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Cerberus beats PIMCO to win NAMA’s Project Eagle

Cerberus Capital Management has beaten PIMCO to win NAMA’s entire loan book of Northern Irish borrowers, in the biggest single loan portfolio trade agreed by Ireland’s bad bank.

CoStar News understands that Cerberus has agreed to acquire the £4.5bn nominally valued Project Eagle loan portfolio for above £1bn in cash, in line with previous reports estimations.

Project Eagle is secured by approximately 850 properties across Northern Ireland, the rest of the UK and the Republic of Ireland with all borrowers originating from Northern Ireland.

NAMA’s agreement with Cerberus to close a clean trade, rather than broker a joint venture arrangement like the bad bank’s Project Aspen loan portfolio sale to Starwood Capital, is notable.

While the deal prevents Ireland’s bad bank from benefiting from any of the upside created through Cerberus’ varied business plans across Project Eagle, NAMA has unlocked the stagnant Northern Ireland real estate market in a single trade which will trigger subsequent future transactional activity in the months and years ahead.

Lazards was instructed to sell NAMA’s Northern Ireland loan book six weeks ago after PIMCO’s reverse-inquiry.

NAMA’s decision to instigate the formal loan sale process was reinforced at the time by a deepening political imperative for Ireland’s bad bank to capitalise on the weight of international capital chasing loan portfolios and de-leverage faster.

A statement by NAMA at 9:40am BST today (April 4) stated: “Based on the recommendation of its adviser, Lazard, the National Asset Management Agency (NAMA) has today announced the sale, subject to contract, of the Project Eagle portfolio of loans to affiliates of Cerberus Capital Management, L.P. (Cerberus).”

NAMA Chairman, Frank Daly, and NAMA CEO, Brendan McDonagh, said: “This transaction represents a significant achievement for NAMA. It is NAMA’s biggest single transaction to date and we are satisfied that the sales process will deliver the best possible result for the Irish taxpayer.

“NAMA management of this portfolio has been measured and supportive taking into consideration the particular circumstances in the Northern Ireland economy. We are assured by Cerberus that they will adopt a similar approach.”

John W. Snow, Chairman of Cerberus Capital Management, said: “We are excited and gratified to reach agreement on this significant, mutually beneficial transaction with NAMA. This investment, and the underlying assets in Ireland and other European markets, will be an important foundation for our overall European strategy.”

“Cerberus is a patient, long-term investor and has a well-established track record of making significant improvements to the assets that it manages. We believe Cerberus has the ideal base of expertise and experience to manage the Eagle portfolio and will be a strong partner for NAMA, for Northern Ireland and for all the stakeholders associated with this transaction.”

Cerberus, whose European real estate division is headed by managing director Ron Rawald, completed a prolific 2013 winning five distressed loan portfolios and one direct portfolio from Lloyds Banking Group.

These portfolio trades comprised Lloyds’ projects Bravo and Charlie for a combined €1.03bn, in the largest Continental European loan portfolio sale of last year, as well as projects Indie, Thames and part of East, the German, UK real estate and UK hotel loan portfolios respectively. In addition, Lloyds sold Cerberus the Admiral Taverns pub chain for around £200m in January 2013.

Last year, Northern Ireland’s transactional activity was just £160m across in 17 transactions, compared to £92m in eight transactions in 2012, according to CBRE, with 68% in retail and 25% in offices by value.

jwallace@costar.co.uk

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