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Lone Star and Cairn nab €2bn RBS Irish loan book

The Project Clear portfolio is mainly secured against 31 residential development sites in and around the Irish capital. Cairn Homes is taking a 75 percent slice of the purchase.

Lone Star and Cairn Homes have bought a portfolio of Irish real estate loans secured by residential land sites in and around the Dublin area, PDI sister title REC reported.

Royal Bank of Scotland’s (RBS) Ulster Bank division sold the circa €2 billion par-value loan book, known as Project Clear, to the joint venture for €503 million (£360 million). Cairn Homes will contribute €378 million for its share for 75 percent of the portfolio.

The Project Clear loans are secured by 31 residential development sites containing 1,694 acres of land. The portfolio is 91 percent located in Dublin and its surrounding commuter belt and represents around 20 percent of the available land in the Greater Dublin area which is zoned for residential development.

Cairn Homes said that it plans to develop more than 14,000 new homes on the sites with an expected net development value of more than €2 billion.

The deal is expected to complete by the end of the year. RBS said that the transaction represents a risk-weighted assets equivalent of around £700 million as at 31 December 2014. The bank said that the sale is part of its ongoing sale of assets from its internal ‘bad bank’, RBS Capital Resolution.

The carrying value of the loans as at 31 December 2014 was approximately £115 million, RBS added. The gross assets were approximately £1.63 billion and the loans generated a loss of approximately £28 million in the year to 31 December 2014.

The transaction is expected to generate a gain for the bank compared to carrying value of approximately £245 million after associated costs, which will be recognised in Q4 2015.