Fund in disputed Nama deal wins portfolio sale

Controversial US fund Cerberus has won a final shoot-out in the latest Nama auction of debtors’ loans — known as the Project Arrow portfolio — which were worth €6.25 billion at face value.

Fund in disputed Nama deal wins portfolio sale

Cerberus is said to have paid about €800m for Project Arrow which consists of 302 small debtors in an underperforming portfolio of 1,906 properties and assets.

When measured by the original par value of the loans, the Project Arrow sale is Nama’s largest transaction to date, but the proceeds are much smaller than the agency’s other high-profile auctions because of the poor quality of the loans.

The appointment of Cerberus as preferred bidder has nonetheless attracted attention because, in a separate transaction last year, the US fund bought a loans portfolio worth €5.7bn at par value, called Project Eagle, held by Nama in the North.

That auction has sparked a huge controversy.

Authorities in Northern Ireland, the UK and the US, as well as committees of the Dáil and at Stormont, are investigating various circumstances of the Project Eagle purchase, amid allegations made by Independent TD Mick Wallace in the Dáil in July that some £7m (€9.5m) in an Isle of Man account was due to be paid over to local fixers and a political party in Belfast.

Cerberus and its advisers have repeatedly said they have done nothing wrong.

Nama has said it had no knowledge of any alleged payments and the Project Eagle bidding process was robust and competitive and the outcome secured the best price for Irish taxpayers.

The latest sale to Cerberus of the Project Arrow loans will not dampen the controversy surrounding its purchase of the Project Eagle loans for €1.6bn last year.

Deputy John McGuinness, chair of the Dáil’s Public Accounts Committee, said the committee’s investigation into Project Eagle will continue after the Comptroller and Auditor General completes his report.

He told the Irish Examiner that he was aware that investigations by US authorities were ongoing, but he had no knowledge of the status or size of those investigations.

Because of the poor quality of the Project Arrow portfolio, the price paid by Cerberus of around €800m is about half of the amount it paid for the Project Eagle portfolio last year.

Nama yesterday detailed that most of the Arrow loans were based in Ireland, but located outside Dublin.

“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 housing demand,” Nama said.

The bidding process for Project Arrow opened in early July and involved 17 potential bidders.

That roster shrunk last month to two bidders — Cerberus and Apollo Global Management — after a rival bidder withdrew from the auction process.

Nama chairman Frank Daly said that the Project Arrow sale was “a positive outcome for taxpayers”.

“The price achieved for this challenged 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,” he said.

The sale proceeds will go to paying down Nama’s senior debt.

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