First Portuguese NPL ‘Project Twins’ out, Inside NAB’s Chestnut, RBS planning Mansell, Final bids on Avon on Monday, NAMA’s €425m Spring nears

By James Wallace - Friday, May 30, 2014 15:15

Banque de Commerce et de Placements (BCP), the 51-year old Swiss bank, is selling around €300m of Inmobiliaria Chamartín’s debt, predominantly comprised of loans to its Amorin subsidiary for which a similar-sized tranche of connected debt was recently acquired by Lone Star in Project Octopus.

Stormharbour has been mandated to sell the first exclusively Portuguese non-performing loan portfolio to emerge post-crisis, in a process which has been dubbed Project Twins.

Inmobiliaria Chamartín, a Spanish commercial property developer, manager and owner, acquired Portugal’s Amorin Group, for around €500m in 2006 including debt, as part of a stated expansion plan to open 30 malls across Europe over a five-year horizon.

The global property crash and credit crisis swiftly put paid to those ambitions.  In 2013, Chamartín restructured its defaulted debt – by reducing it from €1.2bn in 2010 to €1bn after asset disposals– with its consortium of Continental lenders, including BCP and Eurohypo.

Chamartín still owns 10 shopping centres in Portugal and three in Spain under the brand 'Dolce Vita'. In addition, through Retailgeste, Chamartín has 19 shopping centres malls for other owners throughout Portugal and Spain.

Project Twins is comprised of around €190m of outstanding debt at the Amorin company level, a further €60m at the Chamartín company level and €50m at the asset level. 

The syndicated first and second lien commercial mortgages are secured by a share of the outstanding 10 Amorin shopping centres, which include Dolce Vita-branded shopping centres in Porto, Douro and Coimbra.  There is also some small exposure to office and residential assets.

Lone Star acquired €313.5m of Amorin’s outstanding nominal debt as part of its wider €1.5bn purchase of the sub and non-performing loan tranches of Project Octopus from Commerzbank, the parent of the formerly-named Eurohypo.

The Project Twins debt could aid an investor seeking to strengthen its position within the Chamartín capital stack which may appeal to Lone Star. Alternatively, if Lone Star is a seller of its own stake within Octopus, it could pave the way for the existing Iberian banks or opportunistic private equity or hedge funds.

The Project Twins dataroom opened on Wednesday and first bids are called for the end of the month. Around 40 NDAs have already been signed and with no set hurdle price set, BCP is understood to be a committed seller targeting a trde in mid to late July.

Inside NAB’s £674m Project Chestnut

National Australia Bank (NAB) has begun the sales process of its first UK non-performing loan portfolio, the £674m Project Chestnut.

Morgan Stanley has been advised to sell the two-tranche UK loan portfolio, comprised of loans originated through NAB’s UK banking subsidiaries, Clydesdale and Yorkshire banks.

By unpaid balance, just under two-thirds of the outstanding debt, or 65.6%, is secured by Project Chestnut’s first granular subpool, while the second subpool is residential-dominant.

Project Chestnut’s ‘Pool A’ is comprised of 123 loans with a gross balance of £442m, against a current carrying market value of £381m, implying a weighted LTV of 116%.

The loans in pool A – secured by 255 commercial properties, 490 residential assets across 71 connected borrowers – are either already in default, passed maturity or near maturity. Around 80% of the assets within pool A remain cashflow producing.

The granular subpool includes £316m worth of loans which are all sub £20m each, reflecting 71.5% of pool A.

By sector, pool A is 35.7% secured by residential assets, 21.9% by office assets, 15.5% by retail assets, 9.1% by industrial assets, 7.5% by tourism and leisure properties and the balance in mixed use and miscellaneous.

Project Chestnut’s ‘Pool B’ is comprised of 309 small business loans with a gross balance of £232m secured by 1,448 of residential properties and 157 of commercial properties.

Just under three-quarters, or 74% of pool B’s loans are in default, however the aggregate market value of the subpool is £247m, implying a weighted LTV of 93.9%.

NAB has been mulling a potential loan portfolio sale for several months, after it first confirmed its intention to permanently exit UK commercial property lending two years ago.

No doubt NAB has been encouraged by the increasingly shallow discount to real estate value, and in turn unpaid balance, which loan portfolios are starting to trade.

One notable reference point for NAB is Nationwide’s €850m Project Adelaide sale to Oaktree for around €675m, supported by increasingly optimistic rental growth forecasts and expectant market liquidity.

Likely bidders on Project Chestnut, given the loan portfolio’s residential sector bias and granularity, include Carval Investors, Apollo Global Management, Oaktree Capital Management, Lone Star and Cerberus Capital Management.

RBS’ Project Mansell, Lloyds’ Avon final bids and NAMA’s Spring nears

Royal Bank of Scotland is preparing the successor Irish commercial property loan portfolio to Project Button with a loan portfolio dubbed Project Mansell, which is expected to come to market by the end of the summer.

Project Mansell is expected to include properties with an aggregate current real estate value of between €500m and €600m and will be divided into subpools, including one named Project Daly, implying the subpools could be constructed with different buyers in mind, similar to Lloyds’ Project Hampton and Pittlane.

Davidson Kempner won a pool of bilateral and syndicated loans held by Cosgrave Property Group in Ulster Bank’s Project Button, in one of the few loan portfolios on which no bids came in for the entire book. Davidson Kempner remains in pole on a number of other tranches in Project Button, the details of the loan portfolio can be seen here.

On Monday, final bids are submitted for Lloyds’ remaining £533.4m Project Avon, secured by 268 commercial properties with an aggregate market value of £400.4m.

Kennedy Wilson Europe Real Estate (KWE), which separately agreed to acquire a £115.9m six-strong non-performing senior loan tranche secured by five UK regional high-tech fire control centres (FCCs) for up to £93.5m, is expected to bid against Oaktree and Cerberus.

An overview of the remaining Avon portfolio can be seen here. Deloitte is selling Avon, on behalf of Lloyds.

The investment memorandum (IM) for NAMA’s circa €425m Project Spring and access to the dataroom is finally expected to be ready within the next two weeks, CoStar News understands.

Project Spring is much larger than originally reported and comprises loans extended to Irish property developer Gerry Conlan by domestic banks including Allied Irish Bank. While Conlan’s property empire includes three private hospitals, Mount Carmel in Dublin, St Joseph's in Sligo and Aut Even in Kilkenny, these are not included in Project Spring.

The Spring loan portfolio is predomianntly Irish collateral and a mix of residential and offices.

Separately, on Tuesday, CoStar News reported on the £296m Project Avenue, Bank of Cyprus’ inherited performing UK commercial and residential real estate loan book from Laiki Bank, formerly Cyprus’ second-largest bank.

For an overview of Project Avenue, please click here.

Finally, this evening – at 6pm CET time – is the deadline for initial expressions of interest in WestImmo, the German pfandbrief-funded European commercial property lending bank, which is being sold by bad bank Erste Abwicklungsanstalt (EAA) through JPMorgan in Germany.

For the full story, please click here.

All parties declined to comment.

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