On 24th January 2013, we learned that NAMA was offering two large loan portfolios for sale – Project Aspen and Project Club – and on here, we exclusively revealed that the portfolios related to developers David Courtney and Eamon Duignan. Project Aspen is the bigger portfolio with €810m of David Courtney’s loans, and there was criticism from the market when NAMA decided to offer the portfolio without first carrying out a valuation for potential buyers, which would be usual. And in the case of Project Aspen, there was a view in the market that NAMA had failed to maximize the bid potential for the portfolio. James Wallace at CoStar wrote “NAMA has not provided prospective bidders with recent full, or even desktop valuations, to go with the Project Aspen “datatape”, which therefore means that bidders have to estimate a current valuation individually. Failure to supply this information is considered something of a false economy by NAMA, as imposing this additional extra due diligence on prospective bidders is, ultimately factored in as part of discounts tabled for the NPL which can result in a net lower offer.”
It now seems that either Starwood Capital or Pimco will win the portfolio, paying less than 25c in the euro or less than €200m in total.
On 21st February, 2013 Minister for Finance Michael Noonan responded to that criticism – that NAMA failed to value the portfolio pre-market – in the Dail and offered an unconvincing defence by saying “NAMA advises that methodology and strategies applied in the case of any given loan sale is determined after consultation and discussion with the appointed loans sale advisor. The approach adopted in any particular case will be determined by the ultimate objective of maximising sales proceeds”
Today we learn via the UK commercial property portal, CoStar that a reason for the delay in bringing the second portfolio Project Club – understood to be around €230-330m of loans relating to developer Eamon Duignan – to market has been the Agency has been valuing the portfolio! CoStar reports “unlike with Project Aspen, for which there were no recent valuations for the underlying properties initially provided to bidders, valuations have been sought for Project Club, which partially explains the delay in the release of the datatape to prospective bidders.”
At least it shows progress and ability to learn at NAMA, though we may be left wondering if we have lost out on millions on Project Aspen because of the approach adopted there.
NAMA Wine Lake 
Like I said- not even gifted amateurs. BTW, there was only one final bidder for the Aspen portfolio…. Starwood.
Nobody, not even the most avaricious of the vulture capitalists, would put up with this level of professionalism. I couldn’t understand where Pimco were coming from anyway. it’s not their type of deal or asset class..
Starwood showed true commitment. They deserve the prize.
After “mature reflection” on the above post, it needs to be said that as this was NAMA’s first foray into selling individual loan portfolios and that this sale is a major learning curve for the agency, it did well to get the first one away at what appears to be an excellent price in the current lean and competitive market. I am not surprised that Starwood left the rest trailing in its wake, it takes a much more reasonable view on the returns it wants to achieve for its investors than most other PE companies.
I am glad to see that it is upping its game. When it markets the Club portfolio, there should be less whinging from the “also rans”. Kudos on the sale.
Alternatively, nobody else bothered to submit a final bid as they knew they were wasting their time. Who knows…… we won’t be told!
Let’s see who Duignan has teamed up with in the past. Short odds on them being in the “Club”?
As I said on another thread, selling a portfolio of loans where only one principal borrower is involved is fraught with conflict and typically ends up as “stitch up” as buyers soon figure out that they need to team up with the incumbent borrower. The way to do it is to bundle, for instance, Club and Aspen ( and ideally one more) together and bring that to the market. It is not rocket science and is a well tested strategy in other jurisdictions.
Nice for DC, a €600m write down and a bit of upside in the future. As you say, Kudos.
Jeez, Nick. You’re even more cynical than I am, something I haven’t often found.. and I’m worse than Mel Gibson in Conspiracy Theory!
To me it just shows that most of the also rans are lazy buggers who can’t, or won’t, do their own evaluations. They want nanny NAMA to hand a valuation to them on a plate. When they didn’t get it they cried “foul”.
As for bundling loans and selling them where there is more than one principal; well LLoyd’s did that last November with a €1.7 billion Irish loan portfolio under the title of Project Pitlane (see link).
http://www.ft.com/intl/cms/s/0/bda071fa-3274-11e2-ae2f-00144feabdc0.html#axzz2Q0MRBKaR
It made 10c on the €. My money is on the NAMA sales procedure. It will make 25 to 30 cents.
Why? Because the buyers like to know that there is a management platform there with the “long knowledge” if they need it. The last thing they need is discord with the borrower. It doesn’t help them make money. With a co-operative borrower they can pay more for the asset. Bundles of loans with multi-borrowers are just a recipe for dissent and trouble unless of course the objective is that of a LoneStar, i.e. call the loans and turn them into cash. That’s why they only pay 10 cents on the euro and NAMA can get 2.5 times that and more.
Unlike David Courtney, I know Eamonn Duignan. He’s a first class property professional. He is also very much his own man. He is certainly not the type that will work on a servile basis for a meagre wage. To my knowledge he has never teamed up with any PE entity in the past. They were not around in significant numbers then. Like most developers his ambition will be to exit NAMA. Unlike most developers, he is astute enough to be well ahead of the curve in this ambition. It’s the PE bidders that want the help of development platforms, like his, on the ground – not the other way around. Anyone that hangs around with their old portfolio, after the sale is completed, will want some upside for doing so. That’s the real world. Otherwise they will move on and let someone else manage it.
So, in order to recoup the extra money that they will be paying to NAMA for a well managed retail portfolio (as opposed to a much lesser amount for a jumbled up bundle of bank assets just thrown together) I have no doubt that a few bidders will try to secure his co-operation. The rest will just whinge and cry foul. That to is the way of the world – but NAMA will have got its extra pound of flesh.