Ires Continues To Trade Below NAV Despite Robust Growth Outlook
The combined value of residential investor Ires REIT’s portfolio of Irish apartments, commercial space and sites reached nearly €1.5B at the end of 2022 but its stock market valuation fell below €600M.
Ires’ 3,938 apartments account for the bulk of the portfolio that had a net asset value at 31 December of €847M, or €1.60 per share allowing for just over €650M of corporate debt. However, Ires’ share price values the company at just €593M.
Rents rose last year and the company reported a 99.4% occupancy rate across its 38 blocks of predominantly Dublin apartments, though debt costs jumped by 21% and a fair value loss on its holdings saw the company report an overall loss of nearly €12M over the year.
The company said in its results report that it had added 238 units during the year through the purchase of 108 units at Ashbrook and the delivery of 69 units at Tara View and 61 units at the School Yard.
It disposed of 128 units at Hampton Wood at a yield of 3.5%, and brought its LTV at year end to 43.3%. Barclays analysts recently forecast that it would need to sell more assets during 2023 to maintain its LTV at below 50%, The Irish Times reported.
Net rental income increased to €65.7M, representing an increase of 4.3% from the previous year. Adjusted EPRA earnings were €36.6M, down 1.1% on 2021 due predominantly to increased interest costs as a result of the increasing interest rate environment in the second half of the year, the company said.
Ires CEO Margaret Sweeney focused on growth at the results announcement and said that despite the challenging macroeconomic backdrop, the financial and operational performance of the business remained strong.
“Portfolio growth, coupled with our strong occupancy levels and organic rental growth delivered overall revenue growth of €84.9M for the year, a 6.5% increase on 2021 and an increase in net rental income of 4.3%,” she said.
“We successfully completed the internalisation of the management company — a significant strategic milestone for the business. I-RES is now a fully integrated Irish company and operating platform which is unique in the Irish market. We are very well positioned to navigate an uncertain new landscape.”
