Cerberus picked as preferred bidder for €6.25b Project Arrow

Irish bad bank Nama has picked US firm Cerberus Global Investors as preferred bidder for its €6.25 bn nominally-valued Project Arrow loan portfolio.

‘Project Arrow’ comprises around 300 debtor connections with loans secured against 1,906 assets, largely regionally located. It is secured by around 90% Irish real estate and 6% UK real estate. The underlying properties are believed to comprise 43% residential assets, 35% commercial properties, 20% land and development.

The loans in the Arrow portfolio were acquired by Nama in 2010 and 2011, and there has since been a 'significant' deterioration in the value of these assets, the vendor said.

Nama hired Cushman & Wakefield in February of this year to market the portfolio, which may sell for as little as €1 bn due to the fact that many of the loans are non-performing. Even then, it would still mark one of the biggest real-estate related sales in Ireland.

The other two shortlisted bidders for the package, which was launched for sale in July, are understood to be Goldman Sachs jointly with US specialist investor CarVal Investors and Apollo Real Estate. One of those bidders withdrew in September.

The deal is expected to close by the end of the year.

'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,' commented Frank Daly, chairman of Nama. '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.'

Brendan McDonagh, CEO of Nama, added: '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.'

US bargain hunters
Cerberus is not new to the Irish market – last year, it acquired Nama’s Northern Irish loan book for around €1.6 bn. Nama is also in the process of offloading further real estate loans acquired during the financial crisis.

A spokesman told PropertyEU that the bank ‘is on track this year to redeem €5.5 bn of senior debt. This will mean that 73% of senior debt will have been redeemed by the end of the year', he said. Nama currently expects to repay all of its €30.2 bn senior debt in full by the end of 2018. To date, 64% has already been repaid, with a target of 80% by the end of 2016. Nama intends to redeem its €1.6 bn sub debt by March 2020, the spokesman added.

Nama is believed to be in the process of offloading a provincial shopping centre and two retail parks, dubbed the Hazel portfolio, for over €115 mln. The package includes the Wilton Shopping Centre near Cork, the Drogheda Retail Park, and the Gateway Retail Park. DTZ is advising on the sale.

In the regions, Nama together with Ballymore and Elm Holdings are selling Ireland's largest regional shopping centre, the Whitewater shopping centre in Newbridge. Joint agents Savills and Coady Supple have been instructed to seek offers of over €150 mln, or a net initial yield of 7.5%, for the 27,900 m2 mall.

Last month the bad bank sold the Project Jewel portfolio of loans secured against a number of retail assets in Dublin, including the Dundrum Town Centre, to UK REIT Hammerson and Germany’s Allianz Real Estate for €1.85 bn, representing a discount of nearly 30% to the face value of €2.6 bn.