VISION…MISSION…VALUES

Prior to 2007 the property development sector had become all about the money.

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The government were dependent on the money from taxation generated by the sector. Developers were unrealistic on the money they were willing to pay for development sites. Valuers were unrealistic on valuations they were issuing. The crises of 2008-9 was met with panic.

The government and state institutions were very slow to deal with the on-coming difficulties which could be seen from end of the Ahearn period. The Cowen government were slow to engage. I was conscious of the growing difficulties from 2006, and I publicly acknowledged my own family business difficulties in 2007. Once the bank guarantee was in place it appeared the country would have the time to put in place the adjustments to deal with the new realities.

The crises had been dealt with in the US and UK. In Ireland there was no real understanding of the underlying problems.

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The liquidity difficulties were starting to be illuminated. Two years had passed since the guarantee and the international markets were becoming concerned.

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Decision to set up Nama was taken in 2009 after consultation with Peter Bacon. Nama became a reality in late 2009 the first loans were transferred in March 2010.

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The concept of NAMA was a positive one and a necessary step at the time. The process of “working out” could have been
done with the right mindset. But the process was politicized by NAMA executives and by certain Government officials and used to scapegoat developers indiscriminately and unjustly.

Nama has been partly responsible for the destruction of a successful industry which met the property needs of the Irish people. Property development family businesses were not valued by various power groups, and in particular NAMA

The discount of €40bl on the assets which the banks were forced to pass to Nama was an expensive solution payed for by bank shareholders and the taxpayer. NAMA’s policy of bundling portfolios into multi-billion size packages which can only be bought by large vulture funds is a deeply flawed policy.

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NAMA/government policy needs to be adapted to eliminate the packaging of these portfolios into large tranches.

Buying assets at a 60% discount with funding at a cost of 1-2% does not strike me as acceptable outcome for NAMA.

It's difficult for developers to participate and develop equitable relationships with a hedge
fund while still in Nama.

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Evidence shows that once hedge funds have made their profit then developers need to seek expensive international finance to re-engage in development.

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There is an increasing awareness that the vulture funds are walking rough-shod over people and their businesses and there is a hostility to the mammoth profits being made by these vulture funds.

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The housing crisis is now a political hot potato, and in part is a result of NAMA policy in relation to NAMA’s refusal to work with developers and agree redemption figures on a case by case basis.

Nama claims to have made € 1 bl from the sale of the Joe o Reilly portfolio..!!

It is becoming increasingly cleat that the main winners to date are the hedge funds .
Mick Wallace’s exposure on the Northern Ireland portfolio and his Dail statements on the consequences of Ireland Inc working with vulture funds is challenging NAMA and Government policy.

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In our own case at the Dissilstown, Castleknock site (100 Grade 1 residences on 9 acres) the receivers Deloitte are acting as "developers". We are investigating the legislation that governs the roles and responsibilities of the receivers.

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In the past decade Irish entrepreneurs were starting to get established overseas. Now most of their projects have been passed on to competing international groups. In particular some high profile projects in the U.K. e.g. the Battersea project in London.

This project is now being funded by the Malaysians.

The tide may now be turning as the shortage of homes and offices becomes serious.

See my own comments on NAMA at the paper I presented at the MacGill Summer school in 2010 – see attached

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Paddy Kelly
November 23rd 2015

19 TH June 2017 – Update
NAMA publicity of 1 st June 2017
 

Brian Carey article of 4 th June 2017 refers to NAMA…land levy unrealistic, value for money from NAMA

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LAND
Land needs to be available at realistic prices

Land needs to be zoned have planning permission
Land needs to have services

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Builders…finance..viable costs

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A high per of building land went into nama…60 to 90 discount on all loans that went into nama…thisthriws up a huge opportunity to have land at reasonable cost available to housebuilders

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PLANNING

Planning was allowed to lapse – see david daly…

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SERVICES

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FINANCE

The re-structured banks failed to provide finance – THE PILLARBANKS Cairn homes London finance from city of London. Lotus and castlehaven at 15%

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VIABILITY
The cost of building homes has been disguised…the tax component of homes is 37% circa – this is on construction. For rentals the scarity hs ensured that rents have gone by 30% - making it viable for Canadian and us companies with appropriate funding to enter the market…there is noincentive for local landlords…30/40k rentals have been sold…the international investors have a 7 year tax free incentive. The vat was adjusted to 9% to allow for recovery.