U.S. mortgage lender Wells Fargo (WFC) and financial investor
Lone Star are in exclusive talks to buy a U.K. commercial property
loan portfolio worth more than 4 billion pounds from Germany's
Commerzbank AG (CBK.XE), two people familiar with the matter said
Thursday.
Lone Star and Commerzbank declined to comment. Wells Fargo
wasn't immediately available for a comment.
Commerzbank put the portfolio up for sale as it seeks to free up
equity to strengthen its capital ratio. Germany's second-largest
lender by balance-sheet volume is under pressure to strengthen its
capital base amid tougher regulation and eroding earnings. In
mid-March, the bank announced a EUR2.5 billion capital increase, as
it looks to bolster its balance sheet and take another bold step to
reduce government involvement in the bank.
The bank will hold its general annual meeting in Frankfurt
Friday.
Wells Fargo and Lone Star, which teamed up to buy the portfolio,
are close to buying the asset, two people familiar with the matter
said, adding that the sale would come at a slight discount to the
book value of the assets.
While Wells Fargo would buy the performing loans, Lone Star
would snap up the non-performing and distressed loans, these people
say.
According to a Commerzbank presentation from mid-March, the U.K.
real-estate portfolio has EUR5.2 billion of performing and EUR1.3
billion of non-performing loans. It is unclear if the buyers will
take up all of the assets, however.
Other suitors not accepted for the final round included a
bidding tandem consisting of the world's biggest bond fund Pimco
and financial investor Cerberus.
U.K.-based real estate is receiving fresh interest from U.S.
investors at the moment because properties in other European
countries bear a certain currency risk due to the euro-zone crisis,
bankers say.
While the volume of European real-estate acquisitions dropped by
more than a third by the end of March year to date, the U.K. bucked
the overall trend with volume doubling year-on-year to $5.8
billion, according to data provider and research firm dealogic.
The Financial Times earlier reported that Commerzbank is close
to selling its U.K. portfolio.
Write to Eyk Henning at eyk.henning@wsj.com and Alexandra
Edinger at alexandra.edinger@wsj.com
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