Landlord Ires Reit reports surge in profits as average rents rise to €1,600

Additional dividend declared as full-year profits jump from €65.1m to €119.8m

Ires Reit chief executive  Margaret Sweeney:  ‘The prospects for growth in the Irish market remain good.’ Photograph: Cyril Byrne/The Irish Times

Ires Reit chief executive Margaret Sweeney: ‘The prospects for growth in the Irish market remain good.’ Photograph: Cyril Byrne/The Irish Times

 

Ires Reit, the State’s biggest private landlord, reported a sharp rise in profits last year as the average rent achieved per unit increased by 5.4 per cent to €1,599.

Ires reported net rental income of €41.2 million in 2018, a 13.5 per cent increase on a year earlier. It also saw a fractional improvement in its net rental income margin to 81.3 per cent from 81.2 per cent.

Revenue from investment properties increased from €44.7 million to €50.6 million in 2018 as profits jumped from €65.1 million to €119.8 million.

Ires’s shares rose by 2 per cent in Dublin to €1.53 on the back of the strong results. The share price is up more than 13 per cent year-to-date.

The company achieved an average occupancy across its estate of 99.8 per cent, the same level as in 2017. The total number of residential units owned by the company at year-end was 2,679, as against 2,450 a year earlier.

The value of Ires’s portfolio rose by 22.7 per cent to €921.3 million, with an average gross yield of 6.1 per cent.

Ires invested €77.5 million during the year in acquisitions, development and maintenance of its portfolio. The company said it has capacity for another €180 million worth of acquisitions at a loan-to-value ratio of 45 per cent.

Most valuable

The most valuable block of apartments in its portfolio is listed as Tallaght Cross West in Dublin’s suburbs, where the 442 units are valued at €110 million, up 21 per cent on 2017.

In terms of rental prices achieved, the 85 apartments at the Marker in Dublin’s Grand Canal Docks were being let at an average €2,771 at the end of December.

The lowest average rents at the end of last year were in its scheme in The Laurels and Tallaght Cross West, which were running at €1,286 and €1,287 respectively.

Ires said it has submitted planning applications for another 628 apartments at sites that it currently owns, with permission for 80 units granted in 2018. This includes plans for 428 units at its scheme in Rockbrook, Sandyford, for which a planning application was submitted in December.

The company’s net asset value per share rose 19.8 per cent to 142 cent, and it intends to declare a final dividend of 3 cent per share for the year to bring its total dividend to 5.6 cent per share.

Lack of supply

Ires chief executive Margaret Sweeney said the growth prospects for the company remain strong given Ireland’s strong economic performance and a lack of supply in the housing market.

“Rental demand remains strong and, whilst it is beginning to increase slowly, the supply of residential accommodation remains constrained. The prospects for growth in the Irish market remain good, resulting in a combination of attractive yields and rental growth,” she said.

“Looking forward, the structural drivers of demand for private rental residential accommodation are likely to underpin demand for some time to come. Our modern, well-located existing asset portfolio together with our pipeline of development opportunities – 800 units between forward purchase transactions and own sites seeking planning approval – offer significant future growth potential,” she added.