LONDON — Royal Bank of Scotland Group PLC and Blackstone Group remain in talks over the sale of a portfolio of the bank's U.K. commercial real estate loans even as funding for the deal proves more difficult than anticipated, people familiar with the situation said Wednesday.
RBS agreed to sell a 25% equity stake in its $2.2 billion U.K. commercial real estate loan portfolio to Blackstone three months ago. Blackstone is injecting between $154.1 million and $231.2 million for its stake and will also manage the portfolio, while RBS will retain a 75% stake in a new vehicle set up to house the portfolio.
The deal is being backed by a debt package of just over $924.9 million and RBS and Blackstone have been in talks with various banks including Goldman Sachs, HSBC Holdings PLC and Citigroup Inc. to obtain funding.
However deteriorating markets have made banks unwilling or unable to provide loans on anything other than punitive terms and talks are ongoing with just one of the three named banks, while short-term lenders like hedge funds may take up the slack. RBS is also likely to participate in the loan.
The deal is expected to complete this month.
