Ires Reit raises €134.2m to help buy 815 apartments

Ires Reit, the State’s largest residential landlord, raised €134.2 million in a share placing on Thursday as it lined up funding to acquire a portfolio of 815 apartments, mainly in Dublin, where tenants are paying almost €1,500 rent a month.

The Dublin-listed company, led by chief executive Margaret Sweeney, also said that it has exercised an option to extend committed credit facilities from banks, including Barclays, AIB, HSBC, Bank of Ireland and Ulster Bank, to €600 million from €450 million.

Ires had been selected last month as the preferred bidder of the apartments portfolio which was being sold by Marathon Asset Management and is spread across 16 locations. The agreed value of the transaction, at €285 million, was about €45 million over the original asking price.

The share sale was carried out by Davy, Investec, Barclays and TD Securities by way of a planned placement of 86.5 million new units.

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Shares in Ires dropped as much as 4.4 per cent in Dublin on Thursday to €1.583, closing at €1.608. The shares were placed at €1.55, a discount of 3.6 per cent to the Thursday closing price. The placed stock represents almost 20 per cent of the shares in issue before the placing.

Shareholders

Ires had authorisation from shareholders to sell only half the stock being offered, and will need shareholder agreement at an extraordinary general meeting, scheduled for July 9th, to complete the placing of the remaining shares.

“Upon successful completion of the Marathon Portfolio acquisition, the company will have grown its portfolio to 3,568 residential units since our IPO,” said Ms Sweeney, referring to the company’s initial public offering (IPO) in April 2014, when it raised an initial €200 million.

“In addition, the company has the opportunity to deploy capital at attractive yields on a pipeline of both acquisition and own-development properties.”

Fifteen of the apartment complexes are in Dublin, led by a scheme in Santry comprised of 142 units, with one based in Cork. The portfolio is currently generating €14.2 million of rent per year – an average of €1,486 a month per occupied apartment.

All of the apartments in the portfolio are in so-called rent-pressure zones where rent increases are limited to 4 per cent a year. Ires estimates that the portfolio’s rental yield will rise from 5.1 per cent to 5.3 per cent within three years.