NAMA was supposed to have delivered its report and accounts for Q3,2012 to Minister for Finance, Michael Noonan by 31st December, 2012 and we will probably get these in the next month. We must wait until April 2013 until we get the Q4,2012 report and accounts which will also include unaudited accounts for the entire year 2012, and we will get in the summer, probably July 2013, the annual report from NAMA for 2012.
But this afternoon, we get a detailed update from NAMA on 2012. It is here.
This is what we learn
(1) NAMA and its developers and receivers presently have €1.5bn of Irish assets on the market, and given that NAMA should have the final say on most asset disposals, that makes NAMA incredibly powerful, though I would wager that the vast majority of these assets are completed commercial properties.
(2) NAMA is sitting on a cash mountain of €3.6bn even after paying off a lifetime total of €4.75bn of its €30bn of senior bonds. NAMA needs pay another €2.75bn by the end of 2013, as a condition that Minister Noonan agreed to insert into the Memorandum of Understanding with the Troika in May 2012.
(3) NAMA doesn’t offer us an estimate of its profit for 2012, which is out of line with previous years when its CEO did provide estimates even before year end. What we do know is that NAMA made a post-impairment profit of €222m for H1,2012. I would guess NAMA made a €500-1bn operating profit last year and will have taken about €250-500m in impairments. But remember there is a lot of jiggery pokery going on with NAMA’s accounts where it anticipates future receipts in some instances and in others, it ignores certain profits on specific transactions until its relationship with a developer is fully concluded.
(4) NAMA has allocated €2bn to investment in Ireland in the four years ending 2016 and had previous agreed advances of €0.5bn in Ireland. NAMA doesn’t tell us how much of the €2bn has been drawn down to date, the IMF wrote in December 2012 that the €2bn investment would be back-loaded and today NAMA says “the timing of actual draw-downs in Ireland is dependent, for certain of the proposed projects, on resolution of planning matters and a number of infrastructural issues with various local authorities. This will enhance the commercial viability of these projects.” Again, it would seem planning is working against our national economic interest.
(5) NAMA reminds us that it has €2bn available for vendor or staple finance – this is where NAMA lends up to 75% of the purchase price of prime commercial property with quality tenants when NAMA is selling the property to reputable investors; NAMA charges about 3-4% per annum on its vendor finance. NAMA has still only completed one staple finance sale – One Warrington Place but says today “The first vendor finance transaction was completed during 2012 and a number of others are currently in the pipeline and nearing completion.”
(6) In respect of the 295 homes offered with NAMA’s deferred payment initiative or “negative equity mortgage” as it popularly became known the Agency says “sales have been agreed on over 100 of these properties with an aggregate value in excess of €18 million.”
(7) NAMA has now made 3,900 homes available for social housing, and indeed the snails-pace acquisition of NAMA homes by the Department of Environment, Community and Local Government has been the fault of the Department, not NAMA. That’s not what NAMA says today, that’s the assessment on here – NAMA merely says “the onus for determining the suitability of these units for social housing rests with the local authorities, which assess, in conjunction with the Housing Agency, the demand for identified houses and apartments”
(8) When the reform of Upward Only Rent Review terms in commercial leases was abandoned in December 2011, NAMA launched its own initiative to ease the burden of commercial property rents on tenants whose businesses were in distress and today, NAMA says that it has approved €13.5m of rent abatement applications so far. Of the 276 applications received, 212 have been approved, 8 refused including this one presumably, and 56 are currently being approved.
(9) NAMA has dealt with over 17,000 of the dreaded credit applications to date – they’re “dreaded” by developers who must get NAMA to approve additional spending on their properties. NAMA says that is “currently” dealing with requests within five days. Last year, Treasury Holdings had some nasty things to allege about NAMA delays in approving credit applications.
UPDATE: 3rd January, 2013. Commenting on NAMA’s performance in 2012, Chief Executive, Brendan McDonagh said: “the generation of €10.5 billion in cash in the 33 months since the first loans transferred to NAMA reflects a strong performance in terms of asset disposals and also shows the importance for NAMA of capturing the rental income from assets under the control of debtors”. NAMA Chairman, Frank Daly, commented that, with €3.5 billion in Senior Bonds redeemed during the year, NAMA has made significant progress in 2012 towards repaying the debt it had incurred in acquiring its loan portfolio. “As we end 2012 with a healthy €3.6 billion in cash and with €4.75 billion redeemed to date, we remain firmly on course to meet our end-2013 Senior Bond redemption target of €7.5 billion. Performance on a number of key targets during the year, in conjunction with growing indications that the Irish commercial and residential markets are stabilising, reinforces our confidence that we will achieve our
ultimate objective of completing our work by 2020”.