Cerberus used Irish companies to buy €19bn in property loans

US firm purchased Nama's Project Eagle portfolio

Royal Bank of Scotland said in May it had sold its last major portfolio of Northern Ireland-backed loans, Project Rathlin, to Cerberus. Photograph: Chris Ratcliffe/Bloomberg

Royal Bank of Scotland said in May it had sold its last major portfolio of Northern Ireland-backed loans, Project Rathlin, to Cerberus. Photograph: Chris Ratcliffe/Bloomberg

 

Cerberus, the US company that bought Nama’s Project Eagle portfolio of Northern Ireland loans, has used a network of Irish companies to snap up distressed property loans across Europe with a face value of about €19 billion in the last two years.

Each of the Irish companies owns hundreds of millions, or in some cases billions, of euro in assets but has no employees in Ireland and in some instances, pays no corporation tax here.

Cerberus has established at least 10 such companies in Ireland since it started its European property loan shopping spree in 2013, all of which appear to be owned by Promontoria, a Dutch fund that is 100 per cent owned by Cerberus Capital Management.

Most of the companies include as their directors Geert Schipper, managing director of Cerberus Global Investments, and Lee Millstein, a senior managing director of Cerberus Capital Management.

As well as using Irish companies to buy Nama’s €5.6 billion Project Eagle portfolio of Northern Ireland loans and Ulster Bank’s £4.8 billion (€6.7 billion) Project Aran Irish loans, Cerberus has also set up Dublin-registered firms to buy loans in Germany, France, Britain and several countries in Scandinavia.

Cerberus set up Promontoria (Henrico) in Dublin in December to buy a portfolio of £1.2 billion of loans from National Australia Bank (NAB), secured on 5,400 properties throughout the UK. It paid £950 million.

It has also used Irish companies to buy Project Carlisle, a £1 billion from Nationwide building society, and the £625 million Project Chestnut, another NAB portfolio.

Project Avon, a £536 million portfolio it bought from Lloyds, and Project Thames, a Lloyds £527 million portfolio, are also ostensibly Irish-owned.

An Irish company also owns two tranches of European property loans sold by Lloyds to Cerberus, with a face value of €1.25 billion.

As most of the purchases have come in the last year, many of the companies have yet to file accounts.

Statements

The statements for Promontoria (Thames), which bought an initial 28 loans from Lloyds, show it made a profit of £6 million last year on its interest income.

It paid no tax here and had no employees, while its directors were also not paid.

Dublin-registered Promontoria Hampton (1) and Promontoria Hampton (2) were used by Cerberus to buy the €1.25 billion Charlie and Bravo portfolios sold by Lloyds in November 2013.

Accounts for Promontoria Hampton (1), which also had no employees in Ireland, say its purchase, backed by Credit Suisse, is secured on properties “mainly in Germany, France, the Nordic region and the Netherlands”.

It made a profit of €2.27 million last year, and also had no Irish employees. The accounts state its shareholder is Promontoria in the Netherlands, and that the company is ultimately owned by funds associated with Cerberus.

Major portfolio

Royal Bank of Scotland, the parent of Ulster Bank, said in May that it had sold its last major portfolio of £1.4 billion of Northern Ireland-backed loans, Project Rathlin, to Cerberus for £205 million.

There is no Dublin-registered company called Promontoria (Rathlin), which would have followed the template previously established by Cerberus in setting up its network of Irish firms.

It did register a new Irish company in May, however, which is called Promontoria (Ram).

Cerberus was unavailable for comment yesterday about its use of Irish companies to effect its shopping spree.

Meanwhile, Brown Rudnick, Cerberus’ lawyer on the Project Eagle sale, which is at the centre of controversy, last week backed a number of inquiries that have been opened into the transaction of Northern Ireland-backed loans.