Lloyds Banking Group is ramping up the disposal of its real estate debt positions by launching the sale of a £1bn portfolio of commercial property loans.
The lender has appointed JP Morgan Cazenove to advise on the sale of the distressed loans secured against offices, shops and factories that are managed by the bank’s business support unit.
The loan book, which has a face value of £1bn but will be sold at a discount, does not include any debt secured against hotels or residential assets, and all of the properties are outside London.
It is the first time the bank has packaged up loans for sale, and follows a number of other lenders, including Royal Bank of Scotland, that asre pursuing this process.
The sale is still at an early stage, but the Financial Times reported that the bank intends to target a small number of investors and would like to complete a deal by the end of the first quarter of next year.
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 from its £24bn real estate loan book.
Last year, Lloyds 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.
It is still in the process of completing the sale of the Flagstaff portfolio of 35 assets to Telereal Trillium for around £47m, the first time it had packaged up distressed assets – all in receivership – from different borrowers for sale.
Bridget.oconnell@estatesgazette.com
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