Nama says value of Project Eagle assets rose by 2-3% ‘at best’

The National Asset Management Agency (Nama) has disputed claims that assets in the controversial €5.7 billion Project Eagle portfolio have risen in value by as much as 20 per cent since they were sold.

In a letter to the Committee of Public Accounts (PAC) sent on Monday, the agency’s head of relationship management Martin Whelan wrote that the value of the assets in the Project Eagle portfolio would have increased, “at best” by a maximum of 2-3 per cent. Given the funding and management costs, Nama would have made “little or no gain” from keeping the portfolio, he said.

The letter was sent on the same day the PAC said that it would widen its probe into the uplift in values of assets included in Project Eagle, as well as other transactions.

In his letter, Mr Whelan referred to “inaccurate” reports suggesting that the value of the Eagle portfolio has increased by 20 per cent since the sale of the assets.

“We have analysed these claims and we believe that they are based on incorrect interpretation of data, or inaccurate comparisons of portfolio which significantly differ from each other and on misquoted statements attributed to CBRE’s head of research”.

More specifically, Mr Whelan said that an article published in the Irish Examiner on July 17th inaccurately reported an MSCI report detailing property growth rates in Northern Ireland. A property economist was misquoted in the article, he alleged.

Mr Whelan states that the composition of the assets in Project Eagle, is “not directly comparable” to the MSCI report.

“Project Eagle contained a significant proportion of lower quality land and development assets and other assets that would not fit institutions’ investment criteria,” he wrote. Moreover, some 77 per cent of the MSCI portfolio are based in Belfast, with the rest in Northern Ireland. Fifty per cent of the Project Eagle portfolio was based in NI and, of this, just 43 per cent was in Belfast.

“It is clear that there are very significant differences between the respective compositions of the MSCI and the Eagle portfolios and that, accordingly, it is entirely unreasonable to use MSCI data as a guide to price movements for assets in the Eagle portfolio.

As such, given the “granularity” of the Eagle portfolio, Mr Whelan writes that it is “reasonable to assume that price recovery would lag that of the assets in the MSCI portfolio”.

“Therefore, at best, Eagle assets may have increased in price by a maximum of 2-3 per cent, hardly the 20 per cent erroneously claimed. When account is taken of funding and management costs, Nama would have made little or no gain from retaining the portfolio”.