Nationwide readies £1bn Project Carlisle UK NPL

Nationwide is preparing to bring to market a circa £1bn UK non-performing loan (NPL) portfolio, dubbed Project Carlisle, as the building society accelerates de-leveraging of its £7bn remaining legacy commercial real estate exposure.

CoStar News has learned that a group of between 12 and 15 loan buyers have been brought in under an NDA to look at the UK loan portfolio which has a face value of just north of £1bn.  

Project Carlisle is comprised of around 200 UK commercial properties with a real estate value north of £800m, and a blended net yield north of 7%.

Nationwide is yet to confirm its decision to sell Project Carlisle, but at this stage it is considered more likely than not.  A final decision is not expected until at least 10 days to two weeks, as the building society deliberates on likely pricing which is achievable and the consequential impact on Nationwide’s tier one capital.

A teaser document for Project Carlisle is yet to be published.

Deloitte has been appointed to run the sales process Project Carlisle, the building society’s second after selling its entire Continental European exposure in Project Adelaide to Oaktree Capital Management in April for £694m.

Nationwide’s legacy commercial property loan exposure fell to £7.07bn in May, according to its annual results, and is comprised of:

  • £2.62bn in NPLs comprised of £1.9bn secured by regional UK, £454m in the South East and £260m secured by London CRE;
  • £4.39bn in performing loans, comprised of £2.17bn in London, £782m in the South East and £1.44bn in the rest of the UK;
  • Approximately £65m in remaining European CRE-secured commercial property loans, following the £694m Project Adelaide sale.

Of Nationwide’s £4.39bn in performing loans, £3.07bn, or 39%, are impaired.

In its annual results, Nationwide stated that in the financial year to April 2015, £1.4bn of commercial real estate loans are scheduled to mature.  Of which, £900m, or 64%, have provisions against the individual loans of £0.5bn.  

The remaining £0.5bn in unprovisioned maturing loans have an interest cover ratio of greater than 130%.

About CoStar News

Finance Editor, CoStar News
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