Lloyds Bank is preparing to sell €4bn (£2.5bn) of loans secured against Irish real estate.
It has appointed Deloitte to sell the portfolio, codenamed Project Poseidon, which is secured against 2,000 assets spread across the country and has a bias towards residential property.
The exact make-up and structure of the sale is still being determined and could be changed subject to buyer interest.
The portfolio is highly granular, with an average loan size of close to €5m. Despite the dramatic resurgence in the Irish market the loans are of a low quality and are expected to be sold at a large discount.
Lloyds, like most large lenders to the Irish market before the crash, has now disposed of the majority of its highest quality loans and the sale is typical of the type of product available in the Irish market at present.
However, with the weight of money raised by private equity firms to spend on European real estate, and distress diminishing, there is still expected to be strong interest.
It is unlikely to appeal to some traditional, early entrants into the Irish market, such as Cerberus Capital Management and Lone Star, which prefer projects secured against larger assets. Instead buyers such as Goldman Sachs, CarVal and Apollo Global Management are more likely to compete for the assets.
Because of the sheer number of properties, buyers are unlikely to be able to value and underwrite the majority of the assets individually, as is possible with portfolios with fewer, larger assets, and will instead only assess a sample of the assets in order to determine the size of their bids.
A source said: “Those late to the game will find it tough and I wouldn’t be surprised if new names start to emerge for these portfolios and end up overpaying and getting hurt.”
Lloyds has made rapid progress in decreasing its non-core Irish real estate in the past 18 months, including the €2bn sale of Project Parasol to Goldman Sachs and CarVal last December.
