Irish Residential Properties REIT, one of the country's largest institutional landlords, reported occupancy of 99.7% at its properties for the first quarter, up from 99.4% at the end of last year.
In a trading update published ahead of its AGM, IRES REIT pointed to exceptional demand for rental accommodation as well as the "high quality" of its portfolio for the uptick.
The company said that its net income margin continue to improve in Q1 versus the second half of 2024, and that it was implementing additional income generating and cost reduction initiative identified in a recent strategic review.
IRES is now using its "underutilised" real estate footprint for new services such as car parking, but rent collections also remain strong at in excess of 99%, in line with 2024.
The firm completed a refinancing of its main debt facilities during the recent quarter, and one-off refinancing costs and the payment of a dividend have resulted in the value of loans as a proportion of the value of its properties (LTV) rising from 44.4% to 45.4%.
The company has a 50% LTV limit set by its debt covenants and Irish REIT legislation.
It refinanced its existing revolving credit facilities (RCF) to comprise of a new RCF of €500m and an increased accordion facility of €200m, each of which have five-year terms expiring in March 2030 with the option of two one-year extensions and priced at Euribor plus a margin of 2.05%.
Hedging facilities in the amount of €275m have been put in place for five years, maintaining the company’s overall level of fixed rate debt at 85%.
Following this refinancing, the current weighted average cost of interest across the group’s facilities is approximately 3.8%, broadly in line with the group’s weighted average financing costs in 2024.
"The successful completion of the refinancing in the period will bolster our position in the market, delivering additional capital and significantly increased flexibility, positioning us well to play a part in the delivery of much-needed new rental accommodation," said Eddie Byrne, CEO of IRES.
IRES disposed of 66 units last year, and 13 units were disposed of during Q1, with a further 12 units due to be sold in the near term.
"We remain confident we will complete the disposal of at least 50 units in 2025, at an average sales premium of between 15% and 20%, having had a strong start to the year delivering premia in excess of this range."
The IRES board said it remains committed to maximising shareholder value and addressing the discount between its current market capitalisation and net asset value.
As a result, the proceeds from a previously announced asset recycling programme have been deployed to wards managing LTV within the board's target range, and executing a €5m share buyback programme to repurchase 5.1m shares at 97.3c each.
“We are pleased to report strong trading in the period and are encouraged by the positive momentum of the business. The execution of our recycling programme is in line with our expected timeframe and will further strengthen our financial position," said Byrne.
"Consistent with our capital allocation strategy and also recognising the current discount between the Company’s share price and its Net Asset Value per share, we completed a share buyback programme, successfully returning €5m to shareholders.
"We will continue to concentrate on value accretive capital allocation strategies for so long as the share price trades at a steep discount to Net Asset Value.
"Furthermore, while we will continue to consider all opportunities to enhance shareholder value, we are confident about the long-term market opportunity which is underpinned by our high-quality portfolio and market leading operating platform.”
(Pic: File)
