Lloyds property sales under pressure after exodus

Published on Friday 23 October 2009 21:45

LLOYDS Banking Group's efforts to sell off property assets is under strain after losing two senior real estate specialists.

The bank is currently in talks with potential buyers, including the real estate arm of insurer Legal & General, to sell off troubled assets in deals that could generate millions of pounds for the lender.

The assets are part of an estimated 70 billion loan book – much of it accrued by HBOS under its former head of corporate Peter Cummings – a mix of lending and equity in UK-based property companies and assets.

It emerged yesterday that two executives, Nick Robinson, the former managing director of real estate at HBOS, and joint ventures equity director John Moran left Lloyds last Friday "for personal reasons".

Lloyds is looking to raise an estimated 25bn in order to evade the government's asset protection scheme, a plan that is likely to get the green light from the Treasury within days. An estimated 10bn to 15bn of this is likely to be raised in asset sales.

Recently the bank offloaded its loss-making Halifax estate agency business for 1 and sold the Bank of Scotland investment portfolio management service to wealth manager Rathbone Brothers for 35.4m.

Until now, both Lloyds and the Royal Bank of Scotland – which itself has a UK property loan book estimated at 45bn – have been drip-feeding property assets on to the market. Too much too soon would "kibosh them and kibosh the market. That is not going to happen," said one insider.

Lloyds has also put up for sale its hotel on George IV Bridge, Edinburgh – occupied on a long lease by Rezidor – for 37m. It is also marketing Silverburn shopping centre in Pollock after its developers, Guernsey-based owner Retail Property Holdings, went into administration. Sources said selling the 350m shopping centre at an expected 100m discount marked the start of a series of property sales by Lloyds which is keen to offload overvalued assets.

When he left, Robinson said Lloyds had "a plan to manage the distressed loan book and how to manage our core book".

The bank has been working with its property customers to sell off property but many of these have been off market and "below the radar".

One source said: "They don't want to set any hares running. They don't want to distress sell."