NAMA readies Dundrum-backed Project Jewel loan portfolio as Deutsche Bank wins Project Boyne

NAMA has begun the process to sell Ireland’s most globally recognised real estate asset, the 1.34m sq ft Dundrum Town Centre, through a loan portfolio which pools together two much smaller malls in the eagerly-anticipated Project Jewel loan portfolio sale.

NAMA logoAfter some deliberation over the best way to sell Dundrum, which NAMA regards as the ‘crown jewel’ in its property portfolio and hence inspiring the loan portfolio’s name, Ireland’s bad bank is expected to remain consistent with its strategy of pooling borrower’s connections in either a combined loan or hard asset portfolio sale.

One of the considerations for the sale of Project Jewel, which is comprised of loans to Joe O’Reilly’s Chartered Land, is that the two smaller shopping malls – the Pavilions shopping centre in Swords and the Ilac shopping centre in Dublin city centre – are jointly owned and include pre-emption rights for the co-owners.

Irish Life and I-PUT each own a 25% stake in Pavilions and Irish Life owns a 50% stake in Ilac.

The pre-emption rights, a first right to buy option, can be side-stepped through selling the loans secured by the assets, and this is understood to be a key driver in NAMA’s decision to opt for a loan sale.  

NAMA is expected to appoint a sell-side adviser shortly, with UBS tipped as a possible winner of the mandate.  

Originally, NAMA only owned €538m of the €775m unpaid senior debt secured by Dundrum and took to the atypical – but innovative – step to acquire the loans against the giant shopping centre which it did not own last April.  Dundrum is reportedly valued at around €1bn.

NAMA acquired Ulster Bank’s €129m syndicated loan at par value, which was part of the RBS subsidiaries’ €844m Project Button loan portfolio, as well as a €108m syndicated loan from KBC Bank Ireland, also at par.

The marriage value in uniting the disparate Dundrum senior debt is considerable for NAMA which is expected to result in bids from the world’s largest REITs, including Simon Property Group, institutional investors and sovereign wealth funds.

Investment banks will be circling prospective leveraged buyers with an eye on potentially Ireland’s largest single asset refinancing. 

Project Jewel is expected to be put up for sale during the second quarter.

Deutsche Bank wins NAMA’s Project Boyne

Meanwhile, Deutsche Bank has won NAMA’s €287m Project Boyne, the loans secured by property developer Willie Smyth, paying around €95m, amid flurry of activity at the Irish bad bank.

Screen Shot 2015-01-02 at 13.58.43The sale at circa €95m reflects a discount of an approximate two-thirds discount on the unpaid balance.  Underbidders were Oaktree Capital Management, Davidson Kempner and BAML.

Project Boyne includes loans secured by serviced business centres, development land and retail parks including Fitzwilliam Business Centre group of serviced office facilities in Dublin, Navan, Drogheda and Prague.

Also in Project Boyne is the Royal Liver Retail Park in Dublin, a 230-acre site in Navan with the potential for a residential development scheme, an office block in Rathmines, 20 apartments in Clonsilla in North Dublin and a period house on land in Navan, Co Meath, according to the Irish Times last November.

Separately, Deutsche Bank has won a single tranche from IBRC’s Project Quartz. In December, CoStar News reported that a joint venture of Goldman Sachs special situations fund and CarVal Investors acquired the bulk of Project Quartz.

Blackstone Real Estate Partners Europe IV also paid more than €100m for the Atrium buildings – in a direct asset trade – which was also part of Project Quartz.

Back to NAMA, Invel Real Estate Partners announced this morning that it has completed the acquisition of a non-performing loan portfolio from the bad bank which had an unpaid balance of £140m.  The price paid was not disclosed.

The NPL’s underlying properties included comprise a mixture of commercial and residential assets located mostly in the UK.

Invel negotiated directly with the private borrower as well as NAMA to agree terms on the rare off-market deal, although Invel was not the first investor to try and structure a deal.

In a prepared statement, Invel’s chief investment officer, Luv Shah, said: “Invel continues to actively search for and take advantage of opportunities in the European real estate market. This transaction is a testament to Invel’s ability to source and structure highly complex transactions where there is an opportunity to add value through active asset management and development.” 

NAMA’s loan portfolio sale pipeline

The first half of 2015 looks set to be another busy period for NAMA, with at least another four loan portfolios at various stages of readiness for disposal.

The largest upcoming loan portfolio on the horizon is the circa €1.5bn Project Tolka loan portfolio, which is secured by the loans of developers Paddy Kelly, John Flynn and Alanis, a property investment company controlled by the McCormack family.

Cushman & Wakefield’s Corporate Finance team in London is selling two loan portfolios on behalf of NAMA.

The first is a €778m portfolio of loans secured by Gerry Barrett’s property portfolio, which comprised 10 assets including the G Hotel in Galway and the D Hotel in Drogheda.

The second is the circa £325m Project Albion UK loan portfolio which is comprised of a mix of borrower groups.

NAMA is also soon to put up for sale the loan book of Pat Doherty’s Harcourt Developments, which is expected to be around €750m.  It is not yet known which assets will be within the Doherty loan portfolio.  

However, Harcourt Developments global property portfolio includes the Titanic Quarter in Belfast, Park West Premier Business Park in Dublin, Park West Plaza in Dublin and Riga Business Park in Riga, Latvia and a raft of upmarket hotels including in the Bahamas and Antigua.

NAMA, which declined to comment, completed €7.8bn in loan sales last year, which comprised:

In its review of 2014 published on 2 January, NAMA wrote that “improved conditions in the Irish commercial market and an upsurge in investor interest in multi-asset property portfolios and in loan portfolios enabled NAMA to increase substantially the scale of disposal activity in 2014”. 

NAMA is expected to downsize its headcount this year by around 80 staff to 270 by the end of this year and down to around 125 by the end of next year.

NAMA would not comment on the numbers but said in a prepared statement: “Staff were given a briefing [last Friday] by the NAMA CEO on the Board’s strategy and, in particular, the Board’s target of redeeming 80% of NAMA senior debt by the end of 2016.

“The briefing also covered NAMA’s role in facilitating the delivery of important projects such as the Dublin Docklands Strategic Development Zone (SDZ) and residential development delivery.  Based on the assumption that current market conditions will continue to prevail, NAMA expects that it will have redeemed all of its senior debt by 2018.

“The CEO indicated, in his briefing to staff, that achievement of NAMA’s end-2016 80% debt redemption target would inevitably mean a reduced staffing requirement within NAMA.  A redundancy programme would therefore be introduced and the first phase of staff redundancy would take place at the end of 2015 with a second phase at the end of 2016.  The timing of later phases would depend on business requirements.

“Like all other employees in both public and private sectors, NAMA staff will be entitled to redundancy payment from their employer, the NTMA, on the termination of their employment. Such redundancy arrangements will be fully in line with Government policy and established norms in the public sector.”

About CoStar News

Finance Editor, CoStar News
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