The rate return on investment for 2007 showed a very good performance, according to MPLT Chairman Alvaro A. Santos.
The report stated that the assets of MPLT declined in 2006 by $196,251.
Alvaro, in his report to the Legislature, said that while the marketable investments performed very well in FY 2007, MPLT had to write-down the value of its loan to the Northern Marianas Housing Corp. due to the passage of Public Law 15-48 which allowed NMHC to defer making debt service payments.
“Since NMHC has indicated its inability to meet the current terms and conditions of the loan, it is being considered a high risk,” stated the report, adding that MPLT reduced the carrying value of the loan by $4 million, resulting in a reduction of assets and principal.
MPLT’s total liabilities increased by $1,821,658 million in 2007 compared to FY 2006 as a result of the distribution payable to the general fund amounting to $2,228,048 million.
These increases were also factored in MPLT’s net assets which increased by $6.5 million for 2007, its report stated.
It added that the total performance of MPLT for 2007 improved by 12.4 percent.
MPLT said it has had an exceptional performance for the last five years that, except for 2006, has been in double digits.
“This is unusual for a consecutive number of years,” the report stated. “Accordingly, the board of trustees is expecting 2008 to be of average performance in the range of 6-8 percent.”
According to the report, “there is evidence of a slowing economy and inflationary pressures — coupled with an election year, this makes for a lot of uncertainties.”
It added, “We see [a need for] additional support to be allocated more heavily to fixed income than equities…but this is not the reason for the asset allocation change. The prime basis for the asset allocation change was the income needs of our beneficiaries.”
MPLT is the investment arm of the Department of Public Lands.
