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Archive for September 18th, 2012

In January 2012, NAMA appointed two panels of companies to provide “loan sales advisory” services – a European panel and a US panel. There are 13 companies on the European panel and 10 on the US panel. According to reliable sources, it appears that NAMA has now plumbed for one US company to sell off most of its legacy US loans. The company is the Boston-headquartered The Debt Exchange or DebtX and it is understood that over the next three months, DebtX will seek to sell off most of NAMA’s legacy loans in the US.

According to the  2011 NAMA annual report (see above), some 16% of its non Ireland/UK portfolio of loans relates to US assets so the loan sale could top 16% of €2.7bn or just over €420m at NAMA values – NAMA paid an overall total of €32bn for its loans, of which €2.7bn are related to property outside Ireland and the UK. We don’t know what haircut NAMA applied to US loans but if it paid 43c in the euro as it did on average across its entire portfolio, then the US loans could be worth €1bn at book values but the betting is the US loans hadn’t deteriorated to the same extent as loans in Ireland, so the book value could be substantially less .

DebtX is a reasonably well-known firm in the USA.  Its basic value proposition is access to the largest number of (distressed) loan buyers. It is most experienced in selling commercial mortgages in the USA though it also has a large portfolio of US residential non performing loans from FreddieMac and the US Dept of Housing and Urban Development. The company has tried to develop business across Europe over the past eight years, but industry sources claim it has had little success.

Their business model is to establish a minimum portfolio valuation with the seller-client, in this case NAMA and presumably NAMA will want to recover at a minimum what it paid for the loans; DebtX then markets the portfolio and organises bids – bidding similar to the way an estate agent generates bids –  and DebtX earns a high fee when the portfolio sells for a price above the agreed threshold and no fee at all if it sells below the threshold.

It seems that NAMA is accelerating the disposal of non-Irish assets, though given the chronic lack of credit and vertiginous price falls in Ireland, perhaps that is understandable and it seems the future NAMA strategy will be to focus on loans and assets in this jurisdiction where familiar geography, politics and markets can be more easily managed. Indeed it would have been surprising if NAMA seriously considered a ‘hold and loan service’ strategy in the US because it would need rely on many remote third parties.

Neither NAMA nor DebtX had any comment on the matter at time of writing.

UPDATE:  18th September, 2012. The NAMA spokesperson from Gordon MRM has responded to a request for comment on the claim that DebtX has been appointed to dispose of a NAMA US portfolio to say “that information is incorrect”.

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As the Era of the Irish in London’s property market draws to a close, it seems that the Era of the Malaysians is getting into full swing. News first reported yesterday by the UK’s commercial property portal CoStar.co.uk and re-reported today in the UK magazine Property Week (free registration required) that Dublin-based investment company, Jaguar Capital has sold an office block in the City of London for GBP 165m (€205m) . The buyer is identified as Lembaga Tabung Haji, the Malaysian Hajj pilgrims fund board, in partnership with Gatehouse Bank.

Number 10 Queen Street Place is close to the north bank of the Thames and just south of Cannon Street was purchased in March 2008 for GBP 146.3m. According to Property Week, “the 221,198 sq ft 10 Queen Street Place comprises offices, retail, a 20,000 sq ft roof terrace and accommodation arranged over basement, ground and four upper floors. Beneath the building is a car park, operated by NCP.”

Jaguar Capital invests in a number of sectors including food, renewable energy and property. It lists number 2 Heuston South Quarter in Dublin as well as office blocks in London, Edinburgh and Prague in its property portfolio. It claims internal rates of return of 30% and over on its two property sales to date, the IRR on this sale should be less but still positive – many Irish property investors will be envious!

The sale marks the latest in a series of high profile disposals by Irish investors who splurged on London property during the mid 2000s. In August 2012, David Arnold’s D2 sold 23 Savile Row in London’s West End for €275m, and the D2’s Woolgate Exchange in the City of London is still on the market at around €300m. NAMA sold up its interest in the Battersea Power Station site as part of a deal worth GBP 400m (€499m) with the buyer being the Malaysian outfit SP Setia. Property powerhouse CB Richard Ellis claimed that Irish investors were again heavy sellers of London property in the first six months of 2012. Irish investors sold GBP 545m (€700m) in London in the first six months of 2012, compared with GBP 1bn for the same period in 2011.

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