Dallas-based real estate investment manager Lone Star Funds and Irish property group Cairn Homes are to purchase a portfolio of Ulster Bank loans, known as Project Clear, for €503 million.
The loans have a par value of around €2 billion and are backed by nearly 1,700 acres of residential land in Dublin across 31 residential development sites.
The transaction is due to be completed by the end of the year. Cairn said it will pay €378 million for a 75 percent 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 €2 billion,” commented Cairn Homes’ chief executive Michael Stanley.
This transaction is not the first time Lone Star has looked at taking on residential development risk in Europe during 2015.
Back in September, Lone Star took London-listed property developer Quintain private for approximately £745 million. With its takeover of Quintain, Lone Star is betting on the London property market and in particular, Wembley Park. Quintain is currently developing residential property in that area of London, with the Wembley development making up 77 percent of its asset exposure as of March.
“This [Quintain] is an opportunity to acquire a unique residential development scheme in London, with strong existing transportation links, and where its mid-price offering could have a big PRS [private rented sector] angle to it,” David Brockton, real estate analyst at Liberum Capital, said at the time.
“The development profits that could accrue to Quintain from delivering Wembley are not fully factored into the valuation, and the longer term institutional value of PRS could provide even greater upside,” Brockton added.