KPMG confirms all project Salt and Rock tranches progress to phase two bidding stage

KPMG has announced this afternoon that all tranches of projects Salt and Rock, with a combined unpaid balance of €7.3bn, have progressed to the second round phase, implying sufficient bids have been received at above or near to prescribed hurdle rate to enable private sector trades.

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IBRC’s joint special liquidators, Kieran Wallace and Eamonn Richardson of KPMG Dublin, confirmed in a statement all tranches of Project Rock and Project Salt will begin the second phase of the sale process on 19 January, with final and binding bids due in on 14 February.

While this does not ensure all tranches of the two property loan portfolios will trade, the implication from the positive official update is very much that there is sufficient indicative offers near to, or above, the hurdle rates to progress the process.

Project Rock and Salt comprising mostly commercial real estate loans written through the UK branch and UK subsidiary companies of IBRC.

In addition, the statement also confirmed 10 of the 13 tranches of €2.5bn Project Evergreen, reflecting 84% of the loan portfolio, are expected to trade externally after receiving bids above the outlined hurdle rates.

Binding bids for Project Evergreen closed on Friday 6 December.

The statement said: “There was strong market interest in the process which was designed to maximise value and resulted in competition among bidders for the acquisition of the various loan assets in Evergreen.

“The Special Liquidators are pleased with the outcome thus far which reflects the market interest that has been evident since the commencement of the special liquidation.

“Successful bidders have been notified and are proceeding to contract with a number of contracts already executed. It is expected that approximately 84% of the portfolio (by par value) will trade to buyers other than NAMA.”

The loans of three borrower connections which did not meet required hurdles set, will be transferred to NAMA at the independent valuation.

KPMG offered the additional update across the rest of the loan portfolios – which includes an additional subset, the €800m Project Pebble.

  • Project Sand, comprising mostly mortgage loans with a par value of approximately €1.8bn and 13,250 borrower connections, began phase 2 on 9 December with a second round shortlist to submit final and binding bids on 27 January 2014.
  • Project Stone, comprising mostly commercial real estate loans originated through the Irish offices of IBRC with a par value of approximately €9.3bn. Phase one indicative offers concludes today, Thursday, 12 December
  • Project Pebble, a further portfolio of commercial real estate loans originated through the Irish offices of IBRC with a par loan value of approximately €800m. Phase one indicative offers will conclude on Thursday, 19 December.

The expectations of the degree to which the IBRC legacy loan portfolios will trade have substantially improved in the six months since the process began.

To a significant extent this has been helped by the improving sentiment in Ireland and UK for secondary real estate, as well as increasing risk appetite among investors, improving macro economic fortunes and the normalisation of bank lending.

CoStar News has undertaken a series of in-depth analyses of IBRC’s Project Salt and Rock, which can be seen here:

About CoStar News

Finance Editor, CoStar News
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