Lloyds trades €380m Project Pittsburgh to CarVal Investors

Lloyds Banking Group is to sell the circa €380m Project Pittsburgh non-performing loan (NPL) portfolio to CarVal Investors, with the larger €1.8bn Project Lane expected to trade with Apollo Global Management, CoStar News understands.

The two Irish sub-portfolios together comprise the €2.2bn Project Pittlane Irish NPL, with Apollo is now in pole position to secure the €1.8bn Project Lane sub-portfolio after being outbid by CarVal Investors on the Project Pittsburgh sub pool but beating off rival bids for the pure Lane portfolio, CoStar News understands.

The average price paid for the combined Project Pittlane is expected to be around 10 cents in the euro, implying that Apollo paid around €180m, while CarVal Investors paid around €95m, reflecting a circa 75% discount.

Lone Star bid purely for the Lane portfolio, while CarVal Investors beat competition from Marathon, which bid just for the Pittsburgh component.

A four-strong consortium comprised of Kennedy Wilson, Deutsche Bank, Och-Ziff and Varde Partners also bid across the whole Pittlane portfolio.

Project Pittlane is comprised of as many as 700 individual loans, lent by Bank of Scotland in the middle of the last decade to Irish property companies and entrepreneurs.

There is understood to be around 500 properties securing the loans, which also include capex facilities and junior loans, from around 30 different borrowers.

Deloitte has managed the sale of Project Pittlane on behalf of Lloyds, which was brought the Irish NPL to market at the end of August, after selling the much smaller €360m Project Prince NPL portfolio to a joint bid by Kennedy Wilson and Deutsche Bank, which paid around €61m reflecting an 83% blended discount, which CoStar News was first to reveal.

Allied Irish Bank also traded an Irish NPL in the summer, with the circa €650m Project Kildare selling to Lone Star at a near 60% discount, in a sales process managed by Morgan Stanley.

With the final closure the separate Lane and Pittsburgh portfolios, likely in the coming weeks, Lloyds has just one live NPL portfolio sale left to conclude for 2012, the nominally-valued £778.6m Project Forth, which comprises Scottish and Northern England commercial property loans.

The Project Forth shortlist comprises Kennedy Wilson and Deutsche Bank in a joint bid, Cerberus Capital Management and Lone Star.

Lloyds’ commercial real estate loan book in Ireland was £9.96bn at 30 June 2012, of which £9.12bn, or 91.6% of loans were impaired, with £6.18bn of provisions taken, reflecting a 67.7% impairment cover ratio of the Irish CRE loan book by the end of the second quarter.

In addition to the natural run-off and enforcement in the Irish portfolio, Lloyds will be able to confirm the de-leveraging of almost a quarter of its outstanding book through project Prince and Pittlane sales.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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