US investment funds on Northern Ireland shopping spree

dollar bills US investment funds are spending billions of dollars on property assets across Europe

The New York investment fund Cerberus has taken a dominant role in the Northern Ireland property market with the purchase of Nama's Northern Ireland loans.

BBC News NI Economics and Business Editor John Campbell reports they join a growing list of US funds with an interest in Northern Ireland.

US investments funds are on a vast shopping spree, picking up billions of pounds worth of property assets across Europe.

The sellers are the banks: they have already accepted massive losses on loans made during the property bubble.

Now the quickest and cleanest way for them to deal with this long property hangover is to sell loan books, including those in Northern Ireland.

With values recovering a bit, the banks will get some money back, reduce the property exposure on their balance sheets and the management of the loans becomes someone else's problem.

Though rather than seeing a problem, the buyers will see profitable opportunities.

Further deal

This process has been under way since 2011 with one of the first big transactions being a £1.3bn deal between Bank of Ireland and the Californian property firm Kennedy Wilson.

The portfolio consisted of loans attached to 170 properties across the UK.

Company filings suggest that loans made to the Belfast-registered firm Hazelhaw Properties were part of the deal.

A mortgage was registered on the company by KW UK Loan Partners, the company established by Kennedy Wilson to do the deal.

A further deal involving Northern Ireland firms involves another Californian outfit, Oaktree Capital Management.

In 2012, it paid £260m for a package of loans from Lloyds using the exotically-named Luxembourg subsidiary, HRGT Debtco SARL.

The loans had originally been made by Bank of Scotland (Ireland) and ended up with Lloyds when it took over Bank of Scotland in the most acute phase of the banking crisis.

The Belfast-based property firm, Benmore Properties, discloses in its most recent accounts that its Bank of Scotland loans were purchased by HRGT Debtco SARL in December 2012.

And, we also know that loans made to part of the Newry-based Lotus group were part of this deal.

Loans package

HRGT Debtco SARL turns up again in the middle of a complex restructuring of the debt on a shopping centre the group owns in England.

The Americans came calling when IBRC, the former Anglo Irish Bank, was liquidating its loan portfolio earlier this year.

The Northern Ireland loans are understood to have been sold to Lone Star, the Dallas-based private equity firm.

Those loans include £45m of borrowings made to Portadown-based Prentice Estates and a package of defaulted loans that were formerly related to the businessman Barney Eastwood.

The Cerberus deal is the biggest of the lot but there are still more sales to come.

Ulster Bank has only just begun the process of selling property loans.

It is currently inviting bids for what is know as Project Button, a portfolio that includes almost £80m of loans connected to Corbo, Northern Ireland's largest property firm.

The property news service, Co-Star, reports that there is yet more American interest with Kennedy Wilson, Chicago-based LaSalle and New York-based Blackstone all in the running.

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