Starwood consortium agrees to €800m NAMA JV

Greenwich, Connecticut-based Starwood Capital Group is the lead member of a consortium that has struck up a joint venture with Ireland's National Asset Management Agency to own a portfolio of loans.

Starwood Capital Group, Dublin-based Key Capital Real Estate and London's Catalyst Capital have agreed to a joint venture with Ireland's National Asset Management Agency (NAMA) to own an €800 million loan portfolio.

The deal, which was trailed in the Irish press last month but confirmed only yesterday, sees a new JV entity set up in which NAMA retains a 20 percent economic interest in the assets. Also, the agency is providing a senior secured loan – otherwise known as vendor finance – to the joint venture, with an initial loan-to-value ratio of less than 60 percent. The loan, which will carry a commercial rate of interest, is expected to be repaid within five years.

NAMA said in a statement that the sales process for the portfolio, dubbed 'Project Aspen', began in February this year and that, by early April, it had entered into exclusive talks with Starwood.

The statement read: “The structured sale enables NAMA to capitalise on the current robust interest from global investors in Irish commercial property assets and at the same time participate in the continuing recovery of the Irish commercial property market.”

The timing of the announcement is particularly gratifying for Starwood as PERE revealed this week how the Barry Sternlicht-led firm had propelled up the annual PERE ranking of the largest private equity real estate firms in the world. It has shot up 10 places to second overall in the expanded PERE 50, which used to cover 30 firms. The only platform larger by amount of equity raised in the last five years for opportunistic investing is The Blackstone Group.

Starwood has deliberately made a play to concentrate on the opportunity opening up in Europe. In August 2011, PERE revealed how Jeffrey Dishner, Starwood Capital’s global head of real estate acquisitions, relocated from the US to Europe to spearhead acquisitions. It was one of the underbidders on the £4 billion sale of Eurohypo loans by Germany's Commerzbank, over which US bank Wells Fargo and Lone Star Funds are reportedly in exclusive talks.  

Dishner said of the JV with NAMA: “We look forward to a successful working relationship with NAMA and are excited about this investment opportunity. Since 2009, Starwood has taken on over $7 billion in non-performing loans as a key part of our distressed investment strategy and demonstrated an ability to work in partnership with financial institutions throughout the world to successfully manage the portfolios to meet their needs while achieving strong investment results for our investors.”

Brendan McDonagh, chief execuitve officer of NAMA, commented: “NAMA is very happy with the successful outcome of the loan sale process and we welcome Starwood to partner with us in resolving the portfolio. The transaction has a number of innovative features, including NAMA vendor financing and equity participation.”

NAMA appointed Eastdil Secured to manage the sale on its behalf.

PS: Don't miss PERE's Summit Europe 2013 conference on 4 June in London, where an exclusive interview with NAMA's McDonagh will be screened.