Ires hires finance chief from O’Brien’s Island Capital

Group also signals likely movement of property management in house

Ires Reit, the State’s largest private residential landlord, has hired a finance chief from Denis O’Brien’s Island Capital investment vehicle as it boosts its resources ahead of an expected move to take management of its portfolio of over 3,800 apartments in-house next year.

Brian Fagan, a chartered accountant, will join the Dublin-listed company on April 26th, having also previously worked for Ballymore Properties and DCC. The company has also hired Anna-Marie Curry, currently company secretary and general counsel with Bord na Móna, to take on the same role in the property group, from July.

The company, led by chief executive Margaret Sweeney, also said in a statement announcing the hires on Thursday that it has received 12 months' notice of termination from a fund management agreement from Ires Fund Management, which is owned by the Canadian group that set up and floated Ires on the Dublin stock exchange in 2014.

Ires Reit gave its clearest signal yet in the statement that it is likely to move management of its properties in-house. Ires Fund Management has received about €30 million in fees under an investment-management agreement (IMA) since 2014.

A move to internalise management will reduce the Irish-listed property fund’s running costs and boost profits, according to analysts at Goodbody Stockbrokers and Davy.

In addition, the Canadian group, called Capreit LP, continues to hold an 18.8 per cent stake in Ires.

Ires said on November 2nd that a subcommittee of the board was engaged in talks with the investment manager and Capreit “in relation to the potential terms of a revised IMA whilst also evaluating the relative strategic and financial merits of the various alternatives available”.

The company said on Thursday that the subcommittee “believes it is increasingly likely” that Ires will take the portfolio management in-house, known as “internalisation”.

“Further announcements in relation to the IMA will be made by the company ahead of its forthcoming annual general meeting scheduled to be held on 11th May, 2021,” it said.

Direct staff

The move to internalise fund management would see 65 employees of the investment-management company become direct staff of Ires, which currently has only three employees, including Ms Sweeney.

In addition to management fees, the Canadian group has charged some of its salary expenses to the Dublin-listed company.

Ires has been entitled to take over the shares of its Canadian-owned investment manager for €1 since a five-year contract with Ires Fund Management expired last November.

"The termination of the IMA with the Capreit subsidiary is positive, given the potential for lower costs and fees," said Colm Lauder, an analyst with Goodbody Stockbrokers. "We expect an internalisation process of the existing manager as the mostly likely outcome. This provides immediate access to a skilled, in-situ property and asset management team of [about] 65 people."