The Blackstone Group, Lone Star Funds and Starwood Capital Group reportedly are interested in acquiring a portfolio of UK commercial real estate loans currently held by a Commerzbank subsidiary, in what could be one of the largest debt sales since the start of the global financial crisis.
Commzerbank is endeavouring to delever its balance sheet and is understood to be exploring a sale of up to £5 billion (€5.7 billion; $7.4 billion) of real estate debt, according to the Financial Times, as an alternative to holding the loans to maturity. A spokesman for Commerzbank declined to comment.
The bank, Germany’s second biggest lender, last year placed the loans into a specially-created subsidiary designed to house assets in run-off. The loans were managed by the UK property business unit of mortgage company Hypothekenbank Frankfurt International, formerly known as Eurohypo.
Barclays reportedly has been mandated to run the sale process. The loans have a book value of up to £5 billion and are of high quality, suggesting a discount of less than 10 percent to 15 percent is likely, according to reports.
Capital injections from national governments and the European Central Bank have delayed or eliminated the expected wave of loan portfolio sales by European banks in the wake of the economic crisis. If it goes ahead, the Commerzbank deal is likely to be one of the largest sell-offs since the crisis began.