Nationwide readies £1bn loan book sale

Nationwide is preparing to sell a portfolio of £1bn of loans held against UK real estate.

The building society is understood to have appointed Deloitte to carry out the process. Held against predominantly secondary assets issued to around 40 different borrowers, significant elements of the portfolio are thought to be performing or sub-performing rather than made up of heavily distressed positions. As a result of this, and the general buoyancy of the UK market, the book is not expected to be sold at a deep discount.

The sale is part of general drive by UK lenders to strengthen their balance sheets and take advantage of strong interest from private equity buyers trying to increase their exposure to the recovering European property sector.

For Nationwide the sale is the latest part of a deleveraging drive that saw it sell off a portfolio of €850m of loans held against German assets to Oaktree Capital Management in April. Codenamed Project Adelaide, that sale was also driven by Deloitte and the loans were held against around 200 properties and sold for around €650m.

In the building society’s latest annual report published in May it said: “We have made significant progress in reducing our exposure to non-core commercial real estate by reducing out balances by 24% over the past year; our total exposure now stands at £7.8bn [a reduction of £2.4bn over the course of the year] and since the year end we have reduced our exposure by a further £0.7bn through the sale of non UK commercial real estate assets [Project Adelaide].”

Nationwide’s deleveraging drive is led by head of the restructuring team and director of specialised support, Steve Clegg who joined in May last year. He was formerly a senior director at Royal Bank of Scotland responsible for restructuring real estate and CMBS loans.