Several high profile loan portfolio buyers are expected to opt out of bidding for Lloyds Banking Group’s latest – and possibly final – Continental loan portfolio, Project Aberdonia, when first round indicative bids come in next Tuesday, CoStar News understands.
Project Aberdonia comprises €600m of senior and mezzanine debt all extended by HBOS to one borrower, Industrial Securities, the pan-European industrial investment manager and subsidiary of Marcol Group.
Similar to Lloyds’ Project Indie loan portfolio, Lloyds has entered into a pre-sale agreement with the borrower to the effect that it would be part of the subsequent asset management workout of the property portfolio.
However, the degree of borrower co-operation certainty is perceived less in Project Aberdonia than was the case with in Project Indie with Valad Europe, CoStar News understands.
The outstanding balance of Project Aberdonia is comprised of a €526m senior loan and a €63m mezzanine facility. In addition, one separate Polish asset is separately financed in Polish Zloty, which converted into euros equates to a €10.4m senior loan and a €0.7m mezzanine loan.
Project Aberdonia’s €600.1m aggregate debt is secured by 82 properties, predominantly in France and Germany, valued at €279m, implying a blended LTV of 215.1%.
The breakdown of Project Aberdonia by geography and value is as follows:
- 35 French assets, valued at €118m;
- 31 German assets, valued at €97m;
- 5 Dutch assets, valued at €28m;
- 7 Belgium assets, valued at €16m;
- 2 Polish assets, valued at €6m;
- 2 Hungary assets, valued at €14m.
CBRE valued Project Aberdonia’s property portfolio ahead of the loan portfolio sale.
For the winner of Project Aberdonia, the investment play is to recapitalise the property portfolio, based on the discount paid relative to the €279m value, and work with Industrial Securities’ asset management team, invest in capex and re-gear expiring leases and complete a managed sell-down of assets at a premium to the price paid.
CoStar News understands that a raft of usual bidders, including Deutsche Bank, Lone Star, Apollo and Blackstone are unlikely to bid, reflecting the relative attractiveness of the opportunity relative to the outstanding bidding processes underway elsewhere, not least the raft of IBRC loan tranche sales.
However, Marathon Asset Management, which won Lloyds Project Chamonix, is thought a likely bidder, given that around 80% of the Chamonix portfolio was secured by properties owned by Marcol Group, Industrial Securities’ parent company.
While Cerberus and Goldman Sachs’ Special Situations Fund are also expected to bid.
All parties declined to comment.