C&AG report: Taxpayer missed out on €250m windfall

Nama’s decision to sell the Project Eagle loan book as a single bundle and at a reduced price cost the taxpayer at least £190m — the equivalent of €250m — due to a poorly judged and incorrect assessment of the property bundle’s real value.

The claim is made in the Comptroller and Auditor General report into the controversy, which alleges the Irish public lost out on a considerable amount as a direct result of the deal.

According to the C&AG report, in June 2013 the Nama board placed a “standard” discount rate of 5.5% on the Project Eagle loans to help evaluate the interest in a potential sale.

At the end of that year, after the evaluation took place, it was concluded the assets could be sold for £1.49bn if they were put on the market as individual properties instead of sold as a group. However, despite this, the properties were instead sold as a group for a “minimum price” of £1.3bn.

While Nama has disputed the finding, saying it is “fundamentally unsound and unstable”, the C&AG said this discount resulted in a “significant probable loss of value to the State of up to £190m (€250m)”.

This is in addition to a separate writedown in the value of the loans which occurred between 2010 and 2013 as a result of annual revaluations of the portfolio.

The alleged lost money for the taxpayer is likely to place further scrutiny on why Nama chose to sell the entire Project Eagle loan book as a single bundle to Cerberus after an initial interest from separate firm Pimco.

The C&AG report has said there is no indication Nama had considered a single bundle sale until US law firm Brown Rudnick wrote on behalf of US investment fund Pimco in June 2013 offering an exclusive deal.

Nama has stressed it believes the amount of money it brought in as part of the deal was the best option for it and the taxpayer at that time.

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