Aviva is planning to sell its book of distressed property holdings in a move that could raise as much as £400 million for the insurance giant. The sale is further evidence of increasing investor demand that is helping financial institutions recover previous losses.
Around £4 billion of Aviva’s UK property portfolio is reported to be underperforming, forcing the company to set aside £1.5 billion to cover losses.
The book for sale is twice the size of that recently brought to the market by RBS and includes 135 retail and other commercial assets. All of these are believed to be either in administration or held by different borrowers.
Earlier in the year Aviva revealed that £493 million worth of loans were in arrears that required restructuring. The loans in question were made before the beginning of the financial crisis and are particularly exposed to the northern retail sector.
Aviva has said nothing about the proposed sale but the FT reports that several prospective buyers have already expressed an interest in the portfolio. Likely candidates include private equity firms and distressed debt specialists.
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