Last week, Roisin Burke in the Sunday Independent reported that Starwood Capital, the US-headquartered global property investment company, was the top bidder for Project Aspen, the €810m of loans owned by NAMA which relate to some of, though not all, developer David Courtney’s properties. Initial enquiries on here last week indicated the Sindo article was speculation and it was ignored. But the Starwood bid has been confirmed this week by usually-reliable sources, with final bids having been submitted on Tuesday last to Eastdil, which is managing the sale on behalf of NAMA, with additional news that Pimco is the second-highest bidder. All fine and dandy, so far, another shower of foreign investors buying a barrowload of Irish assets.
What is generating ructions in the property world though, is the association of David Courtney – the Dublin developer whose loans are being flogged – with the Starwood bid. The Sunday Independent claimed “David Courtney, a top NAMA client, has teamed up with US investment firm Starwood and local finance house Key Capital to bid for the loan book.” Rival parties are whinging – as loudly as they can without burning their bridges with NAMA – that if the Sindo story is true, what is the point of any investor bidding for NAMA assets when the original borrower can simply team up with one specific bidder and use their inside knowledge to enhance the bid, and afterwards pick up a lucrative role managing the asset.
David Courtney’s role in the Starwood bid in unclear with the Sindo and some confidential contact on here suggesting he is right now central to the bid, though he is not providing funding. There has been talk of David approaching Andrew Gunne at Key Capital which in turn attracted the attention of Starwood Capital to the portfolio.
Others suggest that David is entirely removed from the bid, but is likely to be part of the future management of the portfolio under Starwood, should Starwood win the bidding.
Indeed, there may be unease in NAMA itself about David’s precise role in the bid. NAMA is proscribed by the NAMA Act from selling assets to defaulting debtors, and in 2011, when the Grehan brothers were associated with a consortium’s bid for their UK Glenkerrin assets, it is understood that NAMA was dismissive of the notion. But, on the other hand, NAMA has sold the €250m Donal Mulryan UK loan portfolio to Morgan Stanley, and Donal himself is employed to manage those assets.
NAMA doesn’t comment on individual transactions, and it is clear that the bidding for the Project Aspen portfolio has been fierce, though alas, that won’t be reflected in the final price which is likely to be around €200m or 25c in the euro. It seems though that if Starwood wins the Project Aspen bidding, the future role of David Courtney will be closely scrutinized by NAMA and the market.
Developers themselves are wryly observing that the likes of Starwood are chasing returns from Irish property, which internally in those organizations, are targeted at 20% per annum. If NAMA is supposed to be an asset management agency, then why is NAMA itself not delivering returns of 20% rather than “gifting” them to international investors?
Investigating the Starwood bid during the week uncovered another hitherto-unreported bid for a second portfolio, a portfolio which has not yet been pitched by NAMA to the market generally. It seems that Starwood has submitted a second bid on a €120m par value portfolio relating to some of NAMA Top 30 developer, John Flynn’s assets including the Harcourt Street Children’s Hospital, a 50% stake in Burlington Plaza and Belfield Office Park. John might be most associated with the development of Smithfield, and partnered up with other Irish developers in commercial and residential developments across Dublin. NAMA is understood to be slowly considering the bid in light of its newly-acquired experience with bundling loans up for sale.
UPDATE: 27th April, 2013. Sources close to the matter claim that the Project Aspen sale has been closed at €180m or 22c in the euro and that Starwood Capital (SWC) was the winning bidder. NAMA doesn’t comment on individual sales. There was no comment from SWC at time of writing.