Wednesday 23 October 2019

NAMA will keep stake in property portfolio it offloaded

Donal O'Donovan

Donal O'Donovan

STATE-owned NAMA will retain a 25pc stake a portfolio of Irish property loans that has been sold to a consortium made up of US private equity giant Starwood Capital, Ireland's Key Capital and London based Catalyst Capital.

The loans are backed by a range of assets, including the Dublin Garda headquarters on Harcourt Street, as well as Davy Stockbrokers head office on Dawson Street and the Superquinn stores in Rathgar, Ranelagh, Lucan in Dublin and in Waterford.

The loans have a face value of €810m and are being sold for €200m, or just 25 cents in the euro. It is the first major disposal by the National Asset Management Agency (NAMA) of such a large portfolio of Irish property loans.

NAMA is retaining a significant interest in the assets. The agency will own a 20pc share of the joint venture that is being created to buy the loans.

The balance of ownership will be owned by US private equity giant Starwood Capital, Ireland's Key Capital and London based Catalyst Capital.

Under the terms of the deal, NAMA is providing so-called "vendor financing" for the sale. In this case, 60pc financing means the buyers only have to come up with 40pc of the price to secure the deal.

The loan and the NAMA's 20pc share of the acquisition price are due to be repaid in five years, according to people familiar with the terms of the deal.

The NAMA loan is being provided on a commercial basis, the agency said. Repayment is expected to come from rents and some asset disposals.

In a highly unusual clause NAMA will still be entitled to a 20pc share of future profits on the portfolio, even after its initial stake has been bought out by the Starwood-led consortium.

It means the agency is guarding against the risk of selling out at a low price that could hand the buyers a windfall if the property market recovers.

NAMA is understood to see the combination of joint venture, vendor financing and profit sharing used in the deal as a model for future Irish asset disposals.

It is understood that the joint venture will be advised by developer David Courtney for a period of up to six months following the sale.

He was the original borrower, or part of the original borrower syndicate on the Aspen loans. He is working for a fee and is not part of the bid, so will not end up owning any of the properties following a sale, people involved said.

Borrowers are banned from buying their own debts from NAMA.

Irish Independent

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