a debt fund of £1.6 billion in loans and sold a stake in this to Blackstone. This deal has been a long time in fruition and all over the papers for nearly a year.
Why all the fuss? Well the vehicle created allows RBS to make a manageable write-down on loans that are at 90% loan to value or more. These have been unsalebale in the market to date, leaving RBS and Lloyds with big headaches as they have truly huge commercial property portfolio's and little way to move them on and free up their balance sheets. Lloyds has recently done a deal with Grainger which is a different model, but crucially the property remains the banks.
Here there is a model for a new type of distribution, there are risk to Blackstone in taking these loans on but they can see the upside too and are getting a good price; this deal should work.
As such, it provides a new route to market which will free up the Real Estate market and allow a work-out of this challenging banking issue.