Lloyds deal to recoup Irish loans

Lloyds Banking Group has signed an agreement with BDL Ireland Management that may allow the company to manage hotels tied to the bank’s €1bn of Irish lodging loans, according to two people with knowledge of the matter.

Receivers to hotels that defaulted on their loans from the London-based bank will have the option to use BDL’s property management services, said the people, who declined to be identified. BDL built 30 hotels in Britain and managed 45 through November, according to its website.

Lloyds spokesman Ian Kitts and BDL Ireland managing director Andrew Gill declined to comment.

Lloyds said in February that two-thirds of its €30bn of loans in Ireland are unlikely to be paid back in full following the property crash. That is up from 53% at the end of 2010. The bank is reaching incentive-laden deals in Ireland and Britain with real-estate management groups such as BDL as it seeks to boost recovery on its loans.

“The hotel market in Ireland is still plagued by oversupply,” Jonathan Hubbard, Northern Europe chief executive at the hotels division of broker Jones Lang LaSalle, said in an Apr 10 statement. “The divergent trading performance of the Dublin tourism and hotel market compared to Ireland’s provinces has created something of a two-tiered marketplace, with the Dublin hotel market attracting the majority of investor attention.”

More than half of the loans to Ireland’s hotels and restaurants were not performing at the end of 2010, according to its central bank report. One in seven had defaulted or was impaired.

Hotel values in Dublin have fallen by 50%-60% since their peak in 2007, CBRE Group director Paul Collins said. He handled last month’s sale of the Morrison Hotel on Dublin’s north quays for €22m to Russian businesswoman Elena Baturina, who bought it through Austrian company Beneco Privatstiftung, according to a statement from the broker.

About 12 bids for the hotel were received after more than “70 serious expressions of interest”, Collins said. “The market for prime Dublin hotels is very strong, fuelled by predominantly overseas buyers.”

Last year Lloyds agreed to allow Dublin-based Green Property Ventures to manage real estate tied to as much as €1bn in Irish loans.