Mars Capital and Camael Mortgages win Bank of Cyprus’ £289m Project Avenue

Bank of Cyprus (BoC) has sold the £289m nominal Project Avenue UK loan portfolio to Mars Capital Finance, the British company which acquires and manages UK residential and buy-to-let mortgages, and Camael Mortgages.

Mars Capital logoThe sale price at which Mars Capital acquired Project Avenue is not yet known, however, the discount is thought to be shallow owing to the performing nature of the underlying circa 765 loans. 

Project Avenue’s loans are extended to a pool of 427 separate borrowers which are secured by more than 500 residential and commercial properties.

HSBC sold Project Avenue on behalf of Bank of Cyprus.

Mars Capital Holdings is majority owned by its management and funds managed by Oaktree Capital Management.

A statement by BoC today said Mars Capital were selected after a competitive process, which earlier was understood to have included Macquarie Bank, Deutsche Bank and Blackstone at an earlier stage.

The sale and transfer of the loan portfolio is expected to be completed by 31 October 2014.

Project Avenue is the remaining property loan book from the UK branch of Laiki Bank, also known as Popular Savings Bank Limassol, which was absorbed into the BoC in late March 2013 to protect against a disorderly bankruptcy after the European Central Bank (ECB) rescinded financial assistance to the failed bank.

The original Project Avenue portfolio had an outstanding balance of £296.4m and was comprised of – split 59% residential and 41% commercial real estate.  A recent desktop real estate value of £626m, implying a modest weighted leverage, based on the original pool, of just 47.3%.

In addition, a combination of personal and corporate guarantees, including additional non-real estate asset pledges, takes the entire security against the original £296.4m outstanding debt to £991m.  

The weighted average all-in interest rate across the granular loan pool is 5.4%. By geography, Project Avenue is 82% Greater London, 9% South East, 4% Midlands, 3% South West  and 2% others.

CoStar News reported on the Project Avenue when it came to market before the summer, the original story can be seen here

BoC said the transaction will enhance the Group’s liquidity and will have a small positive impact on the group’s Common Equity Tier 1 capital 2 due to the release of risk weighted assets.

The bank added: “The sale of the loan portfolio is in line with the group’s restructuring plan and is part of the group’s strategy of deleveraging through the disposal of non-core operations and of focusing on core businesses while, at the same time, strengthening its capital and liquidity position.

“The above transaction complements the ongoing deleverage of UK loans from the wider UK portfolio transferred from Cyprus Popular Bank Public Co Ltd, noting that an additional £261m (€325m) of gross loans have been deleveraged at par value since March 2013, through redemptions or refinancing from third parties.”

About CoStar News

Finance Editor, CoStar News
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