AIB looks to sell £200m Project River UK airport hotel loan portfolio

Allied Irish Bank is selling a portfolio of seven syndicated senior loans together with an outstanding nominal balance of around £200m, dubbed Project River, secured by a portfolio of UK airport hotels owned by Arora Hotels, CoStar News can reveal.

AIB big logoProject River is comprised of seven loans together worth around £200m, part of a wider pool of syndicated senior loans which in aggregate have an outstanding balance of around £750m, which were written between 2006 and 2008, CoStar News understands.

Citigroup is managing the sales process, with second round bids expected within the next month.

A number of the original syndicated loans to Arora Hotels, an independent hotel company founded by Surinder Arora in 1999, are understood to be at or near to refinancing.

Seperately, CoStar News understands that first round bids are due in today on Lloyds Banking Group’s latest UK non-perofrming loan portfolio, the 30-strong near £500m Project Thames loan portfolio which is being sold by Deloitte.

AIB’s seven Project River syndicated loans are understood to include a position in the £165m three-bank financing of a 33-strong property portfolio acquired from Airport Property Partnership (APP), a 50:50 joint venture between BAA and clients of Morley Fund Management in August 2008.

Arora financed the purchase with a £165m senior loan from AIB, Bank of Ireland Corporate Banking and Abbey National Treasury Services, now trading as Santander.

While the securing hotel portfolio is not thought to be in distress, the lack of control rights over the assets in the syndicated loan pool is thought to have deterred some bidders.

Project River is expected to trade at a discount slightly below 50%, CoStar News understands.

Loan portfolio sales comprised purely of syndicated positions have been rare in the fledgling commercial real estate loan portfolio sale market, with the only known comparable the Hypothekenbank Frankfurt’s failed sell-off of €370m Project Sol, which is secured by six shopping malls and two land bank portfolios.

AIB’s Project River is the first attempted loan portfolio sale since the failed Project Pivot last November, with the Irish bank abandoning the sale of the portfolio after the finalists – Kennedy Wilson and Deutsche Bank’s joint bid and Cerberus –submitted final bids at a steeper than the stipulated reserve price of 40p in the pound.

Last October, AIB sold the €660m Project Kildare Irish non-performing loan (NPL) portfolio to Lone Star at a near 60% discount.

Project Kildare comprises around 70 loans secured by an underlying collateral pool of more than 400 hotels, nightclubs, shopping centres and offices properties

Lone Star beat Kennedy Wilson, in a joint bid with Varde Partners, and Goldman Sachs’ Special Situations Fund to win Project Kildare.

AIB has a legacy commercial property investment loan book of €16bn, according to the bank’s last interim results to the end of June 2012, comprised of €8.8bn in the Republic of Ireland, €6.3bn in the UK.

Around €6.7bn of this €16bn total was impaired at the time of the bank’s interim results.

In addition, AIB still has a further €6.6bn in land and construction loans, of which, €6.1bn are criticised – which reflect a varying degree of under or non-performing status – while €5.48bn, or 83%, were reported impaired.

AIB reports its 2012 annual results on March 27.

All parties declined to comment.

About CoStar News

Finance Editor, CoStar News
Gallery | This entry was posted in Banks, CMBS, Market Trends, Private equity real estate, Refinancings and tagged , , . Bookmark the permalink.

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