Having now read your post (difficult as it was) if there is any body on this thread who thinks that NAMA is not treason let me know your mind.

Here’s a little music for you while you think about it.

http://www.youtube.com/watch?v=WQriZQbTcjk

Apart from the fact that that was difficult to read I think you are correct.

“Have they got this money I don’t see it anywhere”

Yup,

Ireland does not have this or that money. It never did (just like Iceland – destroyed by selfish banker/political scum)

There just isn’t enterprise enough in Ireland to overcome the continual vampire that is the nature of our leaders.

Maybe it’s a post colonial thing?

So what the hell?

Let’s just give €70Bn to our new masters and let the children want.

It’s just a rumour that was spread around town by the women and children soon we will be house building.

NAMA. Is it worth it?

http://www.youtube.com/watch?v=6LNB6M7yTBo

You tell me.

Have they got this money I don’t see it anywhere

The idea that NAMA was going to become primarily a massive land owner is misplaced. There is a huge cost in managing and maintaning property. Who are NAMA to employ to do it and what kind of asymmetries of information would exist?

NAMA will foreclose where the developer is unlikely to be able to pay off his debts. If the developer can make the assets pay off then it is in the taxpayer’s interest to let him do so.

I assumed that Nama would buy the loans and call them Therefore the developers were bust but the crucial difference was that Nama did not act like a liquidator and could hold the assets to drip them into the market.

Therefore the developers would be bust with crystallised debts. Nama would have its massive landbanks that did not get dumped on the market simultaneously.

Is the BP saying that the developers sit there with no events of default, rolling up interest etc and if the market recovers they get to refinance (repay) and if it doesn’t they will be bust.

A one way bet for developers? If so it IS a bail-out for developers with the downside being carried by the taxpayer/state.

This is appalling - a bail-out for banks and developers.

“Under the provisions of the draft Bill, the Minister and the Comptroller and Auditor General will conduct reviews at the end of 2012 to assess the extent to which NAMA has made progress toward achieving its overall objectives.”

So the Comptroller and Auditor General will not make his first report until after the next general election.

Nice.

2010 €2.9
2011 €3.3
2012 €3.7

And Interest Cash Flow (Table 5) of

2010 €1.3
2011 €1.6
2012 €1.6

NAMA intends “rolling-up” interest of €4.9 billion in its first three years of operation.

“Caveat emptor”

Ah, fair enough. I won’t buy then. Where do I opt out?

The cashflow generating loans are stated as being expected to continue to perform. If it is possible to assume that the cashflow is generated from rents then any downward movement in rent might have a negative effect on this certain loans. I’m not totally convinced that the 40% performing is a certainty. High rents have bankrupted companies this year. More of the same could happen.

46bn of loans with 9bn of rolled up interest? What is the interest rate here? Is it about 5% with about three years of unpaid interest? That would assume build start in 2005-2006 with projected sales prices of probably higher than the bubble prices of 2007.

I do not see this coming close to breaking even. Caveat emptor.

As I wrote some months ago - a very expensive Fas course for real estate agents.

“it is projected that NAMA will return a positive Net Present Value of €4.8 billion over its expected lifespan (the 10 year Irish
Government bond yield of 5% was used as the discount rate).”

Those two quotes are the sum total of what the business plan has to say about the choice of discount rate.

Anyone with any understanding of maths knows that by choosing a sufficiently low discount rate you can make a silk purse out of a sow’s ear.

This business plan seeks to justify the politicial decision to create the biggest property company in the world. They don’t even try to justify the choice of 5% - they simply observe that it is the yield on 10 year government bonds. Have they no understanding of the scale of the risks inherent in NAMA.

Clearly a product of the Frank Fahy Business School.

This is a hospital pass to the next government, if ever there was one…and totally at the expense of the country.

FF know they won’t get in and are basically booby trapping the country so that nobody else has a chance. If we can’t be in power, then nobody can.

This is psychopathic behaviour.

@KarlWhelan

Morning Ireland was hilarious and chilling at the same time. Richard Bruton tried to talk about the low discount rate but it was clear neither Aine Lalor or Frank Fahy had a clue what he was talking about. Frank Fahy’s uber confidence in a property market recovery was also a highlight.

What proportion of the Anglo book is “performing”?

Surely the Anglo book would look decidedly poor if analysed separately.

Will AIB & BOI be “levied” for losses on the Anglo book?

I doubt it. There will be no “cross-levy”.

So one segment could produce an uncovered loss.

Presenting the cash-flow projection as a global picture is misleading if not worse.

Yes not only can NAMA afford to spend €2.6Bn on “fees & admin” it is also projecting a 44% increase in the value of underlying security. The banks don’t believe this. They know the business plan is a load of hokum.

So NAMA will provide €5Bn + to loans which are currently known to be “not-performing”. That amounts to increasing these “known to be not-performing loans” by a minimum of 16%.

Incredible how precise they got given we were making all sorts of assumptions about the future.

For this plan to work demand for the current bank of undeveloped and empty properties (including tiny apartment blocks in silly places) must return over the next 3/4 years. It’s a big ask.

If I was doing the Nama business plan it would have lost a little money ( a few billion) to make it look sort of realistic. To predict a €5.5b profit really is off the scale and holding yourself hostage to fortune.

What could possibly go wrong?

Let me put it another way.

The BP is self contradictory. It cannot say on the one that only 40% are performing (after all, as you say, they can only pay back 100% of there obligations, they cannot subsidise the “underperforming”).

So the 40% “underperforming”, when all is said and done, are actually “performing”. It’s just that they’re “underperforming” now but will perform in the future. Agreed?

Interest can be excluded as it is accounted for separately.

So for the BP to work €30.8Bn of the €77Bn currently known to be “not-performing” must become performing. And within that €30.8Bn of currently “not-performing” there can be no cross subsidy. Agreed?

20% written off.
40% performing
40% eh, um, gee, let’s roll up the interest and hope for the best…

That 40% is expected to do magical things. There won’t be a tooth in the head of any developer by the time the tooth-fairy has finished…

Thanks.

I need to think about this.

40% of the 77 bn are performing. Max recovery = 100% = 30.8 bn

From the BP.

“Based on data supplied by the institutions, it is estimated that 40% of the loans to be acquired by NAMA will be cashflow-generating (interest and principal) and that these loans typically pay an average spread of 2% over Euribor. Assuming no major adjustment in average margins, this will produce interest income of €12 billion over ten years. Interest paid by NAMA on its outstanding debt is estimated at €16 billion over the same period: in general, cashflow-producing assets are expected to mature prior to the realisation of assets which do not currently produce cash flows. Interest inflows and outflows have been calculated by reference to the forward € swap rate curve.”

On the one hand 40% of the loans to be acquired are “cash-flow generating (interest and principal”).

On the other only €15Bn of the €77Bn (say 20%) are described as “defaulting”. That leaves 80% “not defaulting”

“The projections assume that, of the €77 billion nominal value of loans acquired, €62 billion will be repaid by borrowers and that loan defaults or debt restructuring will occur on €15 billion (a rate of 20%).”

So while, according to the BP, 40% are “performing”, 80% are “not-defaulting”.

If I understand you correctly that means that 40% are “under-performing”.

Do I understand you correctly?

Is there a reason given as to why developers will suddenly be able to pay back 3 times as much in 2013 as 2012?
Have the developers signed anything agreeing to do this?
Or is the assumption that a certain % of developers will sell their property in this year?
Does Nama have the power to force a developer to sell?
Would releasing an extra 5 billion worth of property into the property market not have an impact on price?
From a laypersons point of view this really does seem like Alice in Wonderland stuff!

“NAMA is assumed to make a net profit of €5.48 billion by the end of its anticipated lifetime of ten years.”

Is €5.48Bn their “expected return” of NAMA with the assumed discount factor? Or is it just meant to show that they were able to cook up a scenario in which NAMA makes money?

Either way, the pseudo-precision of the €5.48Bn number is bonkers.
It shows that the only thing they are confident of is the innumeracy of the body politic.