from Irish Residential Properties REIT Plc (isin : IE00BJ34P519)
Trading Update and Notice of Results
Irish Residential Properties REIT plc (IRES) 10 January 2023
Irish Residential Properties REIT plc
Trading Update and Notice of Results
Continued Strong Rental Market Conditions
Irish Residential Properties REIT plc (the "Company" or "IRES"), Ireland’s largest provider of private rental accommodation with a portfolio of 3,938 homes, today provides an update on trading for the year ended 31 December 2022 ahead of the publication of its full year results on Friday 24 February 2023.
Trading Performance
The underlying business maintained a strong performance during the second half of the year amid a challenging market environment. Rising inflation has resulted in some further increases in employee costs, utilities and repairs and maintenance during the second half of the financial year. However, continued and active cost management initiatives and discipline will see the business delivering a broadly stable NRI margin for the full year (H1, 30 June 2022: 77.5%).
Our experienced team and portfolio of high-quality residential accommodation remain positive differentiators in the Irish private residential market and have again contributed to a consistently high occupancy rate of 99.4% as at 31 December 2022. This is supported by our mid-market residential sector positioning where demand remains strong. Our average monthly rent stood at €1,750 at 31 December 2022, approximately 13% below average rent levels for new tenancies in Dublin1.
Portfolio Update
We continued to grow our portfolio during 2022 through accretive investment in acquisitions and new developments, while also recycling capital through selective disposals. In the first half of the year, we completed the acquisition of 108 units in Ashbrook and entered into a fixed forward commitment for 44 additional units to be delivered at Ashbrook in 2023. In July 2022, we took delivery of 61 new apartments at The School Yard, a building designed to high sustainability standards and achieving LEED Gold accreditation, and all units were fully leased and income producing from early August 2022. In August 2022, we also took delivery of 64 new apartments and 5 townhouses at Tara View (formerly ‘Project Merrion’). Leasing is progressing well, and 77% of the apartments are currently leased.
With a continued focus on active portfolio and capital management, we disposed of 128 units at Hampton Wood, at a net initial yield of 3.5%, representing a significant return on our original investment. We continue to examine opportunities to optimise our portfolio.
Financing
The Company’s strategy continues to be supported by a robust balance sheet and strong liquidity position. The Company has facilities of c.€800 million, of which c.€657 million is drawn, and has no debt maturing until April 2026, with our debt repayments laddered from 2026 to 2032. Undrawn facilities of c.€143 million were available for investment and c.€7 million of cash as at 31 December 2022.
On 14 December 2022, the Company entered into hedging arrangements in respect of its RCF , specifically interest rate swap agreements aggregating to €275 million until maturity of the facility, converting this portion of the facility into a fixed interest rate of 2.5% plus margin of 1.75%. This is in addition to the Company’s existing €200m equivalent of Private Placement Notes, which are fully fixed with a weighted average fixed interest rate of 1.92% (inclusive of swap costs and excluding transaction costs). As of the year end, approximately 72% of the Company's drawn debt is now fixed against interest rate volatility. The remaining 28% of our drawn facilities is variable based on EURIBOR.
Outlook
Despite the uncertainty of the wider macroeconomic environment, the Irish economic outlook remains positive with a GDP growth outturn of between 11-12% expected in 2022 (Source: Davy, 5th December 2022). Ireland’s GDP growth is expected to outpace all other EU countries again in 2023 with the European Commission forecasting 3.2% growth (Source: European Commission Autumn 2022 Economic Forecast). Unemployment levels remain low at 4.4% in November 2022 (Source: CSO).
With a robust balance sheet and the additional interest rate hedging arrangements, together with a strong operating platform, IRES is well placed to navigate any continued market uncertainties. The Board remains confident that IRES has the right strategy and business model to meet evolving occupier and wider stakeholder requirements and capitalise on strong market fundamentals to continue to deliver long-term returns for shareholders.
Margaret Sweeney, Chief Executive Officer of IRES, commented:
"Despite the ongoing macroeconomic challenges, I am pleased with the Company’s resilient performance in 2022 and I believe that our high quality, diverse portfolio of assets, robust financial position and highly experienced property management team will ensure that our business remains in a strong position as we enter 2023. The new interest rate hedging arrangement we have entered into will further strengthen the Company’s financial position by locking 72% of our drawn debt into a fixed rate, providing us with increased certainty of borrowing costs. The residential rental market remains strong as we continue to see powerful structural trends in demographics, robust employment levels and technological change. All of these dynamics are key drivers of growth in the private rental sector, which is translating into excellent operational performance in our portfolio. I am acutely aware of the increasing cost pressures facing our residents and we will continue our engagement programmes and initiatives which support our residents and the communities in which we operate.”
Notice of Results
The Company will be releasing its preliminary financial and operating results for the period from 1 January 2022 to 31 December 2022 at 7.00am BST on Friday 24 February 2023.
An investor conference call will be hosted by I•RES' management at 9.00am B.S.T. on Friday 24 February 2023.
The details for this call are outlined below:
Joining by Telephone:
Participant access code: 867386
To listen to the investor conference call using the Live Webcast Facility, please register at https://www.investis-live.com/ires-reit/63b5a971aba36a0c0005ac5f/wsckk
We recommend you register for the Live Webcast Facility at least 15 minutes before the start of the call. Should you have difficulties accessing the Live Webcast Facility please contact your IT team or use the teleconference facility (referred to above) to dial in via telephone. It will not be possible to use the Live Webcast Facility to ask questions.
The Company's Results Presentation will be available on the IRES website at https://www.iresreit.ie/investors/reports-and-presentations/year/2023
A replay will be available after the call is completed and will be available until Friday, 10th March 2023 using the following details.
UK: 020 3936 3001 USA: 1 845 709 8569 All other locations: +44 20 3936 3001 Access Code: 405883
For further information please contact:
For Investor Relations: Irish Residential Properties REIT plc Michelle Ang, Director Investor Relations Tel: +353 (0) 87 956 1138 Margaret Sweeney, Chief Executive Officer Tel: +353 (0) 1 557 0974
For Media Requests: Melanie Farrell, FTI Consulting ires@fticonsulting.com Tel: +353 (0) 86 401 5250
About Irish Residential Properties REIT plc
Irish Residential Properties REIT plc, is a growth oriented Real Estate Investment Trust that is focused on acquiring, holding, managing and developing investments primarily focused on private residential rental accommodations in Ireland. The Group currently owns 3,938 apartments and houses for private rental in Dublin and Cork and has a further 44 units to be delivered in 2023 under a pre-purchase contract. The Company's shares are listed on Euronext Dublin. Further information in respect of the Company can be obtained from the Company’s website at www.iresreit.ie
Important information
This note applies if and to the extent that there are forward-looking statements in this Announcement.
This Announcement may contain forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. Except as required by law or by any appropriate regulatory authority, the Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise, including in respect of the Covid-19 pandemic, the uncertainty of its duration and impact, and any government regulations or legislation related to it.
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| ISIN: | IE00BJ34P519 |
| Category Code: | MSCM |
| TIDM: | IRES |
| LEI Code: | 635400EOPACLULRENY18 |
| OAM Categories: | 3.1. Additional regulated information required to be disclosed under the laws of a Member State |
| Sequence No.: | 214419 |
| EQS News ID: | 1530881 |
| End of Announcement | EQS News Service |