Three firms are on the shortlist to buy a property loan portfolio with a face value of €650 million from Allied Irish Bank. A preferred bidder for the portfolio is expected to be chosen within the next few weeks.
Dublin’s Sunday Business Post is reporting that, in addition to Beverly Hills-based Kennedy Wilson, Dallas-based Lone Star Funds and New York-based Goldman Sachs Group are in the running to buy the portfolio, having offered to buy the loans at a 50 percent discount. Lone Star declined to comment. At press time, representatives from Kennedy Wilson, Goldman and Allied Irish Bank could not be reached for comment.
Kennedy Wilson has been ramping up its European business ever since it purchased Bank of Ireland Real Estate Investment Management (BoI REIM) and its senior management team last year, thereby establishing a presence in Europe. Following its acquisition of BoI REIM, the firm bought a portfolio of London office, multifamily and retail property loans valued at $1.8 billion from the troubled Irish bank.
More recently, it was announced in March that Kennedy Wilson struck up a €250 million joint venture deal with Fairfax Financial to buy European commercial real estate assets, including loans and real property. In July, the firm teamed up with Deutsche Bank to target €2 billion in European commercial and residential real estate loans, with a focus on the UK and Ireland.
Meanwhile, Lone Star also has buying up property loans from European banks looking to reduce their real estate exposure. In April, Lone Star agreed to buy the A and B notes of Excalibur, Lehman Brothers’ €1.8 billion securitised legacy real estate debt portfolio, from Deutsche Bundesbank through an affiliate of its Lone Star Real Estate Fund II. In addition to a previous Excalibur purchase, the firm also won a €200 million portfolio from Société Générale earlier this year and bought a £900 million (€1 billion; $1.4 billion) portfolio known as Project Royal from Lloyds Banking Group in December 2011.
At the MIPIM conference in March, Juan Pepa, Lone Star’s managing director in Europe, said he was seeing significant deal flow from European banks that were under pressure due to mergers, state-sponsored aid and new regulations. “Today, in terms of volume of product in Europe, we see a lot,” he added.