National Australia Bank has sold a portfolio of largely non-performing UK commercial real estate loans to Cerberus Global Investors for £625 million (€789 million; $1.1 billion), the bank confirmed in a statement on Tuesday.
Cerberus has been an extremely active participant in the market for loan portfolios over the last 12 months. Deals include the acquisition of almost €1 billion of consumer and personal loans from UniCredit in December, and a large portfolio of real estate debt from Irish ‘bad bank’ NAMA in April this year.
The deal represents “a substantial de-risking of the [UK commercial real estate] portfolio, reducing the gross loans balance by 20 percent to £2.38 billion as at 30 June, and reducing gross impaired loans by 48 percent.”
Andrew Thorburn, the incoming chief executive of NAB Group, said: “We’ve progressively reduced our exposure to UK commercial property loans through organic run-off. This sale represents a substantial de-risking of the non-performing portion of the NAB UK CRE portfolio.”
The deal resulted in a small gain above net book value and will release an estimated £127 million of capital to the NAB Group on completion.
Analysts predict the improving UK economy and appetite from investment groups such as Cerberus for distressed or non-performing loan books will enable to NAB to offload the remainder of its UK CRE portfolio within 12 months.