Results for the Year Ended 31 December 2024. Irish Residential Properties REIT plc / IE00BJ34P519
Irish Residential Properties REIT plc (IRES)
20-Feb-2025 / 07:00 GMT/BST
20 February 2025 Final Results Irish Residential Properties REIT Plc RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024 Earnings growth underpinned by strategic progress Key Highlights A return to earnings growth with Adjusted EPRA earnings increasing 1.4% and Adjusted Earnings (excluding fair value movements) growing to €30.5 million, an increase of 8.7% in 2024. An intention to return excess capital and commence a share buyback programme with a maximum aggregate consideration of up to €5 million. Disposal programme progressing well with 66 disposals completed during the year generating total gross proceeds of c. €19 million, and a €1.6 million gain versus book value achieved through 21 individual unit sales. In the second half of 2024, yields stabilised resulting in like for like valuations broadly in line with 30 June 2024. Irish Residential Properties REIT plc (“I-RES” or the “Company”), the leading provider of rental homes in Ireland, today issues its annual results for the twelve month period from 1 January 2024 to 31 December 2024. Eddie Byrne, I-RES’ Chief Executive Officer, said: “2024 has been a year of solid progress for I-RES. Following the conclusion of our Strategic Review in August, we delivered improvements across key performance metrics, including achieving earnings growth in 2024. Our ongoing asset recycling programme remains a key value driver, delivering strong sales premiums, improving portfolio composition, and providing us with excess capital to deploy against our menu of accretive growth options, including through the share buyback programme which we intend to launch shortly. Looking ahead, our clear focus is to maximise value for shareholders through the implementation of our strategic initiatives. We will also continue to engage constructively and consistently with Government as it reviews the rental regulations. As an Irish long-term investor with permanent capital at our disposal, we are uniquely positioned to navigate the evolving market landscape and deliver sustainable growth into the future.” Financial and Operational Highlights Earnings growth of 1.4% for the year with Adjusted EPRA earnings of €28.9 million (2023: €28.5 million) and adjusted EPRA EPS of 5.5 c (2023: 5.4c). Adjusted Earnings (excluding fair value movements) growth of 8.7% to €30.5 million in 2024 (2023: €28.1 million), reflecting the success of our ongoing asset recycling programme in generating sales premia significantly ahead of book values. The portfolio continues to be effectively fully occupied at 99.4% (31 December 2023: 99.4%) which reflects both our highly effective operating platform and the continued strong underlying demand for high quality rental properties in Dublin. Like-for-like revenue growth of 1.7% in 2024, driven by both organic rental increases and ancillary revenue through new initiatives across the portfolio despite HICP being persistently below the 2% cap throughout H2. Reported revenue for the period of €85.3 million reduced by 2.9% versus prior year, reflecting the impact of 66 unit disposals successfully completed in 2024 as part of our ongoing asset recycling programme and the disposal of c. 5% of the portfolio in H2 2023. Delivered a Net Rental Income (“NRI”) margin of 76.8% for 2024 (2023: 77.3%), with NRI margin in H2 incrementally improving compared to H1. NRI for the year of €65.5 million reduced by 3.6% versus the prior period, driven by the impact of our ongoing asset recycling programme and 2023 H2 disposals. On a like for like basis NRI margins were broadly in line with 2023, reflecting the impact of rigorous cost management initiatives in the period and moderating inflation in Ireland during 2024. Financing costs reduced by 12.4% to €23.4 million, reflecting both the deployment of disposal proceeds to reduce variable debt and the impact of a reducing global interest rate environment. Non-recurring costs of €3.4 million were recorded during the year, with the majority relating to Shareholder Activism and the completion of the Strategic Review which concluded in August. Disposals under the Company’s Strategic Review initiatives were strong, both in terms of the number of units sold at 66 and the premium achieved against book of c. 25% or €1.6m for the 21 units which were sold individually. The Company recorded a loss before tax of €6.7 million for the year driven by a yield expansion of c. 20bps in H1 which resulted in a non-cash fair value reduction for the year of €33.7 million. This resulted in an IFRS NAV per share of 126.2 cents at 31 December 2024 (31 December 2023: 131.7 cents). Balance Sheet and Capital Allocation As at 31 December 2024, I-RES’ portfolio had a total value of €1,232 million (31 December 2023: €1,274 million) with the change in the period primarily driven by asset disposals and a fair value reduction due to expansion of yields in H1 partially offset by positive net rental growth. In the second half of the year yields have stabilised resulting in like-for-like valuations broadly in line with 30 June 2024. The portfolio maintained its EPRA net initial yield of 5.1% in line with 5.1% at 30 June 2024 and compared to 4.9% at 31 December 2023. Stable yields in H2 reflect the wider residential market dynamics in Ireland and the impact of cost reduction initiatives on asset profitability. Net LTV stood at 44.4% at 31 December 2024, down from 45.4% at 30 June 2024, at the higher end of internal targets but is comfortably below our debt covenants and the limits set by Irish REIT legislation. Proceeds from the ongoing asset recycling programme are expected to be deployed towards continuing to actively manage LTV within the target range of 40% to 45%. Thereafter we will prioritise excess capital towards enhancing shareholder returns through an efficient return of capital to shareholders. Consistent with the above capital allocation strategy and also recognising the current discount between the Company’s share price and its Net Asset Value per share, the Company today confirms its intention to return excess capital through a share buyback programme with a maximum aggregate consideration of up to €5 million. The quantum is funded by the Company’s excess reserves and represents the premium to book that the Company has achieved in 2024 and expects to achieve over the next 15 months from its asset recycling programme and is broadly the maximum that can be acquired at present in an efficient manner and in line with our capital allocation strategy outlined above. In line with Irish REIT legislation, the Board intends to declare a dividend of 2.20 cents per share for the six months ended 31 December 2024, bringing the total dividend for 2024 to 4.08 cents per share, in line with the requirements of Irish REIT legislation and representing the company’s dividend policy of paying out 85% of EPRA earnings. Continued Progress on Strategic Review Initiatives The Company completed the disposal of 41 units in total in 2024 as part of the previously announced target of 315 units across a 3-5 year period, selling 21 individual units achieving sales premiums on average of c. 25% and a further 20 units in line with book value through a bulk sale. We also completed the bulk sale of a further 25 units outside of the 315-unit programme, also in line with book values. Together this takes the total number of units disposed of to 66 in 2024. Disposals completed during the year generated total gross proceeds of c. €19 million and a €1.6 million gain versus book value. The Company expects to complete the disposal of at least a further 50 units in 2025, at an average sales premium of between 15% and 20%, generating total gross proceeds of c. €18 million. As at 31 December 2024, the Company had 13 units in a sales process which we expect to complete in the coming months. The Company is implementing additional income generating and cost reduction initiatives as identified in the Strategic Review and to date has successfully executed initiatives across c. 6% of the portfolio, with an expected annualised NRI increase of 8-10% for these units. We continue to review which other units in the portfolio could also benefit from similar initiatives and will continue to build on our progress in 2025. The Company completed a strategic exit from the Cork market. This is an important step towards improving cost structures and margins. Focusing on the greater Dublin area maximises efficiencies and the future operating leverage of the Group. Following the Irish general election in November 2024 the Company has continued to advocate for the advancement of a new regulatory system that gives protection and certainty to renters while also delivering a viable investment case for the development of new private rental accommodation at scale to address the chronic undersupply of rental housing which currently exists in the Irish market. The Company welcomes the Irish government’s commitment in the Programme for Government to encourage institutional investment, continue with its commitment to review rent regulations and attract private capital to its STAR scheme. Outlook The Company remains well placed to deliver on its strategic objectives, drive growth and shareholder value with long term structural drivers of growth continuing to drive demand for rental accommodation coupled with an improving economic landscape. The Company will continue to focus on executing strategic initiatives to maximise shareholder value whilst also continuing to pursue revenue generating and cost reduction initiatives, with a strong focus on optimising the operational performance of the business. The Company will maintain a disciplined approach to capital allocation, focusing on long-term value creation, balance sheet management, while seeking to deliver attractive returns to shareholders through the ongoing ordinary dividend, supplemented by periodic returns of excess capital. A new Government with a significant majority was elected in January 2025 on a five-year mandate, which is positive news for the real estate sector as a long-term focus is necessary for housing policy. There is an improving sentiment from policy makers towards implementing a more balanced regulatory structure aimed at delivering more homes while protecting renters, as outlined in the Programme for Government. Financial Highlights
For the year ended
31 December 2024
31 December 2023
% change
Operating Performance
Revenue from Investment Properties (€ millions)
85.3
87.9
(2.9%)
Net Rental Income (€ millions)
65.5
67.9
(3.6%)
Adjusted EBITDA (€ millions) (1)
53.2
56.0
(5.0%)
Financing costs (€ millions)
(23.4)
(26.7)
12.4%
Adjusted EPRA Earnings (€ millions)(1)
28.9
28.5
1.4%
Deduct: Non-recurring costs (€ millions)(2)
(3.4)
(0.9)
EPRA Earnings (€ millions)(1)
25.5
27.6
(7.5%)
Adjusted EPRA Earnings (€ millions)(1)
28.9
28.5
Add: Gain/(loss) on disposal of investment property (€ millions)
1.6
(0.4)
Adjusted Earnings (excluding fair value movements) (1)
30.5
28.1
8.7%
Decrease in fair value revaluation of investment properties (€ millions)
(33.7)
(141.8)
Loss before tax (€ millions)
(6.7)
(114.5)
Basic EPS (cents)
(1.3)
(21.9)
EPRA EPS (cents)
4.8
5.2
(7.5%)
Adjusted EPRA EPS (cents)(1)
5.5
5.4
1.4%
Interim Dividend per share (cents)
1.88
2.45
Proposed Dividend per share (cents)
2.20
2.00
Proposed Full Year Dividend (cents)
4.08
4.45
(8.3%)
Portfolio Performance
Total Number of Residential Units
3,668
3,734
(1.8%)
Overall Portfolio Occupancy Rate(1)
99.4%
99.4%
Overall Portfolio Average Monthly Rent (€)(1)
1,814
1,774
2.3%
As at
31 December 2024
31 December 2023
% change
Assets and Funding
Total Property Value (€ millions)
1,232.2
1,274.4
(3.3%)
Net Asset Value (€ millions)
668.2
697.3
(4.2%)
IFRS Basic NAV per share (cents)
126.2
131.7
(4.2%)
Group Net LTV
44.4%
44.3%
Gross Yield at Fair Value(1)
7.0%
6.7%
EPRA Net Initial Yield(1)
5.1%
4.9%
Other
Market Capitalisation (€ millions)
481.9
587.7
Total Number of Shares Outstanding
529,578,946
529,578,946
Weighted Average Number of Shares – Basic
529,578,946
529,578,946
(1) For definitions, method of calculation and other details, refer to the Business Review, Business Performance Measures and Glossary (2) The non-recurring costs of €3.4 million were incurred in relation to dealing with Shareholder Activism & EGM of €1.5 million, completion of the Strategic Review of €1.1 million and abortive transaction costs of €0.8 million (31 December 2023: €0.9 million relating to Shareholder Activism). The general and administrative costs of €15.3 million reflected in the Consolidated Financial Statements for the year ended 31 December 2024 (31 December 2023: €12.7 million) contain the non-recurring costs and €11.9 million of recurring general and administrative expenses (2023: €11.7 million). For further information please contact: Investor Relations: Eddie Byrne, Chief Executive Officer Tel: +353 (1) 5570974 email: investors@iresreit.ie Media enquiries: Cathal Barry, Drury Tel: +353 (0) 87 227 9281 Gavin McLoughlin, Drury Tel: +353 (0) 86 035 3749 email: iresreit@drury.ie Results Presentation: webcast and conference call details: I-RES will host a live audio webcast and conference call of the results presentation this morning at 09:00am BST. Access details are listed below: Ireland: 1 800 816 490 UK: +44 20 3936 2999 Global Dial-In Numbers: click HERE Access Code: 797552 Webcast Link: HERE This report and a copy of the presentation slides will also be available to download on the investor relations section of the I-RES website at 07:00am BST: https://www.iresreit.ie/investors About Irish Residential Properties REIT plc Irish Residential Properties REIT plc (“I-RES”) is a growth oriented Real Estate Investment Trust providing quality professionally managed homes in sustainable communities in Ireland. I-RES aims to be the provider of choice for the Irish living sector, known for excellent service and for operating responsibly, minimising its environmental impact, and maximising its contribution to the community. The Company's shares are listed on Euronext Dublin. Further information at www.iresreit.ie. Forward-Looking Statements This Report includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, “maintain”, “forecast”, “potential”, “target” or “believe”, or, in each case, their negative or other comparable terminology, or by discussions of strategy, plans, objectives, trends, goals, projections, future events or intentions. Such forward-looking statements are based on the beliefs of management as well as assumptions made and information currently available to the Company. Forward-looking statements speak only as of the date of this report and save as required by law, the Irish Takeover Rules, the Euronext Dublin Listing Rules and/or by the rules of any other securities regulatory authority, the Company expressly disclaims any obligation or undertaking to release any update of, or revisions to, any forward-looking statements or risk factors in this report, including any changes in its expectations, new information, or any changes in events, conditions or circumstances on which these forward-looking statements are based. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on, such forward-looking statements. There is no guarantee that the Company will generate a particular rate of return.
Business Review Incremental improvement across key performance metrics The Company delivered a strong financial and operational performance in 2024, making progress against strategic objectives and delivering incremental improvements across numerous key performance indicators particularly in the second half of the year. Our high-quality portfolio of modern and sustainable properties remained fully occupied at the end of the year at 99.4%, reflecting the consistent efficiency of our property management operations, the mid-market positioning of our assets, and the continued strength of demand in the Irish Private Rental Sector (“PRS”) market. Revenue, on a like-for-like basis, increased by 1.7% in the period, with organic revenue increases supplemented by ongoing initiatives to increase ancillary revenue streams. Organic annual rental increases in Ireland, which are limited to the lower of 2% or the Harmonised Index of Consumer Prices (“HICP), were impacted by the lower rate of prevailing HICP inflation in H2, which remained in the range of 0% and 1.5% since June 2024. Reported revenue for the year reduced by 2.9% to €85.3 million, driven by the impact of disposing of 66 units in 2024 which were completed as part of our ongoing asset recycling plan and the disposal of c. 5% of our portfolio completed during the second half of 2023. On a like-for-like basis, Net Rental Income (“NRI”) increased by 1.7% for the year. NRI margin for 2024 was 76.8% (2023: 77.3%) with this increasing from 76.5% in H1 despite disposals completed in H2. As highlighted by this H2 margin performance, we are implementing additional income generating and cost management initiatives to improve the profitability of our assets and we continue to review which other units in the portfolio could also benefit from similar initiatives. Building on our progress in 2023 of rolling out our Resident App (I-RES Living), we launched our new corporate and resident websites during 2024, further assisting in streamlining tenant engagement. Whilst we experienced operating cost inflation in areas such as staff costs, we have also been impacted by Employment Regulation Orders (EROs) which are focused on the contract cleaning and security industries. We have managed to offset the majority of these inflationary impacts through reduced expenditure on utilities (reduced consumption and pricing), stable OMC service charges and repairs and maintenance costs, and strong collections during the period in excess of 99%. Adjusted G&A expenses include costs such as employees’ salaries, director fees, professional fees for audit, legal and advisory services, depository fees, property valuation fees, insurance costs and other general and administrative expenses, and excludes non-recurring costs. In 2024 costs increased by 1.6% with the increase driven by costs associated with the launch of our new corporate and resident websites and Chair and CEO recruitment costs. Financing costs, which include the amortisation of certain financing expenses, interest and commitment fees, reduced by 12.4% in the period to €23.4 million from €26.7 million. The primary driver of the decreased financing costs relates to lower debt levels, post successful completion of the asset disposal programme in 2023 alongside the ongoing asset recycling programme. The weighted average cost of interest for the period was 3.79% compared with 2023 at 3.85%. In January 2024, I-RES reduced the overall facility size of the Revolving Credit Facility (“RCF”) from €600 million to €500 million which has generated commitment fee savings during the year. The Company delivered growth of 1.4% in adjusted EPRA earnings at €28.9 million and adjusted EPRA EPS of 5.5c during 2024, driven by ancillary revenue initiatives, rigorous cost management programmes, and lower finance costs. Reported EPRA earnings of €25.5 million and reported EPRA EPS of 4.8c reduced by 7.5% owing to the impact of non-recurring charges recorded in the period. Adjusted Earnings (excluding fair value movements) increased 8.7% from €28.1 million to €30.5 million. Non-recurring costs totalled €3.4 million in 2024. These costs related primarily to Shareholder Activism of €1.5 million and the Strategic Review which concluded in August at a cost of €1.1 million. In addition, in H2, the Company terminated the contract to forward purchase 44 units in Ashbrook, Clontarf as the vendor did not achieve practical completion by the Longstop Practical Completion Date. I-RES recognises its investment properties at fair value at each reporting period, with any unrealised gain or loss on remeasurement recognised in the profit or loss account. In the period, the fair value loss recorded on investment properties was €33.7 million, reflecting yield expansion in the wider Irish residential market in the first half of the year and was the driver for the recorded loss before tax of €6.7 million. We are encouraged by the yield stabilisation witnessed in the market in H2 following two years of expansion. Yield movements in the period were offset by continued positive rental growth, along with cost reduction measures, which have improved the profitability of certain assets. Our Gross Yield was 7.0% at period end, well in excess of our weighted average cost of interest of 3.79%. Yields
As at
31 December 2024
31 December 2023
Gross Yield at Fair Value
7.0%
6.7%
EPRA Net Initial Yield
5.1%
4.9%
Our average monthly rent increased to €1,814 from €1,774 at 31 December 2023 representing an increase of 2.3% reflecting continued strong organic growth and the optimisation of the portfolio, through the selective disposal of underperforming and lower quality assets. Despite this our portfolio is currently estimated to be 18% below market rent. Occupancy of 99.4% (2023: 99.4%) reflects an effective full occupancy rate which is supported by our mid-market residential sector positioning and continues to highlight the supply/demand imbalance in the market. AMR and Occupancy
Total Portfolio
Properties owned prior to 31 December 2023 (Like for Like properties)
As at 31 December
2024
2023
2024
2023
AMR
Occ. %
AMR
Occ. %
AMR change %
AMR
Occ. %
AMR
Occ. %
AMR change %
Residential
€1,814
99.4%
€1,774
99.4%
2.3%
€1,814
99.4%
€1,779
99.4%
1.9%
Operational and Financial Results Net Rental Income and Profit for the year ended
