Lone Star has been selected as the preferred bidder for Lloyds Banking Group’s Project Royal loan portfolio.
The US private equity manager beat competition from Cerberus Capital Management and Colony Capital. No contracts have yet been signed, but the bank is keen to complete the deal by the end of the year.
The original portfolio put up for sale by Lloyds consisted of around 250 loans with a face value of £1bn extended to around 35 borrowers. However, since the beginning of the process, around £100m of these loans have been repaid, taking the loan portfolio’s face value down to £900m.
Bids for the portfolio came in at around £650m, but the final purchase price for the book reflects the change in size of the portfolio.
Lone Star’s bid is backed by £300m of senior debt from Royal Bank of Canada and Citigroup, which are thought to be taking an equal share. The senior debt is priced at 600 bps over LIBOR.
The loan portfolio sits in the bank’s £23.6bn Corporate Real Estate Business Support Unit (CRE BSU), headed by managing director Richard Dakin.
Lloyds refused to comment.
bridget.oconnell@estatesgazette.com
