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Cerberus nabs RBS and NAB real estate portfolios

The US-based asset manager has bought £6 billion in par value UK and Irish commercial real estate loans from two banks.

Cerberus has purchased non-performing real estate loan portfolios from Royal Bank of Scotland (RBS) and National Australia Bank (NAB), it was announced today (16 December).

The £4.8 billion ($7.5 billion; €6 billion) par value portfolio acquired from RBS is made up of Irish commercial real estate loans collateralised by 5,000 assets, said a source close to the deal. A small portion of the portfolio is made up of loans to buy-to-let investors and around 25 percent is tied to assets in Northern Ireland with the remainder in the Irish state.

Cerberus paid £1.1 billion at current exchange rates, or around €1.38 billion ($1.73 billion) for the majority euro-denominated loans. The loans represented a risk weighted asset-equivalent value of £1.2 billion to RBS as of 30 September, according to an announcement by the UK-based lender.

At the start of the year, the bank had risk weighted assets worth £8.9 billion earmarked for disposal, said the source.

Cerberus has also won the bidding for a £1.2 billion portfolio of UK commercial real estate loans from National Australia Bank (NAB), releasing £127 million of capital for the bank.

The portfolio includes mainly defaulted and high loan-to-value loans and the sale reduces NAB’s for-sale bad asset portfolio to £836 million, from £5.6 billion in October 2012.

The firm’s real estate investments in Europe continue at a strong pace. Earlier this month Spain’s bad bank Sareb announced that Cerberus’s Spanish real estate management unit won the contract to manage 52,000 real estate loans issued by Spanish lender Bankia, and for which Sareb paid €18 billion.

The NAB portfolio sale is the bank’s second sale to Cerberus, the last was another chunk of its distressed UK commercial real estate portfolio in July for £625 million, as reported by PDI.