Allied Irish Banks PLC has become the latest of Ireland's major financial institutions to sell its portfolio of U.S. commercial real estate (CRE) holdings.
The Wall Street Journal reports that Allied Irish Banks is planning to sell its $1 billion CRE portfolio to Blackstone Group LP and Wells Fargo & Co. The sale is reportedly at roughly 7% to 15% discount off the portfolio's face value and includes loans tied to notable U.S. properties including New York's MetLife Building and San Diego's Grand Del Mar resort.
Allied Irish Banks' sale follows an announcement made earlier this month by the Bank of Ireland, which is selling its $1.5 billion portfolio in U.S. CRE loans. Earlier this year, Anglo Irish Bank sold its mortgage for the Mark Hotel redevelopment project for $190 million and its $147 million construction loan on New York's Setai Wall Street condominium and spa project for about $80 million.
The Wall Street Journal notes that Ireland's banks have mostly been nationalized due to severe loses during the global economic crisis – the Irish government owns 93% of Allied Irish Banks – and banking regulators have pressured these institutions to sell off their distressed U.S. CRE assets. According to the Irish Times, Allied Irish Banks is required by regulators to reduce its commercial loan portfolio by â�¬19 billion (approximately $27 billion) before the end of 2013, while Bank of Ireland needs to shed â�¬30 billion (roughly $42.5 billion) in the same period.
The Irish Independent also reports that the commercial property assets being sold by Ireland's banks do not include Irish assets, but mainly consist of U.S. and U.K. assets.
