EXCLUSIVE: Lone Star in €600m NPL buy

Lone Star has bought another €600m of European non-performing real estate debt, winning part of Ulster Bank’s Project Achill sale, PERE's sister publication Real Estate Capital revealed.

The US private equity firm has bought half of all the Project Achillloans at a discount of around 35 percent, paying about €390 million, according to PERE's sister publication Real Estate Capital.

The whole €1.2 billion Achill portfolio was secured against Irish property, mainly in Dublin, on Northern Irish assets and a few in Scotland and the UK.

Lone Star has bought all of the multi-borrower tranches of the broader €1.2 billion package. Eastdil Secured is advising Ulster Bank, the Irish subsidiary of Royal Bank of Scotland.

Lone Star remains the largest buyer of non-performing property loans In Europe this year. Its purchases included the £5.2 billion Projects Rock and Salt in February from IBRC and the €4.4 billion Project Octopus from Commerzbank, in partnership with JPMorgan, secured against Spanish real estate.

Lone Star competed for the whole of Project Achill against Cerberus Capital Management, Oaktree Capital Management and Deutsche Bank, but it is understood that none of the latter three are buying any of the remainder of the portfolio which is being sold to different buyers in three separate tranches.

Bank of Ireland, Goldman Sachs and Davidson Kempner are tipped as potential buyers of the other tranches.

Lone Star’s acquisition comes at a time when there are a large number of European NPL portfolios on the market with the prospect of more to come as a consequence of banks deleveraging ahead of the impending Asset Quality Review. Some sources have started to question whether there are enough private equity buyers to buy them all.

One investor told Real Estate Capital, “You’ve got a massive volume of loans coming to the market in Ireland and the big question is if there are enough buyers for these loans. There is a danger of over-supply and everyone is looking at pricing very carefully.“

Achill is the first in a series of ongoing Irish loan sales including the €1.7 billion Project Aran, also being sold by Ulster; two from Lloyds Banking Group, €2 billion Project Parasol and €1.1 billion Project Paris; whilst Danske Bank has also been reported as readying an Irish portfolio.

In total Achill is made up of 3.5 million square feet of commercial property, over 800 acres of land, nearly 1000 hotel rooms and over 1,500 residential units. The portfolio includes 207 units at The ARC Apartments plus the 130,500 square foot Gateway Office, let to Citigroup, both at the Titanic Quarter in Belfast, although this is not in a pool bought by Lone Star which has acquired largely granular loa