Friday 20 January 2017

Anatomy of a lucrative deal

Emmet Oliver

Published 09/03/2011 | 05:00

In 2007 a consortium of investors bought a building at 20/21 Grosvenor Square, near the American Embassy in central London. The consortium was led by fashion mogul and restaurateur Richard Caring, best known for owning the opulent Ivy restaurant. The purchase price at the time was £250m (€290m) and Irish Nationwide backed the Caring-led consortium. The building society had already lent about €3.3bn for property developments in the London area. Although the property market was starting to decline, Michael Fingleton said he remained "positive" about the London market. Plans were drawn up to develop the site into luxury apartments, which is expected to take place later this year or next. NAMA took over the loan from Irish Nationwide last year in one of its earliest transactions. It is estimated the discount on the loan could have been as much as 50pc. If so, NAMA could be looking at a paper profit of €145m. Mystery surrounds why the loan would have attracted such a discount. One explanation could be if there was a problem with the security underpinning the loan, NAMA wouldn't have paid Irish Nationwide the full value. However, other reasons could also explain the discount or "haircut" on the loan.

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