Thursday 23 November 2017

Australia's Pepper to take over €600m of Danske's Irish loans

Peter Flanagan and Donal O'Donovan

AUSTRALIAN financial services firm Pepper Asset Servicing is to take over asset management of €600m worth of loans from Danske Bank, cementing its position as a little-known but important player in the Irish market.

The move will see Pepper manage loans on some 270 properties that are in receivership at the moment along with Arrow Asset Management, and "oversee the rationalisation of the receivership process for the portfolio and special servicing on behalf of Danske.

This is Pepper's second major foray into the commercial real estate asset management market in Ireland. The Australian firm set up here last September when it bought GE Capital's Irish subprime mortgage book and in January was appointed to manage €380m worth of distressed property loans that had been formally owned by Lloyds.

The deal also marks the second collaboration between Pepper and Irish commercial real estate management firm, Arrow Asset Management.

The head of Pepper's business in Ireland, Paul Doddrell, said the deal "marks another significant development in the company's growth strategy for Ireland".

"We're delighted to be partnering with Danske and this contract win represents a further endorsement of our expertise to provide a unique approach to managing commercial portfolios in this market.

"We continue to be very focused on growing the business in Ireland to establish it as a leading European loan servicing and real estate asset management operation and have recently invested significantly in our people and systems to help us realise this ambition," he said.

This is unlikely to be Pepper's last foray into the Irish market. The company's head of commercial property Brian Berg said the firm "continues to see significant servicing and asset management opportunities in the Irish market and to reflect this have invested significantly in expanding our real estate and asset management team".

"Our strategic partnership with Arrow has also given us the unique ability to provide end-to-end commercial real estate asset management services, which will be invaluable in capitalising on the current market opportunities," he added.

News of the Danske deal came as it emerged that Lloyds is considering the sale of about €650m of Irish real estate loans as the lender extracts itself from these shores.

Bloomberg claimed the bank will have to sell at a discount. Lloyds declined to comment.

Lloyds in 2010 began to run down and close the Irish unit it acquired two years earlier as part of a takeover of HBOS. More than 90pc of its €8bn commercial real estate loan book here is impaired.

As well as dumping the €380m portfolio that was ultimately managed by Pepper, Lloyds also sold some £1.5bn (€1.75bn) of Irish commercial real estate loans to Apollo Global Management for 10pc of face value last November.

Irish Independent

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