Nama makes a profit and taxpayers pick up the tab
When Nama chiefs Brendan McDonagh and Frank Daly appeared before the banking inquiry three weeks ago, they told the politicians the State agency's aim was to pay off all its debts and deliver a surplus of €1bn to the taxpayer by 2020.
So far, so impressive, until one stops to consider the reality of the numbers underpinning those twin targets.
For a start, when Nama took on the €74bn in loans advanced by the country's banks to some 850 individuals for development, it paid just €31.8bn. The transaction left the banks with a multi-billion euro hole in their collective balance sheets, which the taxpayer has been called upon to fill.
It's a hole that could have been far smaller but for the decision by Finance Minister Michael Noonan to strike a deal with the Troika in 2012 in which he agreed to, what some might say was, an overly-ambitious timeframe in which Nama would redeem its bonds.
According to the agreement, Nama was tasked with repaying a massive €7.5bn of the €32bn bonds it issued as collateral to the banks, which they use to obtain funds from the ECB, by the end of 2013 - a full seven years in advance of its original intended wind-down date of 2020.
That 2013 bond redemption deadline is attributed by Nama sources as necessitating the sale of a number of the agency's most valuable assets including Battersea Power Station and the Knightsbridge Estate in London at a time when their values were still rising.
But while Nama may have sold off its proverbial crown jewels prematurely to meet targets agreed by Mr Noonan with our European overlords, the picture isn't much better here at home when it comes to the prices it has achieved.
An examination by the Sunday Independent of the major loan portfolios sold by Nama to date to foreign investors reveals eye-watering losses which have now been crystallised at the expense of the Irish taxpayer.
In the case of Nama's biggest portfolio sale for instance, the State has taken a hit of approximately €4bn which will never be recovered. While Nama declared itself "pleased" in June of last year to have completed the sale of 'Project Eagle' to US fund Cerberus for €1.6bn, the reality is the portfolio which consisted of the entirety of its Northern Ireland loan book had a par value of €5.6bn before being transferred from the banks.
Prior to that disposal, Nama celebrated its achievement some months earlier in selling Project Tower, a €1.85bn portfolio consisting of the loans of Cork-based developer Michael O'Flynn's O'Flynn Group to US private equity giant Blackstone for €1.1bn. Leaving aside the €700m immediately foregone by the taxpayer, the Sunday Independent understands from sources familiar with the matter, that the assets underpinning the O'Flynn Group loans have already appreciated in value since being sold to Blackstone, compounding the potential loss to the taxpayer.
While smaller in scale, the sale by Nama of the Project Holly portfolio to US fund Lone Star in January 2014 represents a loss of hundreds of millions of euro to the State. Having acquired the portfolio at a heavily-discounted price, Nama sold it to Lone Star for €220m. Just 13 months later, Lone Star itself cashed out, selling the majority of Sean Reilly's assets to another US fund, Starwood Property Trust for €350m - or €130m more than its sale price a year earlier.
All of which places Nama's aim of delivering a €1bn surplus in perspective.
In the context of the near €32bn Nama has to recover before it shuts up shop in 2018 (the date now being mooted by its CEO Brendan McDonagh), that €1bn represents a return on capital of 3pc over its eight year lifetime, or 0.038pc per annum. By way of contrast, private equity funds typically seek double digit returns annually.