The National Asset Management Agency has had to reduce the amount it expects to recover from its property loans by €1.27bn.
It is the second year in a row the agency has had to make a reduction.
However, the second annual NAMA report shows that it made an after-tax profit of €247m for 2011.
NAMA said that it made an operating profit before charges for bad loans of €1.28bn, which compares with €305m in 2010.
Chief Executive Brendan McDonagh said that NAMA had made great progress in 2011 and had made a profit for the taxpayer.
Mr McDonagh said NAMA had been accused of ruining the hotel industry, but said "nothing could be further from the truth".
According to the report, NAMA has now acquired €74bn in bank assets, €2.8bn of which was added in 2011.
It generated cash income of €8.4bn in total by the middle of July of this year.
The agency has approved asset sales of €9.2bn in total, €5bn of which were completed by May 2012 with a further €2bn in the pipeline.
Funding of €586m has been approved for projects in Ireland, out of €1.3bn in project funding approved in total.
NAMA said it is indirectly supporting 10,000 jobs in small and medium businesses, which are linked to agency loans.
It notes its plans to spend €2bn in projects in Ireland over the next two years, and to provide an additional €2bn in vendor finance for the commercial property market.
It said that 59% of its Irish assets are in Dublin and the agency has €22bn of assets ready for sale.
The agency also said it believes that property prices in Dublin have stabilised.
Mr McDonagh called for more transparency to the market, asking for a list of transactions to be published.
He said it had taken a long time for the €74bn of loans acquired from the banks to transfer, for the banks to provide information, and for business plans to be completed.
NAMA spent €32bn of taxpayers’ money buying property loans from Irish banks. They were bought at a discount of 57%.