Tuesday 22 August 2017

Cerberus in line for €7.2bn Nama portfolio as rivals pull out

Chairman Frank Daly and chief executive Brendan McDonagh of Nama. The agency is selling the huge ‘Project Arrow’ portfolio
Chairman Frank Daly and chief executive Brendan McDonagh of Nama. The agency is selling the huge ‘Project Arrow’ portfolio
Peter Flanagan

Peter Flanagan

US investment fund Cerberus Capital Management may be in line to own Nama's two biggest portfolios of property assets after a rival bidder pulled out of the "Project Arrow" sale process.

Goldman Sachs and its partner, CarVal Investors, have withdrawn from the bidding for the €7.2bn Project Arrow portfolio, even though they had made it through to the final round.

That leaves Cerberus and another US investor, Apollo Global Management, as the remaining bidders for the portfolio.

If Nama does sell the portfolio to Cerberus it is likely to stir up severe controversy. Cerberus won the Project Eagle portfolio of Northern Ireland assets last year.

That deal - the biggest single sale by Nama to date - has been heavily criticised and is now being investigated by the UK and US authorities amid accusations of financial impropriety. There is no suggestion of any wrongdoing by either Cerberus or Nama.

Project Arrow is made up of 1,532 loans attached to 367 separate borrowers. While the loans have a par value of €7.2bn, they are likely to be sold at a sharp discount. More than a third of the properties are in receivership, while 96pc of the total properties to which the loans in the portfolio are attached are in Ireland. Only 3pc are in the UK.

The single biggest loan in the portfolio is for under €10m, and no property to which loans are attached in the portfolio has a value of more than €5m.

The withdrawal was first reported by property information service CoStar.

It is not clear why Goldman and CarVal have withdrawn their bid. It is highly unusual for a bidder to withdraw after the process has gone to the final round.

The decision however does come at a time when financial markets around the globe are in turmoil, and there are signs of a deepening downturn in China, which may end up affecting the rest of Asia's economies and perhaps further afield.

Goldman and CarVal have done a number of deals in Ireland in recent years. The two firms partnered to buy a portfolio of Irish loans from Lloyds Bank among other deals.

A Nama spokesman declined to comment.

Irish Independent

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