Royal Bank of Scotland (RBS) is understood to be considering selling a £1bn Spanish property loan portfolio after hiring Morgan Stanley to advise on its options.
The Spanish commercial property loans add to a £3bn portfolio of British real estate loans also on the block. Private equity firms and specialised investors looking to pick up the assets at a discount would be the likely buyers. Part-nationalised RBS is attempting to shrink its “non-core” division and has said it may sell assets.
There were £44bn of real estate assets in its non-core division at the end of June, down from £63bn at the end of 2008. At the end of last year 42 per cent of the non-core portfolio assets were in Britain, and a quarter were in Continental Europe.
At least three potential bidders – Goldman Sachs, distressed debt fund Lone Star and private equity group Blackstone – were said to be eyeing the £3bn British portfolio in early October, although RBS said at the time it had not decided whether to sell or not.
The Spanish portfolio is mainly made up of debt secured on commercial real estate. RBS was a big lender to Spanish developers in the run-up to the financial crisis, and has ended up as a stakeholder in property company Inmobiliaria Colonial after a debt-for-equity swap. The real estate sales are part of RBS’ five-year plan to clear £250bn of non-core assets off its balance sheet, as it capitalises on improving loan prices to sell at a small discount.
RBS last week sold €250m worth of European mezzanine debt, a riskier type of loan ranking further down the capital structure and typically used to back leveraged buyouts. That portfolio went to about 25 different buyers, according to one distressed debt fund manager. The bank also disposed of another big chunk of its leveraged loan exposure in August, when it sold a €1.4bn portfolio of senior loans to Intermediate Capital Group.
City A.M. Reporter