Blackstone, Morgan Stanley buy Lloyds Australia loans for $621m - report
Blackstone and Morgan Stanley have bought 34% of a A$1.9 billion portfolio of distressed property loans for A$640 million ($621 million), from a unit of Lloyds Banking Group in Australia.
The two private equity investors won over several high-profile rivals, a source with knowledge of the transaction told Reuters on Friday. Other bidders include Macquarie Group, a team consisting of Goldman Sachs, Brookfield and Government of Singapore Investment Corporation (GIC), and hedge funds Pacific Alliance and Elliot Associates.
The investment was channeled from The Blackstone Real Estate Property Fund VII and the Morgan Stanley Real Estate Fund VII.
The deal is one of several portfolio sales of loans extended before the global financial crisis that then went bad when property prices fell drastically. Private equity funds are now seeking to purchase loans with cheap valuations, while sellers are eager to sell off their assets to secure better liquidity.
Lloyds has had the Australian portfolio on sale since March, as part of a move ton offload its non-core assets. The transaction follows Lloyds' move to divest A$1.7 billion in distressed property loans to Morgan Stanley and Goldman Sachs in November last year.
Nearly all the loans are reportedly in default, while the bulk of the debt is on property in New South Wales, Victoria and Queensland, including residential property, offices, retails, hotels, a marina, and a retirement village.
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