Lone Star and Cerberus are likely to be eyeing the highly anticipated €4 bn Project Gem loan portfolio which is being sold by Ireland's bad bank NAMA.
‘I would expect the usual private equity players to be interested,’ said one analyst, who asked not to be identified. ‘First round bids are due by the end of October and it's conceivable that the deal could close by the year end.’
Neither firm could be reached for comment. US alternative assets giant Blackstone has been a voracious buyer of distressed loan portfolios in Europe, but is not expected to bid this time. Blackstone declined to comment.
The loan portfolio is expected to sell at a significant discount to its €4 bn face value, according to those who track the market. It is believed to be made up of loans secured mainly on commercial property in Ireland but also on assets in the UK and Germany, comprising around 400 properties in total.
The properties backed by the loans are a mix of commercial property, buy-to-let residential properties, hotels and also development sites. The majority of them are understood to be valued at in excess of €1 mln each. NAMA declined to comment.
Critical report
However, NAMA came under fire in September for the way it handled the £1.3 bn sale of its ‘Project Eagle’ portfolio to Cerberus in April 2014. NAMA has rejected the findings of a highly critical report from the Comptroller and Auditor General (C&AG) last month into the sale, saying that the discounted sale price – which resulted in a loss of €220 mln to the taxpayer – reflected the ‘poor quality’ of the loan portfolio.
NAMA pointed out that a number of experts from firms such as C&W supported the discounted rate.
‘The report’s key finding is based on an incorrect assumption regarding the discount rate used to value the portfolio. It incorrectly assumes NAMA should apply the same discount rate to this poor quality loan portfolio as it applied to much higher quality assets in Dublin and London. As a result the report overstates the estimated value of this portfolio,’ NAMA said in a statement.
The Irish government has said that it will now hold an official inquiry into the sale of the Project Eagle loan portfolio, which was secured by around 850 properties from Northern Ireland.
Earlier this year, US private equity group, Oaktree Capital acquired the Project Ruby and Project Emerald loan portfolios from NAMA with a face value of €4.7 bn, reportedly beating rival US private equity groups Lone Star and Cerberus. The purchase price was not disclosed.
NAMA held loans valued at €7.8 bn at the end of last year compared with €13.4 bn at the end of 2014, according to its annual report.
