Ires Reit, the State’s largest private residential landlord, said it has agreed to sell 194 residential units in west Dublin to the Tuath Housing Association for just over €72 million as it seeks to raise cash to maintain sufficient headroom over its debt limits at a time of falling property valuations. That equates to just more than €371,000 per unit.
Including some other disposals agreed so far this year, such as the sale in March of a development site in Sandyford in south Dublin for €17 million, Ires will have raised a total of €96.5 million – just shy of the €100 million target of its asset sell-off programme to pay down debt. The group will be left with about 3,736 units, mainly apartments, once the sales are completed.
Ires, led by chief executive Margaret Sweeney, said on Thursday that it had seen its debt rise to 45.1 per cent of the value of its properties from 42.6 per cent in June last year amid declining commercial property values at a time of rising interest rates. The company is restricted by Irish real-estate investment trust (reit) laws to maintaining a loan-to-value ratio of not more than 50 per cent.
The company shaved €56.5 million off the carrying value of its property portfolio on its books, reducing it to €1.36 billion.
The value of the company’s net tangible assets (NTA), as measured under European Real Estate Association (ERPA) reporting standards, fell almost 12 per cent year on year-on-year about €1.48 per share, which, according to Goodbody Stockbrokers analyst Colm Lauder, was lower than the market had expected.
In the six months to the end of June Ires achieved an average rent across its portfolio of €1,772, up 5 per cent on a year earlier. The occupancy rate on its 3,930 units was 99.5 per cent.
The company, which has fought off calls this year from a Canadian activist investor Vision Capital to put itself up for sale as its stock trades at a discount to its intrinsic value, said it remained focused on “delivering on its value maximising portfolio management and disciplined capital allocation strategy”.
“The company will continue to review opportunities to selectively dispose of assets where value for shareholders can be delivered,” it said.
The latest deal, which will ultimately lower Ires’s LTV ratio, includes 91 units in Hansfield Wood in Clonsilla, Dublin 15, which are expected to be sold to Tuath by the end of this month for €38.1 million. The €33.9 million deal for the remaining 103 apartments has a number of conditions that have yet to be satisfied, meaning that it is not expected to close before the end of this year. Both schemes comprise majority housing assistance payment tenants.
“The proceeds from the sale represents an attractive return on the original acquisition cost and is in line with book value at June 30th, 2023,” said Ires. “The proceeds will be used to further strengthen the balance sheet by retiring the company’s higher-cost debt under its revolving credit facility.”
