A long-awaited strategic review at Ireland’s largest private landlord has ruled out a substantive sale of the group or its assets after months of boardroom tension over the future of the company.
However, Ires Reit’s board has committed to a “capital recycling programme”, which it said will include the disposal of some 315 apartments over a three- to five-year period, about 8 per cent of its total portfolio. The initiative is expected to generate between €110 million and €115 million, Ires said.
The group, which reported half-year financial results on Thursday, said its board had “unanimously concluded that, following rigorous market testing, a sale of the company or its assets is unlikely to maximise shareholder value”. It comes after a campaign by Vision Capital, a Canadian investor with a 5 per cent stake, to force a sale or break-up of the business earlier this year.
A truce was reached in April when the Canadian firm was offered two seats on Ires’s board.
Ires said on Thursday that it received no offers to acquire the company or its assets during the period of the review, which commenced in February amid the boardroom tumult.
Shares in the company, which have fallen by more than 12 per cent this year, have traded at a deep discount, prompting UK activist investor Asset Value Investors (AVI) and US property specialist Starwood to build up small stakes in the Irish group.
Both investors are said to be more interested in a short-term “liquidity event” than holding on to their stake in the hopes that Ires’s market valuation increases.
Speaking to The Irish Times on Thursday, Ires chief executive Eddie Byrne said the group had not yet engaged with shareholders on the review’s recommendations but would do so over the next 24 hours. “We certainly hope shareholders see what we see in terms of the opportunity in our business, to take advantage of that opportunity,” he said.
Mr Byrne, the former head of US lending at Anglo Irish Bank who replaced former chief executive Margaret Sweeney at Ires’s annual general meeting in May, said the 315 apartments identified for disposal had been selected for three main reasons.
Firstly, he said the units are in estates that are not “effectively controlled” by Ires. “The second reason is we don’t have a clear line of sight on [what] the capital expenditure requirements might be for these units,” Mr Byrne said. Finally, he said the profiles of the apartments are such that they can be sold to the private market “at a premium to what our investment values are today”.
While he said Ires is constantly reviewing it portfolio, Mr Byrne ruled out any substantial upward revision of the number of units to be sold in the short term. “I don’t see anything like that happening over the next period of time,” he said. “Possibly in the future, maybe we would look at other assets, but I suspect that would only happen in the circumstances that we had bought or invested in further units, which [were] improving the overall quality and balance of our portfolio.”
Like-for-like revenue at Ires increased by 2.1 per cent in the first six months of the year compared with the same period last year despite a 3.3 per cent decline in total revenue to €42.8 million. The drop-off was driven by the disposal of 5 per cent of Ires’s portfolio last year, it said.
Occupancy levels across the group’s portfolio reached 99.6 per cent at the end of June. “It doesn’t really get much better than that,” Mr Byrne said.
Ires also recommended the payment of a dividend to shareholders of €1.88 per share, down 23.3 per cent from €2.45 last year.
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