Lloyds offloads Aussie assets in cut-price deal

LLOYDS has offloaded a portfolio of Australian loans in a cut-price sale that brought in less than half of their face value.

As part of the bank’s drive to cut its balance sheet down to size, Lloyds sold real estate assets valued at £809m for £388m in cash, which it will use to reduce its debt burden.

The buyer, AET SPV Management, is a joint venture whose backers include Morgan Stanley Real Estate Investing and Blackstone, continuing a trend that has seen US firms keen to snap up bargains from deleveraging European lenders.

The bank said that it has already set aside provisions to absorb the losses from the sale. The assets, classified as non-core by the bank, are currently loss-making, costing Lloyds £183m last year.

The bank acquired its Australian business in 2009 as part of its ill-fated merger with HBOS, which it has spent most of the last three years unwinding. It plans to maintain a presence in the country, however.

Dave Smith, the head of Lloyds International, said: “This transaction further de-risks the Australian business, and results in a cumulative 92 per cent reduction of our real estate non-performing loan portfolio.”

Lloyds group chief executive António Horta-Osório has taken an axe to the bank’s balance sheet since he took the helm early last year in order to cut its reliance on wholesale funding and ditch billions in bad loans, many of them in property.

This year Lloyds plans to offload £30bn in assets, £5bn more than its original target. That is a slowdown compared to last year’s £53bn.

ADVISERS FORT STREET

RICHARD HUNT
FORT STREET ADVISERS

AUSTRALIANā€ˆfirm Fort Street Advisers led the deal to offload Lloyds’ property assets to a consortium of mostly American investors.

The team was led by Richard Hunt, one of seven principals at Fort Street, which is an independent financial advice firm covering deals in Australasia and based in Sydney.

Hunt was one of the original founders of Fort Street in 2010, having previously worked in Australia for 16 years at UBS.

During his time at the Swiss bank, he was co-head of investment banking for Australasia, head of real estate for the region and had a place on the board of UBS’s global investment bank board.

He worked on both equity and debt deals as well as mergers and acquisitions. Fort Street has also advised Lloyds International, the division selling the real estate loans, on several other transactions in the last year or so.

Those deals include the restructuring and subsequent sale of Orchard, a bundle of loans, and the sale of two other portfolios of loans, one in Australia sold to Morgan Stanley and another in New Zealand that Lloyds sold to Goldman Sachs and Brookfield.