Ulster Bank has selected a three-strong shortlist to progress to the second round its third Irish non-performing real estate loan portfolio, the €1.7bn Project Aran.
Project Aran is expected to price between €500m and €600m, CoStar News understands, which would reflect a discount to nominal value of between 65% and 70%, approximately.
Project 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 average occupancy across Project Aran is just north of 60%.
Final binding bids on Project Aran are due early December, with a single winner expected to be picked for a closure before the year end.
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.