A strategic review by Irish Residential Properties REIT has concluded that the sale of the company was highly unlikely to deliver value and it instead should pursue growth opportunities while selling some less efficient units.
The country's largest private residential landlord announced the review in January and said it would consider a potential sale or merger, asset disposals and new strategic initiatives, along with a review of its status as a listed REIT.
I-RES REIT had flagged in April that a sale would be challenging and the review instead identified around 315 units, or 8% of its apartment-focused portfolio, suitable for disposal over the next three-to-five years which would generate €110-115m.
I-RES said today it would explore "the very significant growth and consolidation opportunities" which exist in the Irish private residential market, adding it believed around 50% of the existing stock of properties may come to market over the next 24 to 36 months.
It highlighted in particular properties owned by private equity and some investment funds that are expected to come up for sale.
I-RES said it would also examine potential "capital light" joint ventures where it would operate assets on the ground for an international investor.
It also said it plans to find new revenue streams, subject to regulations, and said it will continue to work constructively with stakeholders, including the Government, to push for "positive change" in the Irish residential regulation system.
I-RES REIT also today reported like-for-like revenue growth of 2.1% for the six months to the end of June, which it said was driven by both organic rental growth across the existing portfolio and enhanced ancillary revenue generation.
Reported revenue for the period came to €42.8m, down 3.3% on the same time last year on the back of asset disposals completed during the second half of 2023 which represented about 5% of its portfolio.
It also said it was seeing continued strong occupancy of 99.6% asat 30 June, which it said reflected the effectiveness of its leasing operations and the continued strong demand for its "high-quality portfolio of modern properties".
The company said that in line with Irish REIT legislation, its Board intends to declare an interim dividend of 1.88 cents per share for the first half of the year, which it said represents 85% of its relevant distributable earnings in the period.
During the six month period, Hugh Scott-Barrett was appointed as Chair and lead of the Board's strategic review in February, having served as non-executive director since September 2022.
Real estate executive Eddie Byrne was also appointed as CEO in May with direct input into the Strategic Review since his appointment.
CEO Eddie Byrne said the first half of 2024 was an active period for the company with the delivery of another strong operational performance and the completion of the Strategic Review.
"While overall we believe the outlook is positive, the current Irish rental regulatory structure remains the single most inhibiting factor for our business. The 2% cap on rental increases has had a profound impact on the supply of new build-to-let properties in the market and is an impediment to critical international investment," Eddie Byrne said.
"We believe that a more progressive and evidence based regulatory framework that is fair and equitable to both the resident and the property owner, will attract institutional capital and help to alleviate the current supply shortage while also providing safe and secure tenancy for residents," he added.
The CEO said the company continues to engage constructively with stakeholders to encourage reform of PRS regulation in Ireland, and it welcomed recent publications from the Departments of Housing and Finance and the Housing Commission, which all point towards a change of tone that the current regulatory structure requires significant reform.
"We are also engaging with Irish government bodies on initiatives such as the Secure Tenancy Affordable Rental programme to support the delivery of new supply to the affordable housing market," he said.
"Looking ahead, we will focus on implementing the operational initiatives identified by the Strategic Review which will help to optimise our portfolio, drive value maximisation for shareholders, and improve our financial performance over the medium-term," the CEO added.
