Landord Ires to buy 77 apartments in Naas as it recycles cash

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

Ires Reit has agreed to buy 77 apartments under construction in Naas, Co Kildare for €31.8 million as it moves to recycle cash raised from the disposal of other units.

It marks a return to the acquisition trail after an absence in recent years as the largest private residential landlord in the State weathered volatility in interest rates, declining commercial property values, concerns over its loan-to-value levels and rent restrictions.

The forward purchase transaction from Westar Group, a Kildare-based development company owned by the Fadden family, follows Ires raising €34.9 million over the past two years from the sale of 107 apartments deemed “noncore”.

Ires shares rose 0.4 per cent in Dublin.

Chief executive Eddie Byrne said that recycling of cash from that deal will leave Ires’s loan-to-value ratio “comfortably within” its targeted range of 40-45 per cent – below the 50 per cent limit set under Irish real estate investment trust laws.

“Our capital recycling programme is progressing well, having raised nearly €35 million in proceeds so far, and we are excited today to announce the reinvestment of a large portion of these proceeds into an accretive asset in a much sought-after and growing residential location,” said Mr Byrne.

“Our asset recycling programme has, to date, generated sales proceeds 25 per cent-plus above our carrying values, thus giving us effective selling yields of approximately 4 per cent which, through this acquisition, we are able to reinvest at 5.25 per cent in new A rated assets.”

The Westar scheme is expected to be largely completed later this year.

The chief executive said he was continuing to “monitor accretive potential growth opportunities” that we now see emerging in the market.

The latest deal has occurred against the background of renewed interest in the Irish private rental sector by investors, as a result of a decline in borrowing costs, clarity on the future of rent caps, and Government efforts to reduce the cost of apartment construction.

“We see very significant opportunities for Ires looking ahead in terms of potential acquisitions, and market liquidity is improving,” said Colin Grant, an analyst with Davy. “The acquisition announced today demonstrates the key role it can play in providing funding for the development of much needed rental accommodation in Ireland.”