Cairn Homes and US equity group Lone Star are to acquire Project Clear, an Ulster Bank portfolio of residential land loans, for €503m.

According to Cairn Homes, an Irish homebuilding company, the par value of the loans being acquired is around €2bn, attached to 1,694 acres, which includes 31 residential development sites.

Some 91% of the portfolio lands are located in Dublin and the surrounding commuter belt, representing 20% of the available residentially zoned land in the Greater Dublin Area.

Cairn Homes is stumping up €378m for the loan portfolio acquisition, with the balance being bought by Lone Star funds. Cairn’s 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. The deal is expected to be completed by the end of the year.

Cairn CEO Michael Stanley said that the transaction will unlock the most significant land bank available in Ireland.

In Association with

Assessing the deal, Merrion Capital’s Darren McKinley said that the acquisition valuation looks attractively valued when compared against Cairn Homes’s current sites costs.

“Before this acquisition, Cairn Homes average site cost in Dublin was around €100,000 per unit, spread across Parkside, Albany, Stillorgan, Carrickmines and Rathgar.

“Our initial estimate based on the numbers releases in this morning’s announcements is that the unit site cost within Project Clear is significantly less than Cairn Homes’s existing €100,000 per site cost. We would expect this acquisition to be taken very positively by investors.”