Things We Lost In The Fire Sale

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Minister for Finance and Public Expenditure & Reform Paschal Donohoe and NAMA Chairman Frank Daly at the launch last April of NAMA’s  Annual Report and Financial Statements for 2018.

Irish Tax Payer writes:

A number of news reports have declared that NAMA is on on track to achieve its overall objectives and is estimated to return a €3.5bn profit to the exchequer.

Ignoring the obvious questions of whether the €3.5bn is really a profit, when it won’t come close to recovering the €74bn nominal value of the loans. Or whether NAMA’s ‘objectives’ actually contributed to the current rental and housing crises we are experiencing.

Instead let’s look at the “return” NAMA is making.

If we take it at face value that it will generate a profit of €3.5bn over its initial €32bn investment, that is an 11% return.

Not bad, right?

Or is it?

Nama was set up in 2009, so that’s only 1.1% return a year. Not great.

How about the private investors that purchased the assets from NAMA, how are they getting on?

Homebuilder Glenveagh Properties PLC, has a gross margin of 18.2%. The company is targeting a 20% margin in 2020.

Cairn Homes the listed housebuilder’s operating profits surged by 267% in 2018.

Profits at Pepper, the loan servicing company, were in excess of €16m for 2018 which was up 186% from €5.6m a year earlier.

And finally figures published by the Government’s show that the dividends paid by the four listed REITs (Green, Hibernia, Yew Grove and Irish Residential Properties I-Res) grew to €93.49 million last year from €9.95 million in 2015, a TENFOLD increase in four years.

Doesn’t look so impressive now?

Fight!

Sam Boal/Rollingnews

17 thoughts on “Things We Lost In The Fire Sale

    1. Johnny Green

      Real Estate Investment Trust-allows mom and pop investors accesses to institutional grade property in a more tax efficient way,than say owning shares in prop co-avoids taxation on dividends.
      Historically,smaller investors had few options,BTL or small time syndicates arranged by private banks/brokers.
      In theory it’s supposed offer superior transparency,liquidity and world class management-the Irish experiment is fatally flawed with an over reliance on speculative one off developments to juice returns-it will end badly as the management is a bunch second rate rookies.
      NAMA is a national embarrassment and you can lay the blame for the housing crisis directly on them,the most incompetent small minded bunch of overpaid loan sharks ever assembled,Frank the Chairman for life is now in his 90’s.Brendan a life long civil servant is devoid of any vision,style,substance or plan,he’s an empty suit.

  1. Jonickal

    Comparing the profits of private investors and developers with NAMA is an example of comparing apples and oranges. The comparison you’ve assumed is that they both started at the same time, they both invested in the same assets, and they both have no other investments outside of the NAMA loan book. All of these are wrong assumptions.

  2. b

    None of those very tenuous comparisons listed bought distressed development loans at a time when alot of analysts were predicting much deeper losses for the assets

    Could NAMA have made more money by holding on to stuff for longer? In hindsight, absolutely, but they were run with the objective of decreasing the state’s risk and exposure to the property over its life and not maintaining risk,

  3. Jake38

    An excellent argument for private business rather than state-directed mock commercial activity. A private business with such a low rate of return would be long gone.

  4. Ted Bovis

    You have to sometimes wonder if there’s a great big government psyop going on to make NAMA and the like more palatable by getting someone who clearly doesn’t know what they’re talking about to make a serious of outlandish comparisons in meme format for the hard of thinking?

    “NAMA couldn’t make one lousy chicken fillet roll last year but my local Spar made thousands. Checkmate Blueshirts.”

    1. Rob_G

      I have a feeling that Broadsheet’s guest editorials are at the centre of this conspiracy.

  5. edalicious

    I don’t disagree that NAMA hasn’t been the best use of the assets that were made available to it, but these comparisons are terrible and essentially meaningless.

    1. edalicious

      Also, could you take me off moderation? I’ve been on it for months now for no discernible reason. [Done]

    2. Cian

      Please put edalicious back into moderation – a triple negative? seriously? This kind of thing needs to be stopped!

  6. Termagant

    I don’t think it’s NAMA’s fault that it was set up for the express purpose of burning assets as quickly as possible. The flaw starts in its mission statement.

  7. Clampers Outside!

    Irish Tax Payer needs a few lessons from ooooh maybe a Leaving Cert pass level Bus-Org teacher by the look of it.

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