Ireland's largest private landlord has said that independent analysis from its advisors has found that a strategy that would require an accelerated sale of all its assets directly into the market would be challenging to maximise value for shareholders in the short-term.
But publishing an update on the progress of its ongoing strategic review, I-RES REIT said these options, alongside a potential sale of the company, will continue to be explored in detail as the review continues.
"Shareholders should note that the company confirms that it has not received any proposals to acquire the assets, in whole or in part, or the entirety of the share capital of the company to date," the firm said.
The company said the strategic review confirms the board's view that it has a market-leading platform which continues to deliver a strong operational performance.
The analysis, which started on February 23, also found that the company's investment case is underpinned by a modern portfolio of high-quality residential assets in attractive growth locations.
But the company added that against these attractive longer-term dynamics, the sector has recently been characterised by "shorter-term headwinds".
These including higher interest rates, widening yields, restrictive regulation including in particular a cap on rental growth, a notable lack of liquidity in the direct market, and an upcoming election, which present challenges for delivering shareholder returns and have impacted growth.
I-Res REIT also noted that levels of liquidity in European real estate assets, including Irish residential assets, remains at historically low levels.
The review is being carried out with specialist retained advisers and overseen by a board sub-committee, led by Chair Hugh Scott-Barrett with CEO designate Eddie Byrne and non-executive directors Denise Turner and Phillip Burns.
The business also said that the review to date has identified several initiatives with the potential to unlock value contained within its operating platform.
This includes further potential of revenue generation from car parking, it added.
"Additionally, the Strategic Review continues to explore value maximisation through selective asset recycling including, where appropriate, achieving value through the sale of individual units which are accretive to value," it stated in the statement.
I-RES also said that the board's focus remains on operational efficiency initiatives and the recycling of capital through opportunistic sales, and is exploring potential consolidation opportunities in the Irish market as part of the review.
"The Board remains open minded to all value maximising options, as well as future growth opportunities should the macroeconomic and sector backdrop continue to evolve favourably," it said.
As part of the strategic review, I-Res REIT said it has conducted "extensive" tax analysis, including a review of the REIT structure.
It noted that the Irish REIT structure provides liquidity and tax efficiency to shareholders within a regulatory framework and has significant advantages over non-REIT structures.
But it also noted that certain elements of the Irish REIT framework remain restrictive when compared to other European jurisdictions.
"As part of a consultation process underway by the Department of Finance on the Irish Funds sector, the company has raised several observations seeking to bring the Irish REIT framework in line with European peers and provide significant flexibility to the Company both operationally and strategically," it said.
The outcome of this review is expected to be published in the second half of 2024.
In February, shareholders of I-RES REIT rejected proposals from Canadian activist shareholder Vision Capital to remove five directors from the board and to pursue a strategic review that could have led to the sale of the company or some of its assets.
The result was a major boost for the embattled board of the business which owns 3,734 units around Dublin, following several months of pressure.
However, earlier this month, I-RES agreed to back the appointment of two director nominees that were being proposed by Vision Capital in a compromise.
