The universe of buyers for struggling UK shopping malls is pretty thin. But there are at least three buyers out there if the price is right.

A shortlist of three potential buyers is through to the final round of bidding for a portfolio of nonperforming loans secured against UK shopping centres being sold by bank NatWest, React News reported.

The bidders are private equity firm Attestor Capital; investment bank Bank of America Merrill Lynch, in a joint venture with Cross Ocean Partners; and hedge fund Marathon Asset Management.

The loans are secured against about 20 shopping centres across the UK, and they have a face value of around £375M. The bidders are likely to pay around half that or slightly less, React reported.

NatWest is running a twin-track process, selling the loans as a portfolio while also inviting bids for the individual assets in the portfolio to see which strategy gets the higher price. The trio of bidders are the kind of organisations that bought up nonperforming loans in the wake of the 2008 financial crisis — indeed, BAML and Marathon were significant real estate NPL buyers after the GFC.

But there is a difference this time. The strategy then was to buy loans cheap, wait for values to recover and either sell the assets or get the borrower to refinance the loan. Asset prices had dropped, but the underlying rental income was generally OK.

This time around, with retailers struggling and either demanding rent cuts or exiting leases, the game will not be so simple. Significant work will be needed to improve the value of the centres being bought and turn a profit.

With that in mind, Attestor has teamed up with specialist retail asset manager Ellandi, BAML and Cross Ocean have paired with Global Mutual, and Marathon has partnered with APAM, React reported.

Shopping centre investment volumes were £511M in the first half of 2021, according to data from Knight Frank, which is actually higher than the £118M sold in H1 2020 and the £295M sold in H1 2019, before the coronavirus pandemic.