UK BANK Lloyds has teamed up with Dublin company Green Property to help manage Irish commercial properties which have been put into receivership by the bank.
Green will offer property management services to receivers on assets in the €13 billion commercial property book at what was formerly Bank of Scotland (Ireland).
It is estimated that properties supporting up to €1 billion of commercial loans in Lloyds’ Irish subsidiary could fall under Green’s management if receivers choose to avail of the company’s services.
Lloyds closed Bank of Scotland (Ireland) last year, announcing its exit from the Irish market. The bank is being run down by a company called Certus, led by former management of the bank.
The agreement with Green is a sign Lloyds does not see an immediate recovery from its Irish loan book, given the lack of activity in the Irish property market.
“We are not talking about short-term solutions to many of these situations – these real estate assets require active management to preserve and enhance the value,” said Richard Dakin, managing director of Lloyds’s corporate real estate business support unit.
The arrangement with Green would help the bank to recoup more on the loans, he said. The bank stressed the deal would not lead to more receivers being appointed to use Green’s services.
“Receivership will always be the last resort option for us,” Mr Dakin said. “Where that happens, then obviously Green Property is going to be better able to help the receivers maximise the recovery on those particular loans.”
Lloyds was working with customers in financial difficulties “with the aim of helping businesses return to health”, he said.
Pat Gunne, managing director of Green, said €25 billion of commercial property was traded in Europe in the first half of the year, compared with just €150 million in Ireland.
“The market has essentially collapsed,” he said. “We are now talking about core asset management skills. Receivers do not have the resources to deal with the day-to- day running of the assets. This is a service to receivers where receivership is the last resort.”
Lloyds reported last week that £10.8 billion (€12.3 billion) of its £11.9 billion Irish commercial property loans were impaired at the end of June.
The bank may provide further finance to complete properties or increase asset values as part of the deal, said Andrew Wilson, head of solutions at Lloyds’ corporate real estate business support unit.
Green, which is best known as the owner of the Blanchardstown Shopping Centre in Dublin, would be paid fees for its services and would not take equity in the properties it manages, Mr Gunne said.
Bank of Scotland (Ireland) has appointed receivers to Liam Carroll’s Zoe group of companies, to D2 Property Management, the investment vehicle of David Arnold, and the to HSS group owned by businessman Jim Mansfield, which is behind the Citywest complex in west Dublin.
