LONDON (Alliance News) - Royal Bank of Scotland Group PLC on Monday said it has agreed to sell a portfolio of Irish real estate loans to a subsidiary of Irish homebuilder Cairn Homes PLC and an affiliate of Lone Star Funds for about GBP360.0 million in cash at current exchange rates.
State-backed RBS said the the money raised by selling the loan assets of Irish subsidiary Ulster Bank will be used for general corporate purposes.
The loans, which equate to about GBP700.0 million in risk-weighted assets, are being sold under the lender's plan to strengthen its capital position and reduce higher risk exposures.
The loans had a carrying value of about GBP115.0 million at the end of 2014, and generated a loss of about GBP28.0 million on gross assets of GBP1.63 billion. RBS said the deal to sell the loans is expected to generate a gain compared to carrying value of about GBP245.0 million, which will be recognised in the fourth quarter of 2015.
Separately, Cairn Homes put the price tag of the entire portfolio at EUR503.0 million. The Irish homebuilder said it will contribute EUR378.0 million for its share of the portfolio.
"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 EUR2.0 billion," Michael Stanley, the chief executive of Cairn, said in a statement.
Cairn Homes said the par value of the loans being acquired is about EUR2.0 billion attached to 1,694 acres of land, which includes 31 residential development sites.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Cairn Homes (CRN)