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NAMA has appointed Cushman & Wakefield Corporate Finance team to sell the giant €8.4bn Project Arrow non-performing loan (NPL) portfolio, as the Irish bad bank accelerates its remaining wind-down.
Project Arrow will be the largest loan portfolio sale in NAMA’s history and takes the aggregate nominal value of the current pipeline of loan portfolio sales by the Irish bad bank to €12.9bn across six separate loan disposal processes.
NAMA’s notable pick-up in planned loan portfolio sales this year – which already reflects a 66% increase on 2014’s €7.8bn – is influenced by a number of aligning economic and political factors.
These include: the success of last year’s €21.7bn IBRC loan book sell-off; the weight of capital chasing Irish real estate, in part due to the relative value of the asset class compared to equities and bonds; and Ireland’s impending General Election next Spring.
C&W’s Corporate Finance team will now undertake a review of the giant loan pool, the underlying collateral and seek to determine the present real estate value within Project Arrow. The process is expected to lead to the formation of sub-pools, which would then be potentially sold separately.
Project Arrow is secured by approximately 90% Irish real estate and 10% UK real estate, and is virtually all non-performing. By sector, Project Arrow is approximately 50% Irish residential, while the remaining half is comprised of a mix of offices, retail, mixed-use, hotels and land – including UK assets.
The Irish Times reported yesterday that the mega NPL was comprised of 500 NAMA borrowers and that the loans, which all have a face value of €75m and below, are currently managed by Allied Irish Bank and Capita Asset Services, on behalf of NAMA. Furthermore, the newspaper reported that Lisney would assist Cushman as selling agent for the giant loan portfolio.
Given the anticipated demand for NAMA loans, Project Arrow – and the five additional separate loan portfolio sales – an end of year closure of all deals is highly probable. The five additional NAMA loan portfolio sales are:
the c.€1.5bn Project Tolka, secured by the loans of developers Paddy Kelly, John Flynn and Alanis, a property investment company controlled by the McCormack family;
the c.€1bn Project Jewel, secured by the Chartered Land’s Dundrum Town Centre, as well as two smaller shopping malls – for the full story, please click here;
the €778m Project Milner, secured by Gerry Barrett’s 10-strong property portfolio comprised of 10 assets including the G Hotel in Galway and the D Hotel in Drogheda. Cushman is selling the loan portfolio;
the c.€700-750m Project Abbey, the loan book of Pat Doherty’s Harcourt Developments. KPMG is selling the loan portfolio; and
the c.€440m (c.£325m) Project Albion, a UK commercial property loan portfolio comprised of a mix of borrower groups. Cushman is selling the loan portfolio.
NAMA completed €7.8bn in loan sales last year – 66% lower than the current visible trajectory for 2015. Last year’s loan portfolio sales comprised:
the €5.4bn Project Eagle which sold to Cerberus Capital Management;
the €1.8bn Project Tower which traded to Blackstone;
the €427m Project Spring which traded to Deutsche Bank;
the €225m Project Drive which sold to Patron Capital;
the €373m Project Holly which sold to Lone Star; and
the €250m Project Club which traded to CarVal Investors.
In its review of 2014 published on 2 January, NAMA wrote that “improved conditions in the Irish commercial market and an upsurge in investor interest in multi-asset property portfolios and in loan portfolios enabled NAMA to increase substantially the scale of disposal activity in 2014”.
NAMA is expected to downsize its headcount this year by around 80 staff to 270 by the end of this year and down to around 125 by the end of next year.
NAMA and Cushman & Wakefield could not be reached for comment.