Lloyds Banking Group Plc announced Wednesday it is selling a portfolio of Australian corporate real estate loans worth £809 million ($1.25 billion) to AET SPV Management Pty Ltd. for about £388 million cash.
AET SPV Management Pty Ltd, a joint venture comprised of funds sponsored by a Morgan Stanley real-estate investment fund and Blackstone Group, intends to use the sale proceeds to repay debt.
The deal comes as the British bank looks to offload underperforming assets in overseas markets. Lloyds, in which the British government holds a stake after providing a bailout, said the sale would help to repay debt.
AET intends to use the sale proceeds to repay debt.
The sale is part of a broader strategy by Lloyds, 41 percent-owned by the U.K. government following a bailout during the financial crisis, of shedding non-core assets and reducing bad loans.
"This transaction further de-risks the Australian business and results in a cumulative 92 percent reduction of our real-estate non-performing loan portfolio," said Dave Smith, the chief executive of Lloyds International Pty in a statement.
"We continue in parallel to focus on growing the profitable core of our business," he added.
Last month, Lloyds Banking reported a small profit for the first quarter compared to prior-year's loss, reflecting mainly further reduction in costs and impairment charges.
The company made a hefty £3.2 billion provision last year for payment protection insurance or PPI. In this year's quarter, it made further PPI provisions of £375 million.
