Given the relative size of the island we live on, you’d be forgiven for thinking that the number of investment properties available to buy must be thinning out by this stage.
With so many interested parties snapping up bargains left, right and centre, it’s hard to believe there’s anything worthwhile still for sale. Yet given the success that the various Real Estate Investment Trusts (Reits) have had over the past year or so, it seems as though the spending is about to continue.
As both commercial and residential rents continue to rise due to the lack of construction activity during the recession, the Reits are cashing it in. With this in mind there will be more than a few eyes looking to see what the Dublin-listed Irish Residential Properties Reit (Ires Reit) has to say when it announces its first-half interim results today.
At its agm in May, the multi-unit investment group – which raised €215 million in its initial public offering in April 2014 – reported a 17 per cent jump in average rents on its apartment portfolio.
Ires Reit reported a 10-15 per cent increase in average rental income, with a net rental income margin for the six months ended December 31st, 2014 of 81 per cent, up from 71 per cent for the initial portfolio, a figure which chief executive David Erhlich rightly said was "outstanding in the market place".
According to the group, average rents increased from €1,070 per apartment to €1,250 in the six months to year-end 2014, largely due to its acquisition of the Marker Residences in the Docklands where average rents are particularly high.
The company, which is the first Reit established in Ireland that is primarily focused on the multi-unit residential rental sector, currently owns 1,566 residential suites and has invested more than €300 million assembling its portfolio.
However, it is the third such company to launch on the Dublin market. The other two trusts, Green and Hibernia, both launched in 2013. Green is focused on commercial property while Hibernia has invested in commercial and residential.
Canadian real estate investor Capreit, which is the largest apartment Reit in Canada, has a 15.7 per cent interest in the fund and according to the group remains committed. The investor granted a $150m funding pipeline facility to Ires Reit earlier in the year, a move that enabled the group to acquire the Rockbrook portfolio of 270 apartments for €87.3 million in January.
The question is, of course, whether the fund will continue to keep acquiring properties. Speaking at its agm, Mr Erhlich signalled that the group was still on the lookout for acquisitions.
With recent figures showing private sector rents in Ireland rose almost 7 per cent in the year to June and the situation being so severe that plans to reduce the size of apartments are being given serious consideration, it would seem Ires Reit is likely to continue to benefit from the housing crisis.
