This is according to the annual financial report issued by the agency that noted its projected overall return for the year “was slightly above its policy of annual return of 7.5 percent but well below its policy index of 9.74 percent.”
Its principal fund is $72.7 million, a balance 2.3 times more than $31.69 million in original principal contributions received from Marianas Public Land Corporation and its successor organizations
The 229 percent gain in the last 23 years occurred despite “sharp loss of investment value occurring in years 2001, 2002, and 2008,” the report claimed.
The report also stated that the agency had incurred $13.76 million in administrative expenses to create $41 million in new assets.
As of last fiscal year, net assets grew by $1.6 million due to improved market valuations. Despite the market’s volatility, MPLT reported it invested in fixed income to cushion volatility of the equity markets and to safeguard guaranteed earnings.
The agency recorded investment earnings of $2,234,965 in fiscal year 2010 with $2,993,772 in realized capital gains [investments sold at profit] and $359,922 in unrealized capital gains [investment if sold would result in profit].
This yielded a total return of $4.97 million or 8.02 percent return on investment, the report stated.
MPLT earned $2.6 million in investment revenue — $2.28 million in interest and $376,702 in dividends — in 2010, a $447,544 decrease from 2009 revenues amounting to $3.1 million or $2.78 million in interest and $324,612 in revenues.
Revenues for MPLT were peaking prior to 2008 — $2.01 million, 2006; $2.72 million, 2007; and $3.04 million, 2008 — before the financial markets crisis that resulted in $8.06 million in losses for the agency.
The MPLT reported that it had yet to recoup its losses in 2008, having partially recovered $6.4 million in 2010.
Moreover, former MPLT chairman Philip Mendiola Long, who was at the helm of the agency in FY’ 10, said the MPLT board of trustees attributed the agency’s success in FY’10 to close monitoring of the markets and proactive management of asset allocation.
MPLT, however, expressed concern with low interest rates and sluggish U.S. economic recovery.
Cognizant of the uncertainties, MPLT also reined in its expenses for last fiscal year and continues to keep expenses at bay for the current fiscal year.
It reported a 4.6 percent decrease in administrative expenses for FY’10 compared to FY’09.
In the current fiscal year, MPLT monitors its expenses and keeps them under control and within the $850,000 budget. Seven months into the current fiscal year, MPLT reported $445,000 in operating expenses versus $509,000 budgeted for the same period.
In order to reduce operational costs in 2010, MPLT relocated to its Capital Hill office in April 2010 that resulted in $11,913 in operational savings for the agency.
It also generated $5,779 in savings by implementing a paperless policy in 2010.
It also renegotiated contracts with service providers that resulted in $64,308 savings for MPLT.
Moreover, the agency is also looking to downplay its performance for fiscal year 2011 given new norms of unemployment and huge annual deficit and national debt of the United States.
“The trend appears to be ongoing for 2011 with expectation of lowered returns,” Mendiola-Long said.
Despite a low expectation for 2011, the MPLT appeared to be en route to achieving its goal for FY’11.
In its May 2011 board meeting, MPLT reported it had year-to-date revenues of $1.7 million with a year-to-date budget of $2.8 million.
MPLT’s investment consultant Bruce M. MacMillan reported in May that the market had been “fairly good, value wise.”
Meanwhile, in the last fiscal year, the agency had taken a conservative approach to monitor global markets and continues to adjust asset allocations as dictated by necessity to curb future losses.
The annual report also noted the issue of the housing loans MPLT received due to settlement of the loan made to the Northern Marianas Housing Corporation continued to hound the agency in FY’10. It reported incurring $83,366 for administration of the portfolio and legal fees associated with foreclosure of defaulted loans and earned $115,000 in interest.
MPLT also stated in its annual report that it resorted to reducing interest rate and monthly payments for home loans to avert mass foreclosures and cushion 60 percent in delinquency rate. Even with the mitigation program, MPLT reported 26 percent in delinquency rate as of 2010 which the trustees found “unacceptable,” the report stated.
As the agency sees the delinquency rate and foreclosures not abating yet, it is looking at recovering the principal loaned to NMHC and protecting its interest by implementing new policies and programs to avert losses in the future, according to the report.
MPLT is looking to get fully paid by Commonwealth Utilities Corporation in August 2011 as the $3.5 million loan in 2008 has a remaining balance of $245,346.
For a copy of the MPLT annual report, go to www.mplt.gov.mp.
