Royal Bank of Scotland Sells Irish Real-Estate Loans--Update
December 07 2015 - 6:45AM
Dow Jones News
(Rewrites, adds detail.)
By Simon Zekaria
LONDON--Royal Bank of Scotland Group PLC (RBS) on Monday said
its Ulster Bank Ireland Ltd. and Ulster Bank Ltd. units have
entered into an agreement to sell a portfolio of Irish real estate
loans to a unit of Irish housebuilder Cairn Homes PLC (CRN.LN) and
an affiliate of private equity firm Loan Star Funds for around 360
million pounds ($543 million) in cash.
The bank, which is majority owned by the U.K. government, said
the carrying value of the loans at Dec. 31 is about GBP115 million.
Gross assets were about GBP1.63 billion and the loans generated a
loss of about GBP28 million in the year to Dec. 31.
RBS said the transaction expects to generate a gain compared to
carrying value of about GBP245 million after associated costs,
which will be recognized in the fourth quarter, it said.
Cairn Homes said the loans include 31 residential development
sites. 91% of the portfolio lands are located in Dublin and
surrounding commuter locations. With a 75% share in the portfolio,
the company said it can build over 14,000 new homes over the coming
years, with an expected net development value of over EUR2.00
billion ($2.16 billion).
The bank expects completion of the deal at the end of the year.
It said it will use proceeds from the deal for "general corporate"
purposes.
It added the transaction is in line with its strategy to
strengthen its capital position and reduce its risk exposure.
At 1100 GMT, RBS shares down 1 pence, or 0.2%, at 303 pence.
Write to Simon Zekaria at simon.zekaria@wsj.com
(END) Dow Jones Newswires
December 07, 2015 06:30 ET (11:30 GMT)
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