MORE than €5bn of distressed commercial property loans are to be brought to the market in the next two weeks as the massive clearout of the banking system continues.
In the biggest sale, Lloyds is to offload loans with a par value of €2bn as part of a final push to sell off its Bank of Scotland (Ireland) commercial loan book. The loans are connected to 3,500 assets and 400 borrowers.
Called Project Parasol, the loan sale will run alongside Project Spectrum, an auction by Lloyds of a portfolio of six shopping centres and one office block. That portfolio, launched last week, is expected to fetch €120m.
The British bank is also ready to sell a medium-sized SME loan book, sources say, and separately is at an advanced stage of planning the sale of a sizeable mortgage book. Lloyds reduced its exposure to Ireland by just over £2bn (€2.5bn) in the first half of the year, through loan disposals, write-offs and net repayments.
Lloyds is progressively working towards a final wind-down of its non-personal lending book. It shifted €5bn of commercial property loans, old Bank of Scotland lending, into a vehicle run by Green Property in 2011. It is understood this entire portfolio could be wound down by the end of this year.
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Ulster Bank, meanwhile, is launching Project Aran, a €1.7bn loan book, brought to the market by Eastdil. It involves more than 315 borrowers and 400 properties.
The loan book is split 76% in the republic, 20% in Northern Ireland and 4% in the rest of the UK. About half of the properties are based in Dublin, and over one-third of the portfolio is residential.
The third large block of commercial property loans to hit the market is Project Quartz, a €1.1bn portfolio of commercial property loans left unsold after the IBRC liquidation process. Project Quartz is to be launched on September 15.
The Sunday Times has learnt that Allied Irish Banks is ready to bring 900 buy-to let residential properties to the market, with the accountancy firm EY, as early as this week. KBC has also been linked with the sale of a portfolio of 1,500 buy-to-let properties. The banks are hoping to tap into the considerable and continuing demand for distressed Irish property loans and assets.
Apart from the launch of Project Aran, Ulster is expected to take final bids on Project Achill, a €1.2bn portfolio of loans on September 19. It includes loans secured on the Arc apartment complex in the Titanic Quarter in Belfast and Independent House in Dublin, the headquarters of Independent News & Media
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CoStar News has reported that Lone Star, Cerberus Capital Management, Oaktree Capital Management and Deutsche Bank all progressed to the final round of bidding on Achill. Ulster is also currently assessing first-round bids for Project Nadal, a portfolio of loans on eight hotels and two hostels north and south of the border.
Properties include the Merchant hotel in Belfast, the Clayton hotel in Galway and the Radisson on Golden Lane, Dublin. Ulster has committed to reducing its Irish commercial property loans by €9.5bn over the next two years.