Press Release - NAMA’s management and disposal of the Project Nantes loans

19 March 2020

A report of the Comptroller and Auditor General in relation to NAMA’s management and disposal of the Project Nantes loans was presented to the Houses of the Oireachtas today.

The report was undertaken following concerns raised publicly about the value for money achieved in the sale of the loans.

Main findings

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.

Notes for Editors

The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds. He reports to Dáil Éireann.

The report was signed by the Comptroller and Auditor General on 18 December 2019 and sent to the Minister for Finance on 23 December 2019. Under section 11 of the Comptroller and Auditor General (Amendment) Act 1993, the Minister is required to present the report to Dáil Éireann within three months of the date on which the report was submitted to him.

The Avestus loan portfolio — as defined by NAMA in 2018 correspondence with the PAC — comprised a total of 165 separate loans, with a combined par value at acquisition of €489 million. NAMA paid the banks that had issued the loans a total of €123.6 million — representing an average discount of 75%.     

A large part of the Avestus portfolio comprised equity-backed loans, which had a par value of €261 million. NAMA acquired those loans for a nominal consideration i.e. a 100% discount. Property-backed loans in the portfolio were acquired by NAMA at an average discount of 44%. Personal loans of the Quinlan Partners in the portfolio with a par value of €31.2 million were acquired at a cost to NAMA of €9.7 million.

Click on the highlighted link to read the full text of the report on Project Nantes.

The sole and exclusive focus of the report is on public bodies, and not on staff members of those bodies or on any third parties. For the avoidance of doubt, the report does not make any criticism or comment or present any view, whether express or implied, with respect to staff members of public bodies or to third parties, and should not be understood as doing so.

Enquiries about the report should be directed to Georgina O'Mahony at (01) 863 8665 or at