Aviva is to sell £2.5bn of assets and loans as it nears the end of the workout of its non-core real estate division.
The portfolio, codenamed Project Loch, is made up almost equally between assets from
all sectors that are in receivership or administration and loans, the majority of which are performing.
Deloitte and JLL have been appointed to sell Project
Loch, the former focusing on the loan element and the latter on the assets. The sales process could formally commence as soon as next week and at the latest at the end of the month.
The portfolio is expected to attract the interest of some of the world’s largest real estate private equity buyers.
It is likely to be one of the last major UK bank portfolios to hit the market. Lenders that were left with distressed loans and assets after the financial crisis such as Lloyds, Royal Bank of Scotland, Nationwide and Irish Bank Resolution Corporation have largely completed their disposals.
Project Loch is structured with performing loans and assets, because loans that were previously non-performing have been enforced upon prior to the sales process. It is relatively granular with the average size of the loans in the region of £2.5m. They are expected to be sold at close to their face value due to being performing.
Aviva’s real estate restructuring is being led by Ewan Tocher, managing director of UK life commercial mortgage restructuring, portfolio solutions and credit, . He joined from Lloyds Banking Group in 2013, having previously been head of corporate real estate business support and non-core.
So far disposals by Aviva have only involved the sale of assets. The process began in earnest with the sale of the £400m Project Moon portfolio in November 2013 to Apollo Global Management. This was followed last year by the £153m Project Tree and £500m Project Bridgett that were sold to Tristan Capital Partners and Kennedy Wilson Europe Real Estate respectively.
Despite Aviva’s sell-off of
non-core loans it continues to grow its new lending business under managing director of Aviva Commercial Finance, Barry Fowler, and has a core loan book of more than £13bn (see p40).
