NAMA selects three €608m Project Arch finalists as €7.2bn Project Arrow formally launches

NAMA has selected three finalists to progress to the final stage for the acquisition of its third multi-borrower non-performing loan (NPL) portfolio, the €608m Project Arch pool, as the bad bank’s largest-ever nominal NPL, the €7.2bn Project Arrow, is officially launched.

NAMA logoProject Arch is comprised of loans extended to five borrowers with the bulk of value and assets owned by property developers Jerry O’Reilly and Terry Sweeney as well as investor Ronan O’Caoimh.

CoStar News has learned that CarVal Investors, Deutsche Bank with Alanis Capital and Apollo Global Management have all progressed to the final round on Project Arch.

Bids are understood to have come in the €150m-€160m range, which reflects a circa 6% to 12% discount to the approximate real estate value, which is approximately €170m.  The current indicative pricing implies a discount to unpaid principal balance of between 75% and 73%.

Binding bids are expected to be called for the final week in July.

Project Arch is comprised of 77 properties, of which 72 are in Ireland while three assets are in the UK and two are in the US.

The majority of value in Project Arch is derived from the assets securing loans to O’Reilly, Sweeney and O’Caoimh.

O’Reilly’s loans are secured by arguably Project Arch’s most coveted asset – the four-star Radisson Blu Hotel & Spa in Galway, which now has 261 rooms after the removal of 11 serviced apartments.

Galway’s Radisson Blu Hotel & Spa, developed by Bernard McNamara who resigned as a director in the company – Shorelark Limited – which owns the asset in February 2011, returned to profitability in 2013, recording a pre-tax annual profit of €190,854.  Last year pre-tax profit soared 106% to €396,059.

O’Reilly’s loans in Project Arch also include debt facilities secured by the four-star 118-room Kilkenny Ormonde Hotel, in Kilkenny City. The hotel, which was originally marketed for sale in June 2014 as part of a three-strong Irish hotel portfolio through Savills before the sale of Kilkenny Ormonde was pulled.

The individual guide price for the Kilkenny Ormonde Hotel at the time was €11.5m.

Sweeney’s Project Arch loans are secured by assets including the four-star Schoolhouse hotel in Ballsbridge, Dublin and Galway’s trendy Busker Browns bar and restaurant.

Shanowen Square Student Residence, comprised of 86 apartments across 13 student accommodation blocks linked to Dublin City University, is the notable asset security for O’Caoimh’s Project Arch loans.

There is also a lesser concentration of value in land sites, industrial and mixed-use and assets. Around 30% of the secured assets by value are located in Dublin, with a further 30% in Galway City.

The cumulative rental income of Project Arch is €3.83m and the hotels’ combined EBITDA is €4.51m.

CBRE Debt and Structured Finance is selling Project Arch on behalf of NAMA.

NAMA finally launched Project Arrow yesterday, with the giant NPL reducing by €1.2bn to €7.2bn, secured by 2,402 properties which an approximate real estate value between €1.2bn and €1.3bn.  

Project Arrow, which is expected to trade at a discount to the real estate value, is comprised of 1,532 loans from 367 separate borrowers.  The largest loan is sub €10m and no individual asset has a current real estate value above €5m.

Just above one-third, 836 or 36%, of the underlying properties in Project Arrow are in receivership. The property portfolio is 96% located in Ireland, with just 3% of assets in the UK.

By sector, €2.81bn, or 39%, of the nominally-valued loans are secured by residential assets; €2.52bn, or 35%, of loans are secured by a mixture of mainstream commercial properties; €1.73bn, or 24%, of loans are secured by land and development assets; and around €144m, or 2%, are secured by hotel and leisure assets.

Cushman & Wakefield’s Corporate Finance team in London is selling the €7.2bn Project Arrow on behalf of NAMA.

All parties declined to comment.

About CoStar News

Finance Editor, CoStar News
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