AIB forges ahead with £550m portfolio sale

The Irish bank has appointed KPMG to sell the portfolio, codenamed Project Forge, which is backed by some 560 assets valued at about £420m.

It includes a broad range of property types including retail, leisure, offices and residential and the assets are spread across the UK, including some in Northern Ireland. As well as involving large numbers of small properties, the portfolio’s loans are also linked to more than 170 borrowers.

The portfolio goes to bids at the beginning of December and is likely to attract the interest of US private equity firms such as Lone Star and Cerberus.

The sale comes as AIB, which was once Ireland’s biggest high-street bank, begins the process of paying back the €21bn (£15bn) cost of its financial rescue.

The UK and Irish banks are now nearing the completion of their sales of non-performing property loans from the last crisis. As they work down through their books, more portfolios are emerging, such as Project Forge, composed of small lots and involving large numbers of borrowers.

Property Week understands that KPMG is also marketing another loan portfolio, codenamed Project Hurst. It is composed of loans made by Dunbar, a residential lender, once backed by James Bond actor Sean Connery and now owned by Zurich. The portfolio is smaller than Project Forge, but is similarly granular, comprising more than 100 assets and loans with a face value of about £150m.

The portfolios are coming to market after a number of significant sales in recent months of large portfolios comprising numerous borrowers and loans.

Last month, Ireland’s National Asset Management Agency sold the €6.25bn Project Arrow loan portfolio to Cerberus for a reported €800m and Ulster Bank’s €2.6bn Project Finn was sold in two parts this summer to Cerberus and a Deutsche Bank-Apollo joint venture. With large portfolios of small assets, bidders are making a macro-economic bet and hoping to deliver high returns by riding the market recovery.