NatWest sells £400m distressed shopping centre debt portfolio

UK government-owned lender NatWest has sold a £400m (€470m) portfolio of loans secured against 15 UK shopping centre assets to a consortium including investment firms Attestor and Octane Capital Partners.

The bank said the Project Mercatus loan portfolio of assets has been sold to the consortium which also includes community retail asset manager Ellandi.

The shopping centres involved are:

Antonine Shopping Centre, Cumbernauld
Bradford Broadway Shopping Centre and the adjoining Light Cinema, Bradford
Bouverie Place Shopping Centre, Folkestone
Cribbs Causeway, Bristol
Erneside Shopping Centre, Enniskillen
Highcross Shopping Centre, Leicester
Manchester Arndale, Manchester
Newlands Shopping Centre, Kettering
Sunniside Leisure, Sunderland
Swan Centre, Eastleigh
Thamesgate Shopping Centre, Gravesend
The Lanes Shopping Centre, Carlisle
The Marlowes and Fareham House, Hemel Hempstead
The Precinct, Coventry
Wellington Way Shopping Centre, Waterlooville

NatWest said it plans to redeploy the proceeds from the sale into its future lending to UK business, “allowing the bank to continue to focus its support of the economic recovery from the pandemic”.

Phil Hooper, the head of real estate at NatWest Group, said: “The shopping centre sector has been under pressure for a number of years, and this has been greatly exacerbated by the Covid-19 pandemic.

“Whilst we have looked to support all our customers through the market disruption caused by Covid-19, in some cases a sale provides the platform for the most sustainable long-term solution.

“Through this trade we have looked to engage with Investors who will continue to work with the customers on a medium - long term basis, and we will re-invest the funds received to further support the UK recovery.”

James Rowney, the head of solutions, restructuring, NatWest Group, said this portfolio sale demonstrates the bank’s ability to find liquidity for commercial real estate assets that have financial challenges and that may require additional investment and re-configuration to meet current and future shopping needs.

“A key part of our decision-making process was therefore an aligned approach with potential investors and Attestor, Ellandi and Octane Capital have been clear throughout this process about their desire to engage positively with these institutional customers and support the shopping centres for mutual long-term benefit.”

The shopping centres involved are: