Archive for December 20th, 2012

The Oireachtas will break up tomorrow for its Chrissy holliers and won’t be back unil the 16th January 2012, but the final debates of 2012 today didn’t display much Seasonal goodwill.

Sinn Fein again returned to the issue of Minister for Health James Reilly’s controversial “bumping-up” of two sites in his Dublin constituency for development as primary care centres. Since the “bumping-up” in July 2012, there has been the highest-ranking resignation so far of this Coalition administration with junior health minister Rosin Shortall baling out, criticising the Minister for engaging in stroke politics.

Two distinct issues have emerged – the apparent pork-barrelling of siting two health facilities in the Minister’s constituency which might serve to bolster the Minister’s chances of re-election and secondly, the selection of a site belonging to a developer who is both an associate of the Minister and a borrower at NAMA.

It was the second of these issues that was the subject of the final Leaders Questions this morning, where Sinn Fein’s deputy leader, Mary Lou McDonald tackled An Tanaiste Eamon Gilmore in the wake of papers, recently released to Sinn Fein under the Freedom of Information legislation, and which Sinn Fein allege showed that in advance of the Minister meeting with NAMA in April 2012, that the specific site belonging to the Minister’s associate at 66,68,70 Dublin Street, Balbriggan had been examined by the Minister. The Minister has always maintained that he did not discuss or refer to the specific site at Dublin Street when he met with NAMA in April 2012, but it seems that it wouldn’t take much to conclude the reference by Minister Reilly at his meeting with NAMA to a site “currently used as a car park” in Balbriggan was in fact the site at Dublin Street.

A copy of the Freedom of Information documents has been requested.

Deputy McDonald went on to charge the Minister with corruption, and in response to that, An Tanaiste invited Deputy McDonald to repeat that accusation outside the Dail where such charges wouldn’t be immune to legal action for defamation. And remembering that Sinn Fein is nursing a €100,000 defamation damages case in Northern Ireland this week – plus legal costs estimated at €400,000 on top– there might be no immediate appetite to put Party finances at risk. It should be said that Sinn Fein is said to be considering an appeal in this defamation case.

An Tanaiste this morning said that an internal audit probe into political influence over the selection of the site in Balbriggan has in October 2012 uncovered no evidence of untoward influence. That internal audit may now come in for intense focus to ensure its scope, resourcing and terms of reference were adequate to investigate the matter. Minister Reilly has always maintained the site in Balbriggan was selected after applying appropriate selection criteria.

The controversy hasn’t gone away, you know.


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NAMA sued in Dublin’s High Court

A fortnight ago, it was reported on here that NAMA was one of the parties being sued in Dublin’s High Court in a case involving what appears to be a Portugese property development. Yesterday, the plaintiffs in that case, Tony Ward and James Hiney, lodged two applications naming the same defendants,


James Hiney is joined in his application – 2012/12954 P – by Sabina Hiney and both plaintiffs are represented by McCartan and Burke solicitors. Tony Ward has a separate application – 2012/12952 P – and he too, is represented by McCartan and Burke solicitors.

Given that this is Ireland, we can’t access the application itself to see what is at issue or what remedies are sought.

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When NAMA is asked about its plans, and particularly when it is asked for specific financial targets, the Agency or its political mouthpiece, the Minister for Finance Michael Noonan tends to stonewall and even cite commercial confidentiality for top-level plans.

Thankfully, we have the IMF involved in running the country, and we learn from its latest staff review report published this week that NAMA is expecting €0.6-0.9m of sales in 2013-4 ON TOP OF the €2bn of vendor or staple finance funding it is making available.

The IMF report states

“NAMA will also make €2 billion of vendor financing available, which is expected to attract new investor equity in the order of €0.6-0.9 billion in 2013–14.”

It has been confirmed that the “investor equity” means independent finance that buyers bring to the table when buying NAMA assets.

We can’t be certain that all of these sales will be in Ireland, but it is in (the Republic of) Ireland where there is the greatest dearth of available finance.

What this tends to suggest is that we will finally see the brakes taken off NAMA’s disposal activity in Ireland, and that commercial property in particular, of which NAMA has about €6-7bn under management still, will finally be unleashed on the market.

NAMA has said in the past that its staple finance would be confined to better quality assets with decent tenancy arrangements, but the betting now is that more secondary assets will be offered with NAMA’s financing, which remember is available to NAMA at the ultra-cheap 0.75% rate per annum it needs pay on its NAMA bonds. Bank of Scotland and Ulster Bank have been early movers as regards disposals of Irish property, but at last it seems we are on the brink of seeing significant planned disposals at NAMA.

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With an unemployment rate of 14.6% equating to 324,000 people and with 420,000 overall on the Live Register which includes all recipients of employment-related benefits, you would have thought it was a national priority to encourage investment which might generate jobs.

So, when NAMA announced in May 2012 that it was going to invest €2bn in its developments over the next four years, there was a warm welcome for the announcement. NAMA itself said that the investment might create 35,000 jobs and that would make quite a dent in the unemployment numbers. Not just that, we know that construction-related investment is one of the best ways of stimulating growth more broadly throughout the economy.

At the time, NAMA was coy about when it would spend the €2bn, and declined to answer questions on the phasing of the expenditure.

But thankfully, we have the IMF involved in the running of this country, and in their latest staff review report on the Irish economy published this week, they say the following:

“To support its asset disposal and market restoration objectives, NAMA plans some €2 billion in capital projects in Ireland, phased in a back-loaded manner through 2016, with risks to be managed by limiting project exposure at any given time”

We know from the NAMA Act and from Minister for Finance Michael Noonan’s letter to NAMA in March 2012 which ordered the Agency to temporarily finance the repayment of the €3.1bn Anglo promissory note, that NAMA has a wider remit than just managing its loans. It has access to ultra-cheap financing and has a massive portfolio of property, a good deal of which requires development and it can act and be ordered to act in the interest of the wider economy.

Which all begs the question – why is NAMA “back-loading” its investment when the need is right now?

NAMA was asked for a comment on the statement in then IMF report, but none was forthcoming at time of writing. That is not to say that NAMA has not been investing in the economy and there have been announcements of shopping centre developments and there is speculation about a major office development in Spencer Dock. But why “back-load” the investment?

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