Lone Star has won Allied Irish Bank’s Project Kildare Irish non-performing loan (NPL) portfolio which has a nominal value of around €650m at a near 60% discount, CoStar News can reveal.
AIB selected Lone Star ahead of finalists Kennedy Wilson, in a joint bid with Varde Partners, and Goldman Sachs’ Special Situations Fund for the majority Irish commercial property loan portfolio.
Project Kildare comprises around 70 loans secured by an underlying collateral pool of more than 400 properties, including hotels, nightclubs, shopping centres and offices both in Dublin, the single largest geographic concentration, and the Irish regions.
The geographic concentration of Kildare is around 90% in Ireland and 10% in the UK, with the exposure in the UK the result of AIB following its predominantly Irish-focused clients abroad.
The Kildare NPL comprises performing and non-performing loans with some past maturity and many of the Irish loans have additional covenant breaches.
Morgan Stanley managed the sales process.
CoStar News understands that AIB has so far only been able to take modest provisions against the defaulted Project Kildare loans, with the closure of the deal before the year end likely to crystalise further losses for the bank in this calander year.
Kennedy Wilson and Deutsche Bank was Lloyds’ Banking Group’s Project Prince Irish NPL in June, paying around 17 cents in the euro, according to CoStar News’ report at the time,
Lone Star’s Kildare win is the private equity firm’s fourth in the last 12 months across Europe, after narrowly missing out on the 25% equity stake in the RBS’ Project Isobel for which remaining £463m acquisition finance was securitised last Friday.
In April, Lone Star won a circa €200m nominally-valued Société Générale NPL comprised French and German corporate real estate loans and senior loans, and financed at 50% loan-to-cost by a loan from Bank of America Merrill Lynch (BAML).
BAML’s loan-on-loan financing was the bank’s first since European real estate loan since the investment bank’s renewed appetite early this year. Lone Star and SocGen closed the NPL portfolio in June.
Lone Star also won the majority of the Excalibur portfolio from Germany’s Bundesbank, which closed in two trades, in January and April, and won Lloyd’s inaugural UK Project Royal NPL last December.
AIB has a second portfolio up for sale - the £383m Project Pivot UK NPL - for which final bids are due in on Thursday, while Lloyds has two NPLs which the bank is aiming to close before the year end, the £700m nominally-valued Scotland-dominated Project Forth, and the huge Irish NPL, the €2bn Project Pittlane.
All parties declined to comment.