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Cerberus set to buy another large slice of Nama's portfolio

By Ed Carty

Published 24/10/2015

US investment fund Cerberus is to buy another massive property portfolio from Ireland's bad-bank
US investment fund Cerberus is to buy another massive property portfolio from Ireland's bad-bank

US investment fund Cerberus is to buy another massive property portfolio from Ireland's bad-bank.

While the price for the Project Arrow deal has not been disclosed, the National Assets Management Agency (Nama) revealed weeks ago that it had a reserve value in the region of €1bn.

Only 2.5% of the loans are said to be performing.

New York-based Cerberus emerged as the winner while inquiries continue into its purchase of Nama's Northern Ireland property loan portfolio, the £1.24bn (€1.6bn) Project Eagle sale from April 2014.

Part of that deal is now under criminal and parliamentary investigation, including by the UK's National Crime Agency, following allegations of fixer fees and kickbacks.

Cerberus has repeatedly denied any wrongdoing.

The sale of Project Arrow was launched on the open market in July this year with 17 potential bidders allowed access to confidential data on the properties - including locations, values and specifications.

Only five offered indicative bids the following month, with three making it on to the shortlist drawn up by Nama - Cerberus, a second major US investment fund Apollo and international bank Goldman Sachs.

The bad-bank said valid bids were received from Cerberus and Apollo.

The loans were originally worth €6.25bn and include borrowings by 302 debtors secured on 1,906 assets.

"There has been a significant deterioration in the value of these assets since acquisition," Nama said.

The vast majority of the assets are in Ireland - 23% in Dublin; 67% outside Dublin; and 6% in the UK.

Almost half of the assets by value (43%) are residential properties, and Nama said the majority are let or occupied and many are in areas where there is limited housing demand.

Nama said the Project Arrow portfolio was about 40% the size it was at the start of the year after a substantial number of assets were sold, loans refinanced, other loans linked to residential development sites were retained by the bad-bank and some property was identified as being suitable for social housing.

The deal has been secured by Promontoria Holding 176 BV, described by Nama as an affiliate of Cerberus European Investments.

Frank Daly, Nama chairman, said: "Following extensive preparatory work and a robust, professionally managed and competitive sales process, we are satisfied that the Project Arrow loan sale is a positive outcome for taxpayers."

Mr Daly said Nama's expectations were met in the sale price.

He said it was the equivalent of the bad-bank working out loans over a three to five year period.

"On that basis, we consider that the Project Arrow loan sale has obtained the best achievable return for the State from these assets, in line with the Board's obligations under Section 10 of the Nama Act," Mr Daly said.

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