NAMA (the Irish National Asset Management Agency) has announced Promontoria Holding 176 B.V., an affiliate of Cerberus Global Investors (“Cerberus”) as the preferred bidder for its Project Arrow loan portfolio. The NAMA Board based their decision on the strong and clear recommendation of Cushman & Wakefield (C&W), the adviser appointed by NAMA in February 2015 to oversee the sales process for Project Arrow.
The Arrow portfolio comprises loans of €6.25 bln. The loans in the Arrow portfolio, which were acquired by NAMA in 2010 and 2011, had been advanced to 302 debtor connections and secured against 1,906 assets. There has been a significant deterioration in the value of these assets since their acquisition.
By location, 90% of the assets are located in Ireland, with 67% outside of Dublin and 23% in Dublin. Assets comprising another 6% of the portfolio are located in the UK with the remaining assets located outside of the UK and Ireland.
Some 43% of the assets, by value, are residential properties, the majority of which are currently let or occupied. Many of the units are in locations where there is limited demand for housing.
Project Arrow was launched onto the open market on 6 July 2015. 17 prospective bidders were provided with access to the Phase 1 data room by C&W. Indicative Phase 1 bids were received from five bidders on 14 August 2015 and three bidders were shortlisted by the NAMA Board for Phase 2. One of those bidders withdrew on 11 September 2015. Binding and valid bids were received from the two remaining bidders on 12 October 2015 and clarification on elements of the two bids was sought and received subsequently.
The current Arrow portfolio is approx. 40% of the size of the portfolio as it stood at the beginning of 2015. In the meantime, there have been a substantial number of asset sales and loan refinancings. In addition, NAMA decided to retain a number of loans secured by residential development sites in order to facilitate funding the delivery of 20,000 residential units by 2020. Furthermore, in cases where local authorities indicated that certain residential units were suitable for social housing, the loans concerned were withdrawn from the sale.
Mr. Frank Daly, Chairman of NAMA, 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. The price achieved for this portfolio, in which just 2.5% of the loans are performing, meets the NAMA Board’s expectation of the proceeds that could have been realised from the management and sale of over 1,900 individual assets if NAMA had worked them out over a three- to five-year workout 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. Brendan McDonagh, CEO of NAMA, said: “The sale of Project Arrow represents another significant deleveraging and risk mitigation milestone in NAMA’s progress towards fulfilling its key strategic objectives. The cash proceeds raised from the sale will be applied towards redeeming NAMA’s senior debt and towards funding our planned investment programme in housing and commercial office space.”
The deal has already been subject to some scrutiny, with parties opposed to the deal citing fears that entrusting large portfolios such as Project Arrow to foreign investors could be detrimental to the long-term wellbeing of the economy. Certain aspects regarding another recent deal acquired by Cerberus, Project Eagle, are currently still under criminal investigation.
Source: NAMA
