Special Report 109 - NAMA’s management and disposal of the Project Nantes loans
| Audit Id | 1604915925952 |
|---|---|
| Title | Special Report 109 - NAMA’s management and disposal of the Project Nantes loans |
| Titel in der Originalsprache |
Special Report 109 - NAMA’s management and disposal of the Project Nantes loans English |
| Jahr | 2020 |
| Betreff |
Financial Institutions and Markets |
| Typ |
Performance |
| Art der Leistung |
Performed by single SAI |
| Beschreibung | The National Assets Management Agency (NAMA) is a body created by the Government of Ireland in 2009, during the Irish banking crisis, in order to deal expeditiously with non-performing loans acquired from Irish banks. Outcome on the Avestus portfolio: The Project Nantes loans were part of a larger portfolio of loans connected to the Quinlan Partnership, and managed by a firm of investment managers called Avestus Capital Partners. The loans grouped into the Avestus portfolio were acquired by NAMA in 2010 for €123.6 million. Taking account of subsequent advances to the borrowers of a further €12.7 million, NAMA’s total outlay on the Avestus loans was €136.3 million. Between 2010 and 2013, NAMA realised a total of €204.1 million in disposal and non-disposal proceeds from the loans. As a result, NAMA achieved an overall cash surplus of €67.8 million on the Avestus portfolio, and an internal rate of return of 29%. The Avestus loans were disposed of or settled in eight transactions, each comprising one or more of the loans. Project Nantes was one of those transactions. The results for the individual transactions varied widely. Loans related to two office developments in London accounted for all of the cash surplus achieved. NAMA had a windfall gain of €25.3 million on a loan related to a Knightsbridge property. There was a further cash gain of €45.9 million on two loans related to an office development in Paddington. Other loans in the Avestus portfolio were resolved through a number of property sales managed by Avestus, or by full repayment of the par debt. In those transactions, NAMA broke even or made small cash gains. The Project Nantes loan sale: The remaining loans were disposed of in January 2012 in a portfolio loan sale that NAMA referred to as Project Nantes. Taking account of acquisition costs and advances, and both disposal and non-disposal proceeds realised, NAMA incurred a net cash loss of €10 million on the Project Nantes loans. The rate of loss was 19%. The Project Nantes loans related to properties in Ireland, the UK and other European states, including hotels, offices, retail and industrial units and residential property. The bulk of the portfolio comprised Quinlan Partnership loans, but some personal loans of Quinlan Partnership partners were also included in the sale. In August 2011, Avestus informed NAMA that it had sourced a US firm — Clairvue Capital Partners — which was interested in acquiring the loans. In October 2011, the US firm submitted a schedule of loans it proposed to acquire. NAMA agreed to grant ‘exclusivity’ to Clairvue Capital Partners in relation to the loan sale until the end of January 2012. A sale was agreed between NAMA and a Luxembourg-based subsidiary of the bidder — Clairvue-Nantes Luxco SARL — in January 2012, for a price of €26.67 million. The NAMA Board had agreed a target level of proceeds it sought to achieve for the Avestus portfolio of loans in July 2011. NAMA executives informed Avestus of the target amount, and subsequently agreed with Avestus a number of adjustments to the target as assets were sold or withdrawn, and non-disposal receipts came in. Following the adjustments, the residue of the target proceeds became NAMA’s price for the Project Nantes loans. Errors and poor analysis by NAMA meant that the residual target of proceeds for the Project Nantes loans was significantly lower than it should have been. Had the full scope of the loan portfolio been consistently and accurately reflected in the target, the residual amount to be achieved through the Project Nantes loan sale would have been of the order of €56 million i.e. about €29 million more than was achieved in the sale. Securing independent current asset valuations prior to any disposal, along with a competitive marketing process, are the normal strategies for ensuring financial returns are maximised. In the case of Project Nantes, NAMA did not seek current valuations of the loans or of the underlying property collateral, and did not pursue a competitive sales process. Without a contemporaneous asset valuation and a competitive sales process, there is no basis to conclude that NAMA achieved the best possible financial outturn from the Project Nantes loan sale. |
| Autor |
Ireland |
| Materialien |
Audit report English |
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