Cairn set to take control of most properties whose debts it bought

Listed house builder Cairn Homes expects to have taken control of most the properties whose debts it bought for €378 million from Ulster Bank by the end of the year.

Cairn recently paid Ulster Bank €378 million to buy €1.75 billion in property loans, known as Project Clear, with the aim of taking over the development sites that the debts were secured against.

Speaking after its annual general meeting in Dublin yesterday, chief executive Michael Stanley said it originally aimed to have taken over 90 per cent of the sites by the end of the year.

“We are very optimistic that we will beat that,” he said. “That process is going very well.”

Many of the sites were already under the control of receivers appointed by the bank when Cairn bought the debt so there were little or no barriers to the company taking control of the properties.

Ahead of its agm the company confirmed that it has taken control of a further four of the portfolio’s sites, with the potential for 1,150 homes.

This brings to seven the total number of sites it has taken ownership of. On March 14th it said it had taken over three: two in Dublin and one in Maynooth, Co Kildare.

The four latest sites include 71 acres on the South Ring Road in Naas, Co Kildare; 7.6 acres at Athgarvan Road, Newbridge, Co Kildare; 145 acres in Blessington, Co Wicklow; and 6.6 acres in Donabate, Co Dublin.

As the size of the debts involved far outstrip the value of the properties, the original borrowers are unlikely to be able to repay the money, giving Cairn the right to take ownership of the properties the debt was secured against.

Ulster Bank originally advanced the money during the credit-fuelled property bubble of the last decade.

It sold the loans as part of an overall programme to rid its balance sheet of bad debt. The sites are mainly in Dublin, with one in Cork and one in Kilkenny.

Targets

Meanwhile, Cairn expects to be building on up to eight sites by early 2017, according to Mr Stanley.

A number of commentators have questioned the fact that Cairn has yet to move significantly towards meeting its target of completing and selling 1,000-1,200 homes a year by 2019.

However, its chief executive pointed out that it has always said it would take three to four years to reach this target. “Any house-building company naturally takes a long time to get to scale,” he said.

Cairn floated 11 months ago. Since then it has acquired 25 development sites where it has the scope to build up to 11,220 homes.

On some properties, including Hanover Quay and Marianella in Dublin, it is re-applying for planning so it can increase the number of houses for which permission was originally given.

“In some cases permission has lapsed,” Mr Stanley said. “In others it was given in a different time and there are new regulations and new requirements and we want to bring it completely up to date.”

Cairn has agreed to sell 70 homes from its development on Dublin’s Malahide Road and 35 customers have moved in there.