Cerberus Capital Management has won National Australia Bank’s (NAB)Project Chestnut UK non-performing loan portfolio for around £485m, CoStar News has learned this evening.
Project Chestnut’s £674m original unpaid balance would imply an approximate 28% discount.
Pimco and CarVal Investors were principal underbidders in the four-strong shortlist which also included Oaktree Capital Management.
However, Oaktree is not thought to have submitted a final bid owing to its concentration on the MEPC UK business park portfolio for circa £435m, CoStar News understands, which the private equity firm won last Friday.
Binding bids for Project Chestnut were submitted last Friday, with the final decision reviewed and decided in Australia this week. NAB’s decision came on Wednesday.
Morgan Stanley has been advised to sell the two-tranche UK loan portfolio, comprised of loans originated through NAB’s UK banking subsidiaries, Clydesdale and Yorkshire banks.
NAB had been mulling a potential loan portfolio sale for several months, after it first confirmed its intention to permanently exit UK commercial property lending two years ago.
By unpaid balance, just under two-thirds of the outstanding debt, or 65.6%, is secured by Project Chestnut’s first granular subpool, while the second subpool is residential-dominant.
Project Chestnut’s ‘Pool A’ is comprised of 123 loans with a gross balance of £442m, against a current carrying market value of £381m, implying a weighted LTV of 116%.
The loans in pool A – secured by 255 commercial properties, 490 residential assets across 71 connected borrowers – are either already in default, passed maturity or near maturity. Around 80% of the assets within pool A remain cashflow producing.
The granular subpool includes £316m worth of loans which are all sub £20m each, reflecting 71.5% of pool A.
By sector, pool A is 35.7% secured by residential assets, 21.9% by office assets, 15.5% by retail assets, 9.1% by industrial assets, 7.5% by tourism and leisure properties and the balance in mixed use and miscellaneous.
Project Chestnut’s ‘Pool B’ is comprised of 309 small business loans with a gross balance of £232m secured by 1,448 of residential properties and 157 of commercial properties.
Just under three-quarters, or 74% of pool B’s loans are in default, however the aggregate market value of the subpool is £247m, implying a weighted LTV of 93.9%.
Cerberus declined to comment, NAB could not be reached for comment.