Nationwide’s €850m German property loan portfolio out next week

Nationwide will sign up prospective bidders for its circa €850m German commercial property loan portfolio next week ahead of access to the data room, finally bringing back to market the loan portfolio which the UK building society first tried to sell-off 18 months ago.

Nationwide logoThe German loan portfolio, to be christened with a project codename this week, has a granular underlying collateral asset pool comprised of around 200 assets spread throughout the country and a diversified mix of retail and offices, as well as other asset classes.

Nationwide’s German loan portfolio is one of three Continental commercial property loan portfolios for sale, along with the sale of Commerzbank’s former Eurohypo Spanish property lending business – which includes €5bn in commercial property loans – and Lloyds Banking Group’s €529m Project Aberdonia.

Prospective bidders were expected to be granted access to the data room on the Eurohypo €5bn Spanish property loan book sale, codenamed Project Octopus, today, CoStar News understands.

However, Lloyds Banking Group’s latest – and possibly final – Continental loan portfolio, Project Aberdonia, is expected to receive several high-profile dropouts prior to the first rounds of bidding.

Nationwide tries to sell German property loan book for second time in two years

Nationwide’s circa €850m granular German commercial property loan book is finally back up for sale for the second time in almost two years, after repayments and external refinanicngs have slimmed the total balance from around €1.2bn almost two years ago.

Last time, prior to the summer of 2012, Nationwide invited a handful of potential buyers – including Apollo Global Management, Lone Star, Deutsche Bank and Cerberus Capital Management – to bid on the loan portfolio but a sale was pulled.

The aborted sale was owed to two reasons.

Firstly, Nationwide sought too great a recovery on its capital, seeking around 95 cents in the euro, which was significantly out-of-step with where pricing for the portfolio came in at.

The UK building society would have had to crystallise significant losses beyond the impairment provisions taken had a trade been agreed.

Secondly, the quality of data provided to invited bidders was inadequate which made the loan portfolio difficult to price.

This time around, Nationwide has appointed Deloitte which is thought to have prepared a more comprehensive data room and has internally valued the assets individually, using a desktop valuation methodology, which has arrived at a value for the underlying real estate of around €600m.

This would imply a trade of at least a 30% discount to the unpaid loan balance, if not greater.

These four bidders invited last time are likely to bid again, along with others such as hedge fund Marathon, which won the Lloyds’ €850m Project Chamonix, which traded for around €400m, as revealed by CoStar News.

The Nationwide loan portfolio is comprised of slightly more than 30 separate borrowers, while virtually all of the individual loans have unpaid loan balances of between €20m and €30m.

All the loans are senior, and there are no mismatched interest rate swap liabilities on the portfolio. Around half the loans are performing, although some are passed due, with the balance split between sub and non-performing.

Data room access is likely to be granted in the week beginning Monday 10 February, with first round indicative bids expected to be called three to four weeks thereafter.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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