Danske Bank has appointed Pepper Asset Servicing to provide special servicing and asset management on a 270-stong Irish commercial property portfolio with an aggregate outstanding principal loan balance of more than €600m.
The 270 properties in the portfolio are currently in receivership and under the deal, Pepper, in conjunction with Arrow Asset Management, will oversee the rationalisation of the receivership process for the portfolio and special servicing on behalf of Danske.
In addition, the company will provide asset management on the portfolio.
This is Pepper’s second commercial real estate asset management contract since the company was established in Ireland last September, the co-investment and management contract on the Lloyds Banking Group €380m Pittsburgh portfolio of Irish loans with Carval Investors.
As with the Pittsburgh contract, Pepper Asset Servicing will work alongside Irish commercial real estate management firm, Arrow Asset Management.
Danske Bank has an outstanding exposure to Ireland and Northern Ireland of €3.21bn, which includes €1.86bn in Irish commercial property loans which have been transferred to a non-core division.
In its annual results, Dankse wrote: “The commercial property market in Ireland remains under pressure as the slight decline in prices continues and return requirements are historically high, even though they stabilised in 2012.
“The number of transactions rose marginally in 2012, but from a very low level, and the market continued to suffer from low activity. The vacancy rate varied considerably, depending on the property type and location. In general, Dublin had the lowest vacancy rates, and particularly retail shops located outside large cities were hit hard.”
Pepper Asset Servicing and Arrow Asset Management could receive additional Irish properties to manage as part of this arrangement as and when stock enters receivership, CoStar News understands.
Paul Doddrell, CEO of Pepper Ireland, said: “We’re delighted to be partnering with Danske and this contract win represents a further endorsement of our expertise to provide a unique approach to managing commercial portfolios in this market.
“We continue to be very focussed on growing the business in Ireland to establish it as a leading European loan servicing and real estate asset management operation and have recently invested significantly in our people and systems to help us realise this ambition.”
Peter Hughes, head of Danske Bank’s non-core unit said: “Since establishing our non-core unit in 2012, we have worked to identify the right strategy for each element of our loan book as we manage down our exposure to the Irish property market. This partnership with Pepper Asset Servicing allows us to bring additional specialist expertise to the management of certain properties already in receivership.”
Brian Berg, head of commercial property at Pepper said: “We continue to see significant servicing and asset management opportunities in the Irish market and to reflect this have invested significantly in expanding our real estate and asset management team.”
Established in September 2012, Pepper Asset Servicing is Ireland’s leading servicer of third-party loan portfolios, asset management and advisory services spanning a range of asset classes including residential mortgages, commercial mortgages, auto finance, unsecured loans and equipment finance.