Cerberus has collected €1.3bn from Project Eagle loans

Accounts show Cerberus subsidiary used to buy loans made €9 million loss in 2016

Nama chairman Frank Daly and chief executive Brendan McDonagh have been forced to defend the agency’s decision to sell its Project Eagle loans in Northern Ireland to Cerberus. Photograph: Matt Kavanagh

Nama chairman Frank Daly and chief executive Brendan McDonagh have been forced to defend the agency’s decision to sell its Project Eagle loans in Northern Ireland to Cerberus. Photograph: Matt Kavanagh

 

New figures show the US vulture fund that bought the National Asset Management Agency’s Northern Ireland property loans in a controversial deal had collected almost €1.3 billion in loan repayments from developers by the end of last year.

Promontoria Eagle, the subsidiary that US fund Cerberus used to acquire the debts for €1.6 billion, has filed returns showing that a write-down in the value of its assets left it with a £8 million (€9 million) loss in 2016.

The State asset agency’s sale of its the loans, dubbed Project Eagle, has been the focus of several investigations since it emerged that one of the agency’s former advisers, Frank Cushnahan, was working for one of the bidders for the assets, another US company, Pimco.

Promontoria Eagle’s accounts state that it collected £144 million in loan repayments from debtors, mostly Northern Ireland-based developers, last year. Figures dating back to mid-2014, when Promontoria Eagle bought the loans, show it had collected £1.136 billion (€1.29 billion) by December 31st, 2016.

In 2015, Promontoria Eagle collected £918.8 million, while the figure was £73 million between June 2014 and the end of that year. Shortly after it bought the debts, a number of developers that owed it money, including Paddy Kearney’s Kilmona, Noel Murphy’s MAR Properties, and Frank Boyd’s Killultagh Estates, refinanced and paid off their liabilities.

Incentive

Promontoria Eagle’s figures show it paid £20,742 to the Irish exchequer last year. The company is one of many vulture-fund subsidiaries that benefit from an incentive that allows them to write off the repayments on loans used to buy the assets that they own against taxes on their profits.

The Government axed this incentive last year, where the property held by the company is in the Republic, but allowed it to stand if the assets are outside this jurisdiction.

Promontoria Eagle owns debts secured mostly on properties in Northern Ireland, Britain and continental Europe. Only a small proportion of them are tied to land in the Republic.

The company originally borrowed £1.2 billion to buy Project Eagle, £730 million of it from Japanese bank Nomura, which it has since paid off.

At the end of last year, it owed £264.7 million in two high-interest loans to its immediate parent, another Cerberus company, Promontoria Holdings 83 BV, which is registered in Holland. It had cut this debt from £442.5 million 12 months earlier.

Promontoria Eagle’s £8 million loss was down to the fact that it cut the value of the assets it held in 2016 by £23 million. This was an accounting exercise meant to reflect the company’s own calculation of what the property loans were worth. Its net assets stood at £19.5 million at the end of 2016.

A report by Comptroller and Auditor General, Séamus McCarthy, last year estimated that the Project Eagle sale may have cost the Irish taxpayer up to €200 million via the sales process. Nama disputed this at the time and during a subsequent Public Accounts Committee inquiry.

Another inquiry, led by retired High Court judge John Cooke, is due to begin shortly. The UK’s National Crime Agency is investigating the deal in the North.