Reuters: Private Equity: Lloyds readies sale of UK property loan portfolio

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Lloyds readies sale of UK property loan portfolio May 23rd 2012, 14:57 By Tom Bill LONDON | Wed May 23, 2012 10:57am EDT LONDON May 23 (Reuters) - Bailed-out Lloyds Banking Group is preparing to sell a second and smaller portfolio of loans backed by UK commercial property, a source close to the process told Reuters. Offloading the so-called Project Royal II portfolio would follow the 900-million pound ($1.4 billion) sale in December of the first batch of loans to US private equity firm Lone Star at a reported discount of about 40 percent to face value. Lloyds declined to comment. UK banks lent tens of billions of pounds against property during the profligate years before the global credit crisis, much of it housing, shops and offices outside the best locations such as central London, which have suffered more in the economic slowdown. Lloyds, 40 percent owned by Britain's government after a bailout, acquired most of its property loans through the purchase of troubled rival HBOS at the height of the global crisis in 2008. New financial rules such as Basel III, and recent directives from the European Banking Association governing the health of banks' balance sheets, will trigger deleveraging of between 1.5 trillion and 3 trillion euros in Europe, a report by property consultancy DTZ said in February. Opportunity funds and US private equity firms such as Blackstone, Lone Star and Cerberus have boosted staff numbers in Europe in recent months, in the hope of buying portfolios of underperforming real estate debt from banks. Last December, a fund run by private equity group Blackstone bought a portfolio of 30 property loans worth 1.4 billion pounds from Royal Bank of Scotland at a 30 percent discount. Link this Share this Digg this Email Reprints

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