Table below summarizes referencing of January 2012 numbers to two different dates: November 30, 2009 – the cut-off date for Nama market value assessments, and Q1 2010 – the first time Nama tried to call property market ‘bottom’. So ‘Loss’ on nama book valuations refers to the percentage difference between the cut-off date value of properties and current value of properties according to RPPI – please note, this is an economic loss – not an actual loss to be provisioned for. Nama valuations inaccuracy index is reflection of Nama prediction – implicitly reflected in its business plans – that the property market in Ireland will bottom out in Q1 2010. Weighting to book assumes that on residential portfolio 70% of portfolio in in Apartments and 30% in houses.
Note that in the above I take account of Nama-applied Long-Term Economic Value uplift and net out the subordinated debt cushion of 5% for burden sharing (Nama loss cushion). When you think about it, we are paying six figure salaries to these boffins who are almost 30% wrong in their market predictions just 7 quarters out.