Biggest landlord in country doubles profit to €120m and plans to expand beyond capital
PROFITS almost doubled last year to €119.8m at Ireland’s biggest private landlord, Ires Reit, boosted by rising rents despite Government-imposed rent caps in places worst hit by the housing crisis.
Ires set up here after the crash, buying up almost 3,000 homes in Dublin, mainly by snapping up entire apartment blocks, and is now the country’s biggest private sector landlord.
Its blocks range from the super high-end Marker apartments at Grand Canal Square in the Dublin docks, and the Elmpark development, close to St Vincent’s Hospital and RTÉ in Dublin 4, to modern developments in Tallaght, Finglas and Inchicore. The average monthly rent for an Ires unit was €1,600 last year.
Reits, including Ires, are a special type of company, they can only invest in property but benefit from reduced taxation – including not having to pay corporation tax on rental profits or the standard capital gains on asset sales.
Ires is listed on the Irish Stock Exchange. Its shares can be bought by anyone, and changed hands yesterday at €1.52 each.
During the year net rental income increased 13.5pc to €41.2m, according to results from the group – that was largely a result of extra properties. Ires spent €41m buying or developing 393 units last year.
Earlier this week, Ires Reit paid close to €14m for 52 apartments at the Coast, in Baldoyle, Dublin 13. That took its tally to 2,895 units including 164 pre-purchase units, which are due for completion by 2021.
Ires has only been in Dublin up to now, but said it will also look at expansion in other urban and in commuter markets outside Dublin that meet criteria including strong local employment, good transport,
and neighbourhoods with schools and infrastructure – evidence that rental market is increasingly targeted at young families.
For existing stock, the occupancy rate last year was a staggering 99.8pc – meaning there are no vacant units for any real amount of time.
Profits were boosted by a 12.6pc increase in the fair value of properties, to €832m from €739m.
Describing 2018 as a “strong” year for Ires, Colm Lauder, analyst at Goodbody, said the group has capitalised on the buoyancy of the rental sector.
“However, Ires has also made considerable, above market gains, on its development and joint-venture projects which can deliver considerable portfolio growth and NAV gains,” Mr Lauder added.
The group’s so-called rent income margin – that is the share of rent kept after costs such as maintenance – was 81pc.
That is higher than the industry average, in part because Ires keeps costs in-house and benefits from scale.
Unsurprisingly, managers see plenty of scope for further growth. Ires chief executive Margaret Sweeney expects pressure on the rental sector to continue.
“Looking forward, the structural drivers of demand for private rental residential accommodation are likely to underpin demand for some time to come.
“The prospects for growth in the Irish market remain good resulting in a combination of attractive yields and rental growth,” she said.
Ms Sweeney said the group continues to invest in the supply of apartments and houses for rent through a combination of acquisitions and built-to-let.