Billions for Sale

Billions for Sale I was traveling back from the UK yesterday morning, picked up a copy of the Financial Times for the plane ride back, and found a cover story reporting that the Royal Bank of Scotland is moving ahead with a $2.5 billion sale of “unwanted” legacy commercial real estate loans. But that’s apparently only the tip of the iceberg. According to the article, the bank is sitting on $70 billion of real estate loans could be sold or “wound-down” by 2014. The numbers are staggering for one institution. However, the most interesting news reported was that the bank is only inviting a “small” number of private-equity groups to play in the bid process. Among the names mentioned were Lonestar, Blackstone and Starwood Capital. The bank’s reasoning is that they want firms to play that have the experience, and balance sheets, to manage large portfolios of debt. If RBS is an indicator, it appears that the disposal of the mega billions of commercial real estate loans may be controlled by the big guns. Stay tuned.