Nationwide eyes adviser for German loanbook workout

Accountancy firms and investment bank are in the running to devise a sale or workout strategy for €1.1bn portfolio of NPLs and performing loans

Nationwide is selecting an adviser to draw up a workout strategy for the building society’s €1.1bn German real estate loan book. The building society has invited proposals from the big accountancy firms and one investment bank to advise on a workout or disposal plan and is about to make an appointment.

While possibly half of the book is non-performing, a source said Nationwide does not see itself as a forced seller. It considered divesting the non- core German property book last year, but pulled back because the indicative pricing would have meant taking losses above the provisions made.

Nationwide has since been focusing on the portfolio. In May it recruited Steve Clegg from RBS’s global restructuring team to lead work on the non-core portfolio, including the German loans. Part of the adviser’s role will be to consider any regulatory requirement that Nationwide must adhere to as a UK building society, the source said. Nationwide declined to comment.

Nationwide returned to the UK new property lending market in September, with new teams established in London and Manchester reporting to Mark Bampton, who is focusing on smaller real estate deals, up to £20m and on a bilateral basis where Nationwide sees less competition and more demand in the market. One area the teams have been looking at is financing single assets or small portfolios coming out of larger portfolio sales.

Elsewhere, the latest European non-performing loan (NPL) portfolio being marketed is a fifth from the receiver to Ireland’s IBRC. Project Pebble is €800m of mainly Irish commercial property loans for which KPMG is soliciting interest.

It follows hard on the heels of the larger Project Stone, the fourth IBRC package to be marketed, which includes around €9bn of loans, just under 50% secured on Irish assets, about 40% in the UK and 15% on the Continent. It includes the IBRC’s interest in the Whitgift Centre in Croydon, to be developed by Hammerson and Westfield, and the €200m Diagonal Mar shopping centre in Barcelona.

Bids were due in last Friday for Projects Rock and Salt. Rock now comprises around €5bn of loans, about 75% secured on UK property, some in Germany and a few in the US. Salt is €1.5bn and mainly UK, plus German and US, collateral.

The final portfolio is the Evergreen package of corporate loans, most to Irish companies. The Irish government had set the end of the year as the deadline for selling IBRC debt before it transfers to NAMA if it is unsold. But one adviser said: “The end of the year is too challenging. The reality is more like March next year.” KPMG is also advising Lloyds on Project East, the sale of a portfolio of loans made to owners of 39 UK hotels. Final bids are due on 3 December.

Final bids are due later this week for NAMA’s €250m Project Club Irish retail NPL package, which includes assets and development sites once owned by Eamon Duignan. Patron Capital has been tipped as the frontrunner. NAMA has also opened the data room for €400m Project Holly, secured on Irish property, to 20 prospective buyers. PwC estimates that €15bn of property NPLs were traded in the first eight months of 2013.