Tag Archives: Nama Wine Lake

Taoiseach Leo Varadkar and Minister for Housing Eoghan Murphy at the Housing Summit in the Custom House, Dublin last week

NAMA Wine Lake writes:

It’s one thing for Government to a miss a second important housing target, it’s another for entire nation not to realise it’s being missed.

In July 2016, the government’s target for building social housing in the 12 months of 2017 was X.

Last week, the Government said that its current plans for building social housing in the 12 months of 2017 was Y.

What is X and what is Y?


Hint: Y is “four times the number of units built in 2015” – that’s what the Government said last week and that’s what the old media faithfully reported.

Confused? You really should be.

Neither X nor Y has been clearly communicated by either the Government or old media.

This piece will clarify both and lambast the old media for its failing in this regard.

[TLDR? X is 3,000 units Y is 1,860. The Government will fail to meet its target for 2017 by 1,100-odd units, or 38%]

The story of X

In July 2016, the Government published its Rebuilding Ireland report. The 117-page report was largely devoid of meaningful targets.

For example, it committed to “47,000 social housing units delivered by 2021, supported by investment of €5.35 billion”. This is typical of this government’s announcements which take the format – “we’ll spend x squintillions to build y bazillions of homes by the time hell freezes over”.

Short-term targets, by which the Government could be held to account, were nowhere to be found.

You remember the brouhaha during this summer when the Government missed its target of getting the homeless out of emergency accommodation by July 1? That wasn’t a target in Rebuilding Ireland.

When the report was being launched, the then Minister for Housing Simon Coveney said the use of hotels would be “practically eliminated by the middle of next year”. That was the only short-term target and it wasn’t even in the report!

And for the few people who paid attention, they interpreted that commitment as rehousing the homeless, but as the homeless numbers continued to increase month-by-month, a new term entered our lexicon “family hub”, which is the euphemism this government is applying to the already well-established term “poorhouse” (singletons will be accommodated in these new poorhouses, and whilst a singleton might be a one-person “household”, they can hardly be described as a “family”, and what sort of media would embrace and repeat the term, the progressive-sounding “hub”?).

Regardless, we all now know the Government has failed to meet the target of rehousing the homeless.

And some, perhaps most, think the target has been perverted anyway and poorhouses were never originally anticipated as solutions to homelessness.

So, what was the target for building social housing in 2017? The Rebuilding Ireland report didn’t actually provide a number. It did however provide a graph!

The blue represents actual new construction. So, what do you think the target was for 2017?

I would have said 2,500, but last week, the new Housing Minister Eoghan Murphy said the original target for 2018 was 3,000 units, and, as you can see from the graph above, the amount of blue in 2017 looks identical to the amount of blue in 2018, the target for 2017 must therefore be 3,000 units.

Seriously, in Ireland, this is how we divine Government targets for the provision of critical public services.

In fairness to the housing minister, last week, he predicted they would build 3,800 units in 2018 compared to the original target of 3,000 (no diff with clearly articulating that, eh?!) but given Paddy Power is offering odds of 1/3 for an election next year, the present housing minister is unlikely to be around to be held accountable for anything that happens next year.

If you thought divining the target was an ordeal, brace yourself for divining the present plan!

The story of Y

On Friday last, the current housing minister (having been in the job for three months and a day, he should be up to speed by now) said this government will this year build four times the amount of social housing built in 2015.

“Four times”? “Wow”, eh? “2015”, though? That’s strange.

Why didn’t he provide a clear figure though? Why didn’t he refer to social housing built in 2016, rather than 2015? I don’t know, but let’s look at the actual figures and an explanation might suggest itself.

The Department of Housing says a total of 465 social housing units were built in 2015, comprising 64 units built by local authorities and 401 by private sector housing associations (the likes of Cluid and Tuath).

So, four times the number built in 2015 would be 1,860 (465 X 4). 2015 just happens to have been the worst year on record for building social housing.

In 2016 (not the reference year used by housing minister last week), 652 units were built by local authorities and housing associations. If the housing minister used the same format for a statement referencing 2016, it would read, “this year we will be building between 2-3 times what we built in 2016”.

Precisely, it’s 185% more than 2016 but that’s not as impressive as saying “four times” what we built previously.

Did the housing minister deliberately refer to the worst year on record as a base for comparison with current year plans? Who knows?

Did the housing minister avoid reference to a specific number in case anyone was keeping track of what the original plan was? Who knows?

What does this all tell us about Government and old media?

With a target of 3,000 units and a current plan of 1,860 units, representing a fairly pathetic 38% failing, you might have thought the housing minister would be battening down the hatches with all the criticism he’d be receiving? Not at all.

He’s basking in the reflected late summer sunlight of building “four times” the number of units built in the worst year for social housing-build. Good job old media!

Governments don’t like short-term targets, or even 12-month targets. There was practically no short-term target in Rebuilding Ireland.

Between July – December 2016, old media appeared ignorant of the target of “practically eliminating” homeless in emergency accommodation by mid-2017.

Governments feel safe in announcing long-term targets, but will resist being nailed down on short-term targets. Governments will spin the bejaysus out of actual performance.

Old media allows Governments to announce meaningless plans. Where were the demands last July 2016 when Rebuilding Ireland was published for short-term targets by which performance and progress could be measured?

Is old media incapable of asking questions of “how much”, “when” and demanding meaningful responses.

Old media doesn’t challenge neologisms like “family hubs”. Old media reports cryptic announcements without challenge, like “four times 2015”.

And, in the middle of a housing supply crisis, old media fails to harry the housing minister and his department for, er, monthly housing supply statistics.

NAMA Wine Lake

Previously: When Anthony Met The Housing Minister

‘The Numbers That Are Really Vacant Are Actually Much Smaller’


House completions – 1970 to 2015

There you go now.

Publishers in the Irish market have now come together to develop their own form of programmatic advertising. If it comes to pass advertisers will pay into a central pot to reach specific audiences.

It is a collective solution to the demands of advertisers used to dealing with the likes of Google and Facebook who want to reach a critical mass of readers in very specific categories.

…..In response all of the major newspapers, including the Irish Examiner, The Irish Times, the Irish Independent, the Irish Farmers Journal and the Ireland edition of The Times, are in talks to form an alliance to stem hemorrhaging advertising sales.

You haven’t heard about this nascent coalition, unprecedented on this island, because the talks have been kept secret in the hope of ironing out a deal acceptable to all parties.


Press hits back in advertising battle (Tom McEneany, The Times ireland Edition)




From top: Dundrum Town centre, part of portfolio of loans known by Nama as Project Jewel: NAMA board member Brian McEnery  British property giant Hammerson’s statement on Project Jewel, June 2016

Nama Wine Lake writes:

On Sunday last, Brian McEnrey a board member of NAMA was on the Marian Finucane show defending NAMA and badmouthing the Comptroller’s report [Into Project Eagle].

During the interview, Mr McEnry made this statement

“Project Jewel, Dundrum Shopping Centre held until we were at the very height of the market and sold for about a billion euros profit into Nama.”

It has some in the property and investment sectors scratching their heads as to how it could be true.

So what is Project Jewel?

This was a portfolio of loans linked to Joe O’Reilly, a NAMA Top 10 borrower. The loans had a par value of €2.57bn and were secured on collateral which included the Dundrum Town Centre shopping centre in south Dublin, Joe O’Reilly’s 50% stakes in the Ilac centre in Dublin city centre and the Pavilions shopping centre in Swords.

Other property collateral included an area around North O’Connell Street/Moore Street which has planning permission for a major new shopping centre.

How much did NAMA pay for Joe O’Reilly’s loans?

We don’t directly know. We do know the loans were acquired in two steps. Step #1 was in 2010 when NAMA acquired loans for the top developers from several Irish banks and building societies (Bank of Ireland, AIB, Anglo, EBS and Irish Nationwide)

Step #2 was unusual, and involved NAMA buying from Ulster Bank its €129m loans which were secured on the Dundrum Town Centre. NAMA paid Ulster Bank par value for the loans, in other words, it paid €129m.

We do know, in general, that NAMA acquired all of its €74bn loans from the banks in 2010-2012 for at an overall 44c in the euro. NAMA paid less for loans which had poor collateral. Dundrum Town Centre and the Ilac and Pavilions would have been considered good collateral.

How much did NAMA sell Project Jewel for?

€1.849bn was the price when NAMA sold the portfolio in early October 2015. The buyer was a venture between the British property giant Hammerson and the insurer Allianz.

Is it possible NAMA made a profit of €1bn on the sale of Project Jewel?

If the sale price was €1.849bn and NAMA made a profit of €1bn, that suggests the NAMA cost of the loans was €849m (€1.849bn minus €1bn). If NAMA paid €129m for the Ulster Bank loans, that suggests the cost of the other loans was €720m (€849m minus €129m).

Deducting the Ulster Bank loans from the par value of Project Jewel suggests the par value of the Step #1 NAMA loans was €2.44bn (€2.57bn minus €129m). That suggests the NAMA cost of €720m versus the par value of €2.44bn was 30c in the euro, which was worse than the average NAMA acquisition price.

The perceived wisdom would be the cost of Joe O’Reilly’s loans would have been greater than the average 44c in the euro because the collateral was so good.

It seems very unlikely to the point of incredibility that NAMA made a €1bn profit on Project Jewel, at least in the way it was presented by NAMA last Sunday.

There may be complicating factors such as the interest charged on the loans by NAMA in 2010-2015, and NAMA may be including that interest in its “profit”, but that would be disingenuous and at odds with how NAMA’s loss on Project Eagle was calculated.

Was October 2015 “the height of the market”?

No, according to the JLL Irish commercial property indices, prices have been increasing for all property, including retail up to June 2016, the latest period for which JLL has issued its indices.

Between Q3,2015 (the end of which NAMA sold Project Jewel) and Q2,2016, Irish commercial property overall has increased by 9.4%, whilst retail, which forms the greatest element of Project Jewel increased by 8.4%.

Q3,2015 was certainly not the “height of the market”.

Are the buyers now making a profit on Project Jewel?

Oh yes, at least on paper. Hammerson, one of the parties to the venture which bought Project Jewel, issued a statement in June 2016 which said:

“Project Jewel was accretive to 2016 EPS and with opportunities for valuation growth, the portfolio provides an attractive projected five year ungeared IRR of 7-8%, excluding development returns”.

Translated into basic finance, Hammerson expects its purchase from NAMA will make a €870m profit in five years, excluding financing costs, and also excluding any unforeseen profits from developing the properties including the property at Upper O’Connell Street.

Yesterday: Taking The Michael

Nama Wine Lake


Screen Shot 2016-06-16 at 16.59.16

Table of new house completions released by the Department of Housing, Planning and Local Government this afternoon

What’s the news today?

The Department of Housing, Planning and Local Government (which used to be called the Department of the Environment) has published housing completion and commencement statistics for the month of April 2016.

In addition, it has published commencement statistics only for the month of May 2016.

In the month of April 2016, 1,149 residences were completed nationwide, of which 296 are in Dublin. Completions are measured by reference to first connection to the ESB.

In the month of April 2016, commencement notices for 784 residences nationwide were filed, of which 242 are in Dublin.

In the month of May 2016, commencement notice for 1,223 residences nationwide were filed, of which 412 are in Dublin.

When you want to start building a residence, you need to notify the Building Control Authority in your local council 14-28 days before you actually start building, and building needs to commence within 28 days of providing the notification.

It takes 3-6 months typically to build a residence, so commencement statistics give a forward-looking indication of future housing supply.

Screen Shot 2016-06-16 at 17.02.49
How many new residences do we need a year?

There are different views. In 2014, the ESRI estimated we need 25,000 new residences a year up to 2030. Government departments have adopted this research by the ESRI’s David Duffy, and it represents the official position.


(1) if annual housing need isn’t met in any year, then the shortfall will be passed on to the following year and in 2014, we completed just 11,016 residences and, in 2015, we completed 12,666 units.

If you accept the ESRI analysis, then in 2016, we started with a 27,000 deficit from the previous two years before consideration of the 25,000 units we need for new demand in 2016.


(2) there are other views as to how many units we need annually. Based on the assumption that Irish households are shrinking by 0.04 a year (there were 2.68 people in the average Irish household in Census 2011, but the number has been declining by an average of around 0.04 a year over the past two decades, as we near the European norm of around 2.4 people per household), we need around 17,000 units a year for fragmenting households.

We also need units to replace obsolete stock. The ESRI estimate obsolete replacement need at 5,000 units a year (that’s included in their 25,000 analysis). Other sources suggest international obsolescence rates are 0.5%, which would equate to 10,000 units a year in Ireland, which had, according to Census 2011, 2m residential units.

And, based on April 2015 population estimates compared with April 2014 (the latest available), and assuming 2.52 people per household, the annual housing need is closer to 50,000 units, of which 23,000 would be in Dublin.

NAMA, for instance has told an Oireachtas committee that over 20,000 units a year are needed in Dublin alone.

So, what do today’s published figures mean for the housing crisis?

With 25,000 units needed a year, according to the official position, equivalent to 2,087 a month, and with just 1,149 completed, it means the housing crisis has gotten worse to the tune of 938 in the month of April 2016.

With 10,000 units needed in Dublin, according to the official position, equivalent to 866 a month and with just 296 completed, it means the housing crisis in Dublin has gotten worse to the tune of 570 in the month of April 2016.

The housing crisis got crisisier in the month of April 2016.

Do today’s figures give any guidance about the future?

Yes, the commencement statistics should point to completions in 3-6 months time.

Alas, assuming the average commencement-to-completion duration is 6 months, the commencements indicate that in 2016, just 8,514 residences will be completed in the first 11 months of 2016, or which 3,193 will be in Dublin.

Screen Shot 2016-06-16 at 17.10.04

If the housing crisis is getting worse, what does that mean?

More people won’t be able to live in suitable accommodation in their preferred location and a greater proportion of household income will be spent on rent or house purchase.

The number in emergency accommodation (hotels, hostels, B&Bs) will increase. There were 6,100 in such accommodation at the end of April 2016, of which 2,100 were children.

The numbers sleeping rough on the street, in parks or in cars will increase.

The hidden homeless sofa surfing or staying in unsuitable or cramped accommodation will increase.

The 130,000 households on the waiting list for social housing will have to wait longer. Last Monday night, Vincent Browne estimated that these households equate to around 500,000 people.

Rents inflation (presently running at 9% per annum, and 20% per 24-month period) will continue to outstrip general inflation (presently 0.0%) and wage increases (presently 1.1%) and that will lead to lower disposable household income for renters.

From November 2016, there will be substantial number of tenancies each month which are subjected to a 24-month rent review and the trend in rent inflation suggests reviews will be in the 20-25% range, that is, a €1,500 monthly rent will be increased by €300-375.

Basic supply and demand principles will keep house price inflation elevated above general inflation.

Were it not for the mortgage rules, residential inflation would probably be 10-15% per annum, but even with mortgage rules, residential inflation is 7% for the 12 months to April 2016.

There will be lower disposable income for house buyers.

Thanks Nama Wine Lake


nwlThe opening to an unexpected, sad and strangely legalistic farewell today from the person or persons behind whistleblowing Irish business website Nama Wine Lake.

It follows some lawyerly brouhaha on the site earlier this month.


Farewell From NWL (Nama Wine Lake)

Thanks Jimmy Chin