Cairn Homes, the listed housebuilder, and Lone Star have won Ulster Bank’s Project Clear, a portfolio of 31 residential development sites predominantly located in Dublin, paying a €503m.
The portfolio has the capacity for thousands of homes in Dublin and the surrounding commuter belt with the majority of sites benefiting from fast-track planning approval under a strategic development zone.
Project Clear has a par value of €2bn (£1.63bn), is secured by 1,694 acres of Irish land and comprises almost one-fifth of the available residentially zoned land in the Greater Dublin Area.
Cairn Homes and Lone Star have split the portfolio 75:25, with Carin contributing €378m and Lone Star paying €125m, respectively.
The Project Clear disposal sold for considerably below its €650m reported asking price.
Underbidders included two joint venture bids: Centerbidge and Avestus Capital, and O’Reilly’s Castlethorn Construction with the Abu Dhabi Investment Authority, as well as bids from Cerberus and Hines.
Royal Bank of Scotland, Ulster Bank’s parent company, will receive £360m is cash for the £1.63bn gross assets, reflecting a discount of 77.9%. The Project Clear loans generated a loss of approximately £28m in the year to 31 December 2014.
The carrying value of the loans was approximately £115m as at 31 December 2014, while the transaction represents risk weighted assets equivalent of circa £700m as at 31 December 2014, RBS said in a statement.
For RBS, the transaction is expected to generate a gain compared to carrying value of approximately £245m after associated costs.
The deal is expected to be completed by the end of the year.
In a statement this morning, Cairn reported that is circa 75% share of the portfolio gives the company the opportunity to build over 14,000 new homes over the coming years, with an expected net development value of in excess of €2bn.
Cairn CEO Michael Stanley said: “We are delighted to have entered into an agreement with Ulster Bank for the Project Clear loan portfolio, one of our key strategic targets.
“I would like to congratulate and thank Lone Star for also recognising this truly unique opportunity. This transaction will unlock the most significant land bank available in Ireland. Cairn’s share of the portfolio will provide the opportunity to build over 14,000 new homes, with an expected net development value of in excess of €2bn.”
Project Clear was divided into three tranches with cornerstone assets across the loan pool including a 142 acre landbank at Adamstown in west Dublin, nine acres at Cross Avenue, Blackrock, Co. Dublin and 90 acres at Portmarnock in north Dublin.
Last Wednesday, Cairn issued 48.9m new ordinary shares raising net proceeds of €52.1m to fund future acquisitions. In a statement at the time, Carin said the extra capital was to capitalise on the recovering Irish residential property market. This equity capital was also supported by a €150m senior debt facility by Allied Irish Bank.