Lloyds Banking Group is ramping up the disposal of its real estate debt positions by launching the sale of a £1bn portfolio of distressed commercial property loans.
The part-nationalised lender has appointed JP Morgan Cazenove to advise on the sale of the loans secured against offices, shops and factories that are managed by the bank’s business support unit.
The loan book does not include debt against any hotels or residential assets, and all the properties are outside of London.
JP Morgan is understood to have approached a small number of debt investors expected to include Blackstone, Apollo Global Management, Lone Star, Starwood Capital, Westbrook Partners and Texas Pacific Group.
It is understood that Lloyds will not follow the model used by RBS, which kept a 75% stake in a £1.6bn portfolio of loans it sold to Blackstone earlier this year.
Instead, LBG intends to dispose of the portfolio in a straight sale in order to speed up the deleveraging process of its £24bn real estate loan book.
The discount at which the portfolio will sell has yet to be determined, and will be based on factors such as loan performance, tenancy profile and vacancy rate.
It is the first time the bank has packaged up loans for sale, and marks a clear change in strategy following on from its ongoing £47m Flagstaff portfolio sale, which was a package of 35 assets.
Last year, it sold around £4bn of real estate either through forcing administration or encouraging an investor exit, and has sold a further £1.8bn in the first half of this year.
