RBS sells Irish home loans to Cairn Homes and Lone Star for £360m

7th Dec 2015 07:47

(ShareCast News) - RBS has sold a portfolio of Irish real estate loans and a 1,700-acre land bank for £360m to Ireland's recently floated Cairn Homes and an affiliate of Lone Star Funds.The sale by RBS's Ulster Bank arm, which has a risk weighted asset equivalent of £700m, is designed to strengthen further RBS' capital position and reduce higher risk exposures, the state-owned bank said.RBS said the carrying value of the Project Clear loans as at 31 December 2014 was approximately £115m. The gross assets were approximately £1.63bn and the loans generated a loss of approximately £28m in the year to 31 December 2014.The loans are attached to 1,694 acres, which includes 31 residential development sites, with 91% of the portfolio land located in Dublin and the surrounding commuter belt, representing close to a fifth of the available residentially zoned land in the Greater Dublin Area. Contributing €378m for a near-75% share, Cairn, which in June was the first Irish housebuilder to float since McInerney in 1997, said it will divide the portfolio between itself and Lone Star.Cairn plans to use the land to build over 14,000 new homes over the coming years, with an expected net development value of in excess of €2bn.RBS said it expected the sale to generate a gain compared to carrying value of approximately £245m after associated costs, which will be recognised in the fourth quarter of the current financial year, with the proceeds used for general corporate purposes.The deal is expected to be completed by the end of the year.Cairn chief executive Michael Stanley said the purchase was a "truly unique opportunity"."This transaction will unlock the most significant land bank available in Ireland."