The three firms competing to buy Lloyds Banking Group’s £1bn Project Royal loan portfolio have until the end of the month to submit second-round bids.
US private equity managers Colony Capital, Lone Star and Cerebus Capital Management are all vying for the package, which comprises around 35 loans secured against UK commercial property valued at £700m in total.
The portfolio is a broadly even three-way split of non-performing, defaulted loans; loans that have matured and not been repaid; and performing loans.
Lone Star is working with its loan servicer subsidiary, Hudson Advisors, as it did with its bid for RBS’s £1.4bn Project Isobel disposal.
Cerebus owns a 25% stake in LNP Partners, which owns loan servicer Hatfield Philips.
Lloyds is to provide about half of the senior debt, which is expected to total over £300m, and wants to completed a deal by the end of the year.
The underlying assets include offices, shops and factories with loans within the bank’s £23.6bn Corporate Real Estate Business Support Unit, which is headed by managing director Richard Dakin. All the properties are outside London.
JP Morgan Cazanove is advising Lloyds Banking Group on the sale.
