Deutsche Bank wins NAMA’s Project Arch for €164m

Deutsche Bank has won NAMA’s €608m Project Arch non-performing loan portfolio paying €164m, CoStar News has learned.

db-logoThe price suggests a discount of 73% based on the original principal balance.

NAMA has completed a busy week after defining a final five-strong shortlist for its most-coveted asset, the Dundrum Shopping Centre, the centrepiece of its intentionally-named Project Jewel loan portfolio.

Underbidders on Project Arch were CarVal Investors and Apollo Global Management, which were both separate winners within the last 10 days on Project Finn and Project Poseidon, respectively. 

Project 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.

This is the third NPL win in a month for Deutsche Bank after beating Angelo Gordon, Oaktree and Marathon to buy NAMA’s Project Maeve for €97m, secured by property developer Gerry Barrett’s assets.

Last week, a separate Deutsche Bank team acquired the commercial real estate tranche of Ulster Bank’s final major Irish NPL portfolio, Project Finn.

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 advised NAMA on the sale of Project Arch.

All parties declined to comment.

About CoStar News

Finance Editor, CoStar News
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