when the National Asset Management Agency expects to make an appointment for the provision of custodian and fund administration services for its proposed qualified investments funds, the tender for which was issued on 3 February, 2012 with a closing date for bids of 15 March 2012.
Deputy Pearse Doherty: To ask the Minister for Finance when the National Asset Management Agency expects to launch its first qualified investment fund; the anticipated value of the QIF; the nature of the assets that will be managed by the QIF; and how the QIF will be marketed.
Minister for Finance, Michael Noonan : I intend to take questions 111, 112 and 113 together.
I am advised that NAMA, for and on behalf of the QIF, will make an announcement shortly as to the outcome of the tender competitions for investment manager and for custodian and fund administrator.
I am further advised by NAMA that the Qualifying Investor Fund (QIF) is expected to be launched, subject to regulatory approval, at the end of 2012. NAMA advises that the QIF will publish a prospectus which will set out the subscription process for QIF shares. Investment in the QIF will be limited to qualifying investors (as defined by the Central Bank rules).
NAMA Wine Lake 
You have to wonder are there any adults or market savy people at NAMA,why oh why do they keep letting Brendan out in public.
I know it’s Friday but WTF does this mean….who talks like this…”abroad” where is abroad exactly and based on what,he’s an embarrassment keep him indoors away from public engagements.
“However, crucially we are tackling our problems head on and that is being recognised very emphatically abroad.” Link above.
By who exactly them people abroad,over the sea….in the US,who is he talking about,what a bizarre weird statement to make,hasn’t a clue poor chap.Keep him in a back room where he belongs.
The Guardian this week:
“Saunders says that while this year’s government deficit will be close to Noonan’s 8.1% of GDP target, “over the longer term, Ireland’s ability to return to a sustainable fiscal path requires both fiscal austerity and economic growth. The underperformance of the economy in Q1 and Q2 reinforces our worries that, even with strict adherence to its fiscal plans, Ireland’s deficit and debt path will exceed official forecasts in coming years.”
http://www.guardian.co.uk/business/economics-blog/2012/sep/24/ireland-economic-growth-fall-flat
Wall Street Journal yesterday:
“Ireland made its share of mistakes before and during the financial crisis. But no small part of the current pressure it is under comes directly from the generous treatment of the creditors of its commercial banks. This was done at the behest of the ECB, and largely for the benefit of its neighbors. Irish taxpayers should not have to bear that load alone.”
http://online.wsj.com/article/SB10000872396390443507204578022253548973258.html?KEYWORDS=Ireland+debt
The truth is that other than One Warrington Place, NAMA’s record of supplying or stimulating the market has been abysmal. BOSI in particular has shown the way to the extent that Certus is now pausing for breath as it has achieved its targets for disposals in Ireland – unlike NAMA which has concentrated on the UK (particularly London) to the detriment of the Irish economy.
Brendan talks of the future and the need to provide “headquarter” office buildings in the CBD. He is going to have to distort the market by putting in the sites for nothing or they won’t get built. The reason? It is impossible to build a new office block today and rent it at the current rental levels in Dublin’s CBD, which currently stand at €27 per sq. ft. and make a profit. It is only possible if you put a nil value on the land.
Brendan hopes that by becoming a developer NAMA will be able to recoup the amount it paid for its loans. He will not do it by putting the land in the sum for zero…… and he is already down a minimum of 25% at this point.