Cairn says fund-backed landlords could spend €5bn on new homes

Investment fund-backed landlords could spend €5 billion snapping up new homes in or close to the Republic’s cities, builder Cairn Homes says.

Dublin-listed Cairn reported on Tuesday that it sold 1,080 new homes last year, earning a 28 per cent increase in profits to €68 million from €53.2 million in 2018.

Cairn estimates that overseas and Irish investment companies have up to €5 billion to spend on newly-built homes in suburban and commuter-belt locations that they will lease to tenants.

Last year Cairn agreed to sell 659 apartments and houses to businesses backed by US investors Starwood Capital and Angelo Park, which intend renting the properties out once they are built. Other builders have done similar deals, selling mainly apartments to overseas investment businesses .

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Cairn chief executive Michael Stanley claimed most apartment blocks "would not get built" without such deals in the first place.

The building company reported that revenues advanced 29 per cent to €435.3 million last year from €337 million in 2018.

Cairn is building homes aimed mainly at first-time buyers on 16 sites around the Republic, where it says it will complete around 6,750 new dwellings.

Earnings per share rose more than 60 per cent to 6.5 cent. Cairn plans to pay shareholders a final dividend of 2.75 cent a share, bringing the total payout to 5.2 cent for 2019.

Cairn said that this year’s spring selling season had started positively. The company expects to sell between 1,250 and 1,300 new properties this year.

Mr Stanley described 2019 as a very strong year. “This momentum has carried through to 2020,” he added.

Cairn's shares climbed 3.28 per cent to €1.26 on the Irish Stock Exchange as investors reacted to the news on Tuesday.

During the year the builder sold 1,080 homes across 12 sites in 2019 at an average of €372,000 each.

The company said that it had completed 60 per cent of a share buy- back programme that would return €60 million to investors in total. Cairn originally began buying back €25 million worth of shares from backers in September, but increased this to €60 million in January.

Net debt

The builder cut its net debt to €91.2 million at December 31st last year from €134.4 million 12 months previously.Construction costs rose to €288.7 million last year from €241.9 million.

During the year Cairn agreed to sell 282 apartments in Citywest, Dublin, and 150 homes in Maynooth, Co Kildare, to Urbeo, which is funded by US investor Starwood Capital.

Similarly, it sold 229 apartments, houses and duplexes in Shackleton Park, Lucan, west Dublin, to another US fund Angelo Park for €79 million. Carysfort Capital will manage the properties.

Cairn paid €21.7 million for 97 acres in Clonburris, Dublin, from the State's National Asset Management Agency and O'Callaghan Properties. The company already owned 174 acres in the area, designated a strategic development zone.

Mr Stanley said that the company hoped to begin building there later this year, and could sell its first properties in Clonburris in about 12 months.