AIB pulls sale of £100m UK property loans after bids fall short
Published 09/11/2012 | 05:00
STATE-owned bank AIB has pulled the planned sale of a £100m (€125m) portfolio of UK property loans.
The hoped-for sale is to meet a "deleveraging" target to sell non-core assets to pay off debt. The targets for AIB and other banks were set by the Central Bank last year.
It is understood the sale was pulled after bids for the portfolio known as Project Pivot fell short of a 40c in the euro minimum price the bank was seeking.
The sale had been in the works since July when the portfolio of loans, originally with a face value of £340m, attracted 20 first-round offers.
Despite the interest the deal struggled and the portfolio was slimmed down in an effort to maintain investor interest.
The auction ultimately collapsed this week when none of the final offers met the bank's reserve. AIB opted not to proceed with the sale rather than to drop its price
It is understood the bank believes the offers that were submitted fell short of the value of the loan portfolio.
The sale by AIB of loan portfolios is part of a wider trend repeated across other Irish and European banks.
The cancelled auction of the Project Pivot, however, is the first time a sale has failed to happen at the end of an auction process since the start of the financial crisis, according to the trade publication CoStar News which has been tracking the process.
It said the deal was pulled after two final bids from US investor Kennedy Wilson in partnership with Deutsche Bank and from Cerberus Capital Management fell significantly short of the 40c in the euro minimum reserve.
It has been reported that the sale was hurt by a lack of detailed information for buyers about the loans in the portfolio, and the properties secured on the assets.
CoStar said that this was in contrast to AIB's sale of a portfolio of €650m of Irish property loans dubbed Project Kildare that was successfully sold to Lone Star in October.
Morgan Stanley advised AIB on Project Kildare. Citi advised the bank on the latest, failed auction.