Lone Star, Kennedy Wilson Bidding for $2.6B Irish Loans

Lone Star, Kennedy-Wilson Said Among Lloyds Irish Loan Bidders
Lloyds decided two years ago to close and run down the Irish unit it acquired two years earlier as part of its 2008 takeover of HBOS Plc. Photographer: Paul Thomas/Bloomberg

U.S. investment firms Lone Star Funds and Kennedy-Wilson Holdings Inc. are among remaining bidders for parts of about 2 billion euros ($2.6 billion) of mainly Irish real estate loans Lloyds Banking Group Plc is selling, two people with knowledge of the matter said.

The U.K.’s second-biggest government-aided bank attracted bids of 10 to 15 cents in the euro for the so-called Pittlane portfolio, which is being sold in two pieces, according to two people, who asked not to be named because the matter is private. Initial bids were made in mid-September, with winners scheduled to be chosen next month, they said.

Lloyds decided two years ago to close and run down the Irish unit it acquired two years earlier as part of its 2008 takeover of HBOS Plc. The bank has taken 11.8 billion pounds ($18.9 billion) of impairment charges on Irish loans since the nation’s real-estate market collapsed four years ago, according to data compiled by Bloomberg News.

“The headline valuations on the portfolio highlight the still difficult outlook for property prices domestically,” Eamonn Hughes, an analyst at Dublin-based Goodbody Stockbrokers, said in a note Oct. 8. “Also, the valuation will reflect the desire of the vendor to exit Ireland.”

Lloyds rose 4 percent at the 4:30 p.m. close in London, while the benchmark FTSE 100 Index fell 0.6 percent. The shares have risen about 49 percent this year.

Irish commercial real estate prices have plunged by two-thirds from their 2007 peak, according to Investment Property Databank Ltd., while residential property values have fallen by 50 percent, according to the country’s statistics office.

Leading Contender

The Sunday Times reported on Oct. 7 that Kennedy-Wilson was the leading contender to acquire the Lloyds portfolio.

Spokesmen for Lloyds and Dallas-based Lone Star declined to comment. A Dublin-based spokesman for Beverly Hills, California-based Kennedy-Wilson wasn’t immediately in a position to comment.

Lone Star was one of three firms that won the bidding for $9.2 billion of U.S. loans sold by Irish Bank Resolution Corp., formerly Anglo Irish Bank Corp., last year. It bought more than 900 million pounds of mortgage-backed loans from Lloyds in December at a 40 percent discount to par value, two people with knowledge of the matter said at the time.

Kennedy Wilson made its first foray into the Irish market in June 2011 with the purchase of Bank of Ireland Plc’s real estate investment management unit, with 1.6 billion euros of assets under management, mainly in western Europe.

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