Private equity firm Lone Star and US bank Wells Fargo are in exclusive negotiations to buy a £4 bn (€3 bn) package of UK property loans being sold by Commerzbank's Eurohypo unit.
Private equity firm Lone Star and US bank Wells Fargo are in exclusive negotiations to buy a £4 bn (€3 bn) package of UK property loans being sold by Commerzbank's Eurohypo unit.
The deal - which could be finalised as early as May - would be the largest disposal of real estate debt by a European bank since the financial crisis.
According to a news report in the Financial Times, Lone Star is targeting the distressed section of the loan book with Wells Fargo focusing on the performing loans. The £4 bn price tag represents the nominal value of the portfolio.
The offer price is reportedly expected to reflect a discount of about 10% on the face value of the performing loans - which account for three quarters of the portfolio - and a 25% discount for the distressed loans, the FT reported.
The disposal is part of Commerzbank's strategy to wind down Eurohypo as a condition for a €18 bn bailout received by the European Union in 2009.
The sale is being managed by Barclays.
The operation mirrors Wells Fargo's acquisition in June of last year of Eurohypo's loan portfolio in the US. In that case, the US bank teamed up with Blackstone to buy a $760 mln (€605 mln) performing loan portfolio from the German lender.
The package, consisting of 13 loans backed by office, retail, industrial and multifamily assets across the country, was divested for an average 5% discount to par value.
