By Ed Hammond, Property Correspondent
Lloyds Banking Group seems poised to take a loss of about 35 per cent on a ?1bn basket of commercial property debt as it enters second-round talks with four remaining bidders for the portfolio, according to people familiar with the process.
The bank has been considering bids by dozens of private equity groups, opportunistic buyers and pension funds after launching its first sale of distressed real estate loans three weeks ago.
On Friday, Lloyds narrowed the field to four parties, each of which had tabled initial bids at almost ?650m, say the people, a price that would represent a 35 per cent discount to the loans? face value.
Acceleration of the process means a sale could take place before Christmas, rather than next year as expected. Lloyds? ambition is to unwind the ?24bn worth of bad property loans it holds.
The bank declined to comment on the process, which is being run by JPMorgan Cazenove, and would not name the remaining bidders.
Lone Star and Cerberus, the private equity funds, have been involved. It is unclear whether either group is among the final four.
Blackstone, the private equity group in negotiations with RBS about the purchase of a 25 per cent stake in a ?1.4bn book of distressed property loans, has quit the Lloyds sale, people familiar with the situation say.
The sale of a portfolio of loans marks a change in Lloyds? strategy. It previously only sold individual loans. The move could signal a more aggressive push to deleverage its balance sheet.
The bank?s disposals this year include the ?127m sale of The Mailbox development in Birmingham, helping it raise ?1.8bn during the first six months of 2011.
Lloyds completed a deal this month to sell 35 commercial property assets to Telereal Trillium, the property group. The sale is thought to have raised almost ?45m for the bank.
? The Financial Times Limited 2011