I’ve taken all of the letters and documents from the Eurostat website in relation to NAMA, and OCRd them for posterity. To make things a little easier for searching, I have combined a series of letters, and the results of two Eurostat visits to Ireland. There are some gems in the documents.
One of my favourites is this one. In the appendix to the letter, under Risk Analysis, it says, my emphasis: (MV is Market Value)
There are two main linked areas of risk, which relate to uncertainty about the current and future state of the property market in Ireland and worldwide:
a) Prices will continue to fall below the purchase-date MV.
b) The adjustment factor applied to the MV to obtain the LTEV is too large, so that the market will not recover sufficiently to allow the assets acquired to be sold for at least the purchase price.
It is difficult to quantify the level of risk involved in (a) and (b) above. However, NAMA have been advised that, while there may be some short-term fall in MVs after assets are purchased, ‘based on capital values, the bottom has been reached in the US, UK and Europe’, and in Ireland ‘the market expects that the bottom may be reached in the last quarter of 2009 or the first quarter of 2010.’
Based on the available expert advice, NAMA and the Department of Finance have concluded that NAMA will be profitable over its expected 10-year lifetime, estimating its net present value at some €6 billion.
Eh, no. NAMA have locked in values at November 2009 levels, and prices have continued to fall since then. And in my opinion prices will continue to fall for another 18 months at least. But then back in 2008 when I was out taking photos of ghost estates a good 18 months before the media realised their import, and even before that whole Lehman Brothers thing, it was clear prices had a long way to fall, despite the best efforts of property shills telling us now was a good time to buy, and we were near a floor in the market.
And when many of the loans NAMA is taking on had no collateral to back them, 33% of them in the case of Anglo, then even the increase in the value of any lands or properties within NAMA won’t bring us a profit. It can only bring us a loss.