Wednesday, December 7, 2011

How fast will the buyer want to make a profit?

Lloyds to sell £900m of property loans

'Lloyds Banking Group has entered exclusive talks with Lone Star, the US private equity group, over the sale of £900m of distressed property loans. The sale of the Project Royal portfolio is the largest loan disposal by a UK bank since the collapse of the property market in 2008 and could open the door to a flood of similar deals.'

Posted by hpwatcher @ 04:53 PM (2108 views)
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9 thoughts on “How fast will the buyer want to make a profit?

  • A bit more here

    Lloyds is understood to have selected Lone Star as preferred bidder on the portfolio late on Tuesday night, after rejecting bids from Cerberus and Colony Capital. Royal Bank of Canada and Citigroup are arranging the finance for the deal.
    Government-controlled Lloyds is expected to take a loss of up to 40 per cent on the original £900m value of the loans. However, a person close to the process said it was very unlikely there would be further impairments made to the value of the portfolio.
    The bank had received interest from dozens of private equity groups, opportunistic buyers and pension funds after launching its first sale of distressed real estate loans almost three months ago. The sale of a portfolio of loans marks a step change in Lloyds’ strategy. It previously only sold individual loans.
    The move could signal a more aggressive push to deleverage its balance sheet. Lloyds’ ambition is to unwind the £24bn worth of bad property loans it holds. The bank’s disposals this year include the £127m sale of the Mailbox building in Birmingham, helping it raise £1.8bn during the first six months of 2011.

    FT: Lloyds to sell £900m of property loans

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  • yup lone star are an interesting company in the USA they will lend to quite pi$$ poor customers with little or no chance of paying them back

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  • yup lone star are an interesting company in the USA they will lend to quite pi$$ poor customers with little or no chance of paying them back

    Lloyds is obviously taking a massive hit, but I’m not so sure Lone Star will. Must be quite unsettling for those folks with HBOS mortgages – who are behind with their payments – finding out that their mortgage is now held by a US company. After all, it’s isn’t so political having an american company repossessing you where previously it was a UK owned bank….

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  • If Lloyds are prepared to swallow a significant (40%) write down; then they are probably bailing out in anticipation of worse situations ahead.

    If they are dealing with the highest bidder then, just like other aspects of the property market, the buyer may not actually be able to raise the readies when push comes to shove. Leading to further delays and so it goes.

    Lone Star, Arlington and others are in an interesting market: one mistake on the bundles they take on and they are toast.

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  • general congreve says:

    Sounds like a positive move, as HPW says, this sort of write down is exactly what is needed to get the repossession ball rolling.

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  • So, why shouldn’t the mortgagees have the option to buy their mortgages at, say, a 30% discount from Llyods?

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  • So, why shouldn’t the mortgagees have the option to buy their mortgages at, say, a 30% discount from Llyods?

    They simply won’t have the money and it would be a nightmare to administer.

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  • Well it wouldn’t look good for a UK bailed out bank to start evicting families would it? Lloyds probably felt they had their hands tied behind their back.

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  • this is commercial loan book not residential

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