Bank of Ireland and Goldman Sachs fund seven deals for buyers including Blackstone and Kennedy Wilson, as foreign players join Irish bargain hunt
Bank of Ireland and Goldman Sachs have lent on at least seven Irish property deals in the first signs that lending activity is restarting in Ireland. Bank of Ireland has been backing both existing clients and some of the international buyers that have been bidding strongly on good-quality Irish office, residential and hotel assets.
The Irish bank funded Blackstone’s acquisition of Dublin’s The Burlington hotel; the international buyers of the city’s new Marker Hotel and flats; and two multi-family housing blocks, both acquired initially for cash by Kennedy Wilson.
Goldman Sachs has financed three deals, most recently providing debt for Kennedy Wilson’s acquisition of State Street’s Dublin HQ, as well as two loan portfolio sales, for Lone Star and Pepper Homes. Kennedy Wilson and an investment partner bought Ulster Bank’s loan with an unpaid principal balance of €120m on State Street’s HQ and an adjoining three-acre site, in a contract race last month with a Delancey/KKR joint venture.
The total debt provided in the seven deals is likely to be at least €400m, assuming an average loan-to-value ratio of just over 50%. Overseas buyers attracted by Ireland’s repriced market are hunting for bargains and banks have started to offload distressed assets and loans, a trend that is expected to continue this year.
Ireland’s National Asset Management Agency is about to appoint Eastdil Secured and CBRE to sell two loan portfolios totalling around €1bn – the first time NAMA has sold packaged-up Irish debt.
Eastdil will sell Project Aspen, with an €800m face value, comprising loans on about 30 or 40 “pretty decent” mixed-use properties mainly in and around Dublin. CBRE will sell a portfolio worth around €230m, called Project Club.
NAMA’s asset management head John Mulcahy prefers asset management, followed by asset sales, to loan portfolio sales. The agency has until 2020 to wind down its €74bn book, which it bought in 2010-11 at a 58% discount, judged to represent “long-term economic value”. From peak to trough, Irish values have fallen 70.5%
Last year NAMA failed to sell a portfolio of overseas loans made to Cyril Dennis, because bidders couldn’t see a way to work out the loans, but did sell the UK Saturn and Chrome portfolios. Most of NAMA’s asset sales have also been outside Ireland, but more domestic sales are expected soon, including loan sales, in a strategy to “shift more assets”, according to an insider.
“NAMA correctly focused on overseas markets where there is more liquidity,” said John Moran, managing director of Jones Lang LaSalle, Ireland. “But it will shift back to Ireland in the next year.”
Projects Aspen and Club are expected to come to the market in the next couple of weeks. Eastdil and CBRE, who are on the loan panel which NAMA set up a year ago, declined to comment.
Meanwhile, Irish Bank Resolution Corporation has invited brokers and property advisers to pitch for places on a panel the bad bank is setting up to advise on potential loan sales from its €22bn balance sheet. The closing date for pitches is 4 February. The loans are in sectors including real estate, healthcare, oil and gas, retail, media and IT.