State’s biggest landlord records 30% rise in rental income
Ires Reit portfolio grew to 3,739 units in first half of 2020, up from 2,771 this time last year
Ires Reit chief executive Margaret Sweeney said the results “demonstrate the strong resilience of the business”. Photograph: Nick Bradshaw
The State’s biggest landlord recorded a more than 30 per cent increase in net rental income during the first six months of the year despite the challenges posed by the coronavirus pandemic, its interim report shows.
Ires Reit published its half-year results for the six months ended June 30th on Friday.
The report shows the landlord enjoyed 35 per cent growth in the scale of its portfolio to 3,739 units for rental, up from 2,771 units at the same time last year. The new units were across 42 properties in Dublin and Cork.
It also recorded a 30.2 per cent increase in net rental income (NRI) to €29.6 million, which was up from €22.7 million at the same time last year. The report says the increase was due to acquisitions and organic rental growth.
There was an NRI margin of 79.2 per cent for the period, down from 81.6 per cent the year before. The decrease was due to higher bad debt and vacancy expenses compared with previous years, mainly resulting from the Covid-19 pandemic.
The basic net asset value per share of 150.4 cents was down from 155.3 cents as of December 31st.
The company said it intends to declare an interim dividend of 2.75 cents per share for the six months ended June 30th, which is an increase of 1.8 per cent compared to the 2.7 cents per share for the same period last year.
On Covid-19, Ires Reit said it implemented “working from home” measures for all staff other than frontline site staff from the end of February.
“We have enhanced our cleaning and disinfecting at all properties as well as introducing an ongoing program of communications with residents in relation to Covid-19,” the report says.
“While we limited our repairs and maintenance on existing properties to essential works during the early stage of the pandemic to maintain the safety of our residents, we have now returned to a full service.”
It said its adjusted occupancy rate has remained strong at about 98.9 per cent, while monthly rent collections have also remained resilient post-Covid-19 at 98.4 per cent for the residential portfolio.
“While this is marginally lower compared to the rent collections in previous years, it represents a very strong outturn under the current exceptional conditions,” the report notes.
“Rental demand has remained strong and we continue to see demand levels in line with pre-Covid-19 levels.”
The closure of non-essential construction sites for seven weeks and continued social-distancing requirements resulted in construction activity on the company’s active development sites and forward purchase contracts being temporarily suspended.
While work has recommenced on all sites, the company expects delays to completion of its developments at Hansfield Wood (95 units), Merrion Road (69 units), and Bakers Yard (61 unit).
The company’s portfolio value fell 1.95 per cent, principally due to lower forecasted rental income in the short term impacted by vacancy and bad debt due to Covid-19, and decreases in developmental land values and commercial components of the portfolio.
Its revolving credit facility was refinanced during 2019, increasing the committed facility to €600 million, lowering the interest fixed margin to 1.75 per cent and extending the maturity to 2024, with the option to extend further to 2026.
The company has €14.1 million of cash and €212 million of committed undrawn debt under its revolving credit facility.
Ires Reit chief executive Margaret Sweeney said the results “demonstrate the strong resilience of the business”.
“To date rent collections across our residential portfolio remain strong, but this may not be indicative of the rate of rent collection in the upcoming months given the ongoing uncertainty related to the Covid-19 pandemic,” she added.
These include “uncertainty surrounding governmental measures taken to mitigate the economic impacts”.