Commerzbank in final talks to divest $5bn of Spanish property loans

Commerzbank has reportedly reached final-stage discussions to offload a multi billion-euro portfolio of Spanish real-estate loans and assets to Lone Star Funds and JP Morgan Chase, that may fetch up to €3.9bn ($5.3bn) for the German lender.

Commerzbank has reportedly reached final-stage discussions to offload a multi billion-euro portfolio of Spanish real-estate loans and assets to Lone Star Funds and JP Morgan Chase, that may fetch up to €3.9bn ($5.3bn) for the German lender.

Sources familiar with the development were quoted by Reuters as saying that the two US investors will acquire the business by paying between €3.7bn to €3.9bn (between $5bn and $5.3bn) for the portfolio.

The Spanish real-estate loans and assets portfolio comprises loans with a face value of about €4.5bn that are backed by shopping centers, hotels and offices.

One source told the publication that the deal might conclude within a month, which would be the largest property transaction in Spain since the country’s real-estate bubble burst in 2008.

As per the terms of the deal dubbed as Project Octopus, Lone Star would buy the majority of the loans in the portfolio, whereas JP Morgan will purchase a minority stake and offer financing for the deal, one person said.

Managed by investment bank Lazard, the auction originally attracted more than a dozen large international investors, including Blackstone Group, Cerberus Capital Management and Apollo Global Management, among others.

Commerzbank unit Eurohypo originally extended the loans and the company is being closed following huge losses in recent years.