Last week, NAMA announced that it has at last sold its Project Aspen portfolio of €810m par value loans that related to Dublin developer, David Courtney. But what about Project Club, the c€300m portfolio which relates to loans to developer, Eamon Duignan. Sources are this afternoon claiming that NAMA has pulled the sale amid general concerns that borrowers are teaming up with potential buyers which is undermining the reputability of NAMA’s processes.
You will recall that when NAMA sold Donal Mulryan’s €250m of UK loans to Morgan Stanley that Donal then became a consultant to Morgan Stanley after the sale. Out of sight, out of mind it seems and the involvement of Donal never made news in Ireland. But in the case of the recent sale of David Courtney’s Project Aspen, there was considerable comment on David’s involvement with Starwood pre-sales and before the portfolio was offered to the market and that he will act as a consultant for a period post-sales.
In the case of Project Club, NAMA delayed bringing it to market following criticism of its failure to provide a valuation to bidders on Project Aspen – the absence of a valuation, which would be shared with all potential bidders, was seen as unusual and is understood to have had a deterrent effect on bidding generally. However, NAMA duly went about getting a valuation of Project Club after the criticism with the previous portfolio. Now it seems that NAMA has become sensitive about borrowers teaming up with potential bidders for single-borrower portfolios, and there has been some unsubstantiated talk of Eamon Duignan having an involvement with a potential buyer, Patron Capital Partners.
NAMA and Patron were both asked for comment, but there hasn’t been a response at time of writing.
A fortnight ago, the Sinn Fein finance spokesperson Pearse Doherty challenged Minister for Finance Michael Noonan about borrower involvement in single borrower portfolio sales. It seems NAMA has taken the concern on board. If the story is confirmed, it would seem that it won’t stop NAMA selling loan portfolios, it will just mean that loans from different borrowers will in future be packaged for sale so as to prevent any particular borrower conferring benefit on a potential bidder.
This is the parliamentary question and response:
Deputy Pearse Doherty: To ask the Minister for Finance following news that the National Asset Management Agency is selling large portfolios of loans which bundle together loans to a single borrower, if he is concerned that the borrower may derive a benefit from providing pre-sale advice to certain bidders. [18471/13]
Minister for Finance, Michael Noonan: I am advised by NAMA that it cannot preclude market participants from approaching debtors to discuss their property assets or to indicate potential interest in acquiring either properties or loans. Nor can NAMA preclude debtors from engaging with such potential purchasers. To do either would be counterproductive and could stifle normal commercial discussions in the property market and in particular could discourage international investors from exploring acquisition possibilities in Ireland. However, NAMA has very clear rules regarding the open marketing of loans or of properties on which it holds security.
As set out in response to recent Parliamentary Questions on the topic of NAMA loan sales [44286/12, 44287/12, 44288/12, 44189/12, 1549/13, 8753/13, 8754/13], NAMA has adopted a very thorough approach in line with accepted international market best practice for the sale of loan portfolios. As part of the formal sales process, potential purchasers are required to provide an undertaking that they will not engage with the debtor or other obligors at any stage during the sales process. Both debtors and potential purchasers are aware that the infringement of agreed protocols or undertakings may have an impact on NAMA’s decisions as to whether and to whom it sells a particularly portfolio. Furthermore, where NAMA approves the sale of any loan or approves the sale of any secured property by a debtor, it requires a confirmation that the purchaser is not connected to the debtor or other obligors.
Having ensured, as far as possible, that the sales process is conducted on the basis of all parties having equal access to the necessary information at the same time and that such primary sales are not made to the relevant debtors or to connected parties, NAMA advises that it has no legal right to intervene in any further future management or sales of the loan or underlying property in question post disposal.