Ires Reit, the State’s largest private residential landlord, is understood to be at an advanced stage of planning to move the asset and property management of its portfolio of almost 3,700 apartments in-house to lower running costs.
A fund-management company called Ires Fund Management, which is owned by the Canadian group that set up and floated Ires on the Dublin stock exchange in 2014, has received about €29 million in fees under an investment-management agreement (IMA) since then, according to disclosures in annual and interim reports.
In addition, the Canadian group, called Capreit LP, continues to hold an 18.3 per cent stake in Ires.
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 chief executive Margaret Sweeney.
In addition to management fees, the Canadian group has charged some of its salary expenses to the Dublin-listed company. These amounted to €1.36 million alone for 2020, according to its latest annual report.
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.
A spokesman for Ires declined to comment on the plans to move its investment-management function in-house at 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”.
“As at 1 November 2020, being the expiry date of the initial IMA term, the board subcommittee has not reached agreement on new terms for a revised IMA with Ires Fund Management. Therefore, in accordance with its terms, the IMA shall continue at this point under the existing terms,” it said at the time.
Ires currently owns 3,683 apartments and houses for private rental in Dublin and Cork, and has an additional 69 units due for delivery by the end of the first half of 2022 under pre-purchase contracts. It has planning approval to develop another 543 residential units on its existing sites.
In addition, the company said last month that it will acquire 146 apartments at the Phoenix Park Racecourse in Dublin 15 for €60 million before the end of January.
Four founders of Hibernia Reit shared €39.9 million in stock and cash resulting from the company’s move in November 2015 to “internalise” management of the company midway through an IMA contract with the listed office property company.
The early internalisation deal resulted in no additional costs for Hibernia Reit beyond what it would have otherwise have had to pay in fees.
Asset manager Green Reit Property Ventures, the firm led by Stephen Vernon and Pat Gunne that managed the assets of Green Reit, reportedly received more than €100 million in stock and fees between the property company's flotation in 2013 and its purchase off the market last year.