HSH invites bids for €3.2bn loan sale

Germany’s HSH Nordbank has called for bids for its €3.2 billion (£2.7 billion) loan portfolio, which contains a significant proportion of real estate debt.

According to a report in The Times, the German bank called for bids for the portfolio, known in the market as Project Leo, last week. In its results for the first three quarters of 2016, the bank said: “The disposal is to be completed by the middle of 2017, with a substantial proportion to be sold in the fourth quarter of 2016.”

HSH Nordbank, which took a huge hit from losses on shipping loans during the Global Financial Crisis, is in the process of cleaning up its non-core loan book ahead of a sale of the business. In May, it won European Union approval for an increased state guarantee, which paved the way for a change in ownership by 2018.

The bank first announced the Project Leo sale in September, when it said that it intends to sell a portfolio of mainly non-performing loans, of which disposals of around €1.6 billion are envisaged this year. UBS was appointed to handle the sale, which also includes infrastructure, shipping and aviation loans.

EuroProperty reported in November that the portfolio contains debt secured by the 39,000 square foot Cannon Place building in London, which was developed by Hines. Underlying assets are also reported to include Cisco Systems’ Bedfont Lakes headquarters near Heathrow airport and offices at Riverbank House in London.

In October, Reuters reported that Deutsche Bank, Credit Suisse, Citigroup, Apollo Global Management, KKR and Oaktree Capital Management were among 20 firms expected to make bids for the portfolio.

Meanwhile, Cerberus Capital Management has been selected as the preferred bidder for a major Irish loan portfolio. The US private equity firm is to buy Project Gem, a circa €3 billion face-value loan book which is expected to be the last major portfolio to be sold by Ireland’s National Asset Management Agency (NAMA).

Cerberus beat competition including from Oaktree Capital Management and Goldman Sachs, according to an Irish Times article. NAMA instructed Eastdil Secured to sell Project Gem in July.