Ulster Bank launches €1.7bn Project Aran non-performing loan portfolio

Ulster Bank, the subsidiary of Royal Bank of Scotland, has launched the sale of its third Irish non-performing real estate loan portfolio, the €1.7bn Project Aran.

Ulster Bank logoProject Aran is comprised 411 connections and is secured by 315 properties, including more than 1,150 residential units, 1.1m sq ft of office and retail space, 1.1m sq ft of industrial and 1,550 acres of land.

Eastdil Secured is selling Project Aran on behalf of Ulster Bank.

Project Aran’s geography is split c.76% Republic of Ireland, c.21% Northern Ireland, and c.3% the rest of the UK.

By sector, Project Aran underlying property portfolio is very granular and is split approximately c.35% housing, 11% apartments, 10% office, 10% mixed-use, 8% retail and industrial, and 10% land.

Around 50% of the real estate value is concentrated in in the Dublin area and another 10% in five of the largest regional cities throughout Ireland as well as Belfast.  The weighted averaged occupancy across Project Aran is just north of 60%.

First round bids are called for Thursday 2 October, with an expectation that a trade will be concluded before the year-end.

Eastdil Secured is also selling the €1.2bn Project Achill, on behalf of Ulster Bank, which CoStar News revealed narrowed to Lone Star, Cerberus Capital Management, Oaktree Capital Management and Deutsche Bank in mid-August.

In addition, there is understood to be progressing bids by underlying borrowers who are seeking to re-purchase their debt.

Project Achill is comprised of more than 3.53m sq ft of commercial property assets and a further 1,565 residential units, 817 acres of land and 918 hotel rooms.

Final binding bids on Project Achill are due Friday 19 September, with winning parties expected to sign a binding agreement before the end of the month.

Ross McEwan, chief executive at RBS, in a conference call with analysts last month for the bank’s half year results, remarked on the upswing in asset prices in UK and Irish commercial real estate, stating: “You are seeing an uptick, you know the economy is picking up, people are after these assets and that is certainly helping us.”

Ulster Bank’s remaining legacy Irish and UK commercial real estate loan exposure was transferred into RBS’ newly-created internal ‘bad bank’, RBS Capital Resolution (RCR), at the turn of the year.

In its half year results to the end of the second quarter, RCR reported a £1.4bn reduction in gross Ulster Bank loans to £13.9bn, including a £0.9bn fall to £3.5bn in funded assets.

Of this funded assets total, £2.6bn are Irish commercial real estate loans – split £1.9bn in investment loans and £0.7bn in development loans.

RCR’s total gross commercial real estate exposure was £18.3bn – split £10.7bn investment loans and £7.6bn development loans.  RCR’s £10.7bn investment loan exposure includes £4.4bn in provisions, while the bad bank’s £7.6bn development loans have £6.1bn in provisions.

RBS and Eastdil Secured declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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