US vulture fund 'ready for exit' after recouping £1.3bn

AMERICAN 'vulture fund' Cerberus has virtually completed its work in Northern Ireland, having recouped all of the knockdown £1.3 billion it paid for Nama's loan book in little over a year.

Figures seen by the Irish News show that by the end of May it had already worked through 87 per cent of the portfolio of commercial properties and development sites it bought from Ireland's 'bad bank' in April 2014.

And it is understood the private equity firm may soon be in a position to get its paperwork in order for an exit from Belfast.

When it snapped up the distressed loan portfolios, Cerberus - named after the mythical three-headed dog guarding the gates of Hades - said it was a "patient, long-term investor" with a well-established track record of making significant improvements to the assets it manages.

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But it seems its key aim has been to get its £1.3 billion back, with a healthy profit on top, in the shortest time-frame possible.

On May 28, Liam Strong, chief executive of Cerberus, wrote to Daithi McKay, chair of the Stormont finance and personnel committee, to cancel a meeting he and his colleague Ron Coggle had scheduled with MLAs for six days later.

He suggested an alternative meeting could be arranged, but it is understood that never happened.

In the letter Mr Strong revealed: "I can tell you that so far over 87 per cent of the portfolio, as a percentage of the purchase price, has already been consensually resolved.

"In addition, only 13 per cent of the portfolio has been subjected to enforcement proceedings preceding consent, of which 7 per cent as a percentage of purchase price were enforcement proceedings started by Nama prior to the sale and resolved by Cerberus after the sale."

And Mr Strong added that only one personal guarantee had so been enforced at a value of just £200,000, relating to a borrower with whom a consensual resolution could not be reached.

A personal guarantee allows a lender to pursue an individual personally if a business loan can’t be repaid, and typically it might mean they can take control of assets such as that person's home or certain valuables or investment accounts.

Several major property development groups in the north have already refinanced loans that were held by Cerberus, including Lagan Development (Holdings), which is jointly owned by brothers Kevin and Michael Lagan, MAR Properties and Paddy Kearney.

Some of those deals were refinanced through Jefferies Loan Core (JLC), a US real estate finance firm.

But while a number of larger developers have been celebrating the through-working of their dealings with Cerberus, other smaller firms who ended up on their books have labelled the company's methods as "aggressive" and "ruthless".

One small property developer who spoke to the Irish News said he found the vulture fund's representatives "hard-nosed".

But he asked not to be named because "coming out and saying anything against Cerberus at this time would, I fear, be commercial suicide".

A spokesperson for Cerberus said: “Given the highly confidential and commercially sensitive nature of our work with borrowers we are limited in what we can discuss publicly however we are dedicated to reaching as many consensual outcomes as possible.

“Through its investment in the Project Eagle portfolio, Cerberus has been a good steward and partner to Northern Ireland and helped to stabilise and strengthen the property market. We take issue with any suggestion to the contrary.”