Sunday 21 January 2018

Green eyed up €1.2bn deal for Lloyd's loans

The Irishmen at Lone Star fund bag massive 'Project Royal' loan book

Nick Webb

Nick Webb

Stephen Vernon's Green Property is understood to have bid for the €1.2bn Project Royal block of commercial property loans sold off by British bank Lloyd's last week.

However, the Irish still managed to land the deal as Texan fund Lone Star is believed to have paid more than €1.2bn for the loans. Lone Star was set up by John Grayken, who is thought to have become an Irish citizen in the 1990s.

Lone Star's other key player was Ellis Short, who became an Irish citizen in February 2010. Mr Short is chairman of Premiership football team Sunderland.

The sale of the €1.2bn Lloyd's Bank Project Royal attracted interest from Green Property early in the auction. Final-round bidders are understood to have included giant private equity firms Cerberus and Colony Capital.

Lone Star has become increasingly active in buying up property loans from ailing banks, who are seeking to shrink balance sheets.

Last July, the Sunday Independent revealed that Lone Star had entered the race to buy a big chunk of Anglo Irish Bank's $9.65bn (€7.2bn) US book.

The private equity subsequently inked a deal to buy -- the $5bn block of loans was the largest non-performing and subprime book to hit the market since the crisis began in 2008. Wells Fargo and JP Morgan bought Anglo's US performing loans.

While Green Property may have stepped back from the Project Royal deal, it is possibly the only Irish property firm with the firepower to do major acquisitions.

Earlier this year, it agreed a deal to manage more than €1bn in commercial property loans for Bank of Scotland.

The company, which was taken private in a €1bn-plus deal back in 2002, has also teamed up with Ryanair chairman David Bonderman's private equity behemoth TPG to target up to €900m in property loans or assets.

It also manages more than €1.5bn worth of property for AIB -- much of it part of the Achilleas Kallakis portfolio. Mr Kallakis is standing trial for fraud in London. It is alleged that he masqueraded as a Greek shipping tycoon in order to get up to €740m in property investment loans from AIB and other banks. AIB transferred the loan assets to Green Property at a loss of €63m after questions over the Kallakis business emerged.

Changes in last week's Budget to reduce commercial property stamp duty and to tweak commercial property tax breaks may help to re-animate the flatlining domestic market.

Election promises to look at scrapping upward-only rent reviews were dropped last week. Major property investors have welcomed this move, while retailers are in uproar over the decision.

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