2019 YEAR END RESULTS - CONFERENCE CALL - Irish Residential Properties REIT plc - Investor Relations
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Irish Residential Properties REIT plc
May 2020
2019 YEAR END RESULTS – CONFERENCE CALL
1
D I S C L AI M E R
Cautionary Statements
This presentation has been prepared by Irish Residential Properties REIT PLC (the “Company” or “I-RES”) for information purposes only.
This presentation has been prepared in good faith but the information contained in it has not been independently verified and does not purport to be comprehensive. The Company is not
undertaking any obligation to provide any additional information or to update this presentation or to correct any inaccuracies that become apparent. This presentation is neither a prospectus nor an
offer nor an invitation to apply for securities. The information contained in this presentation is subject to material updating, completion, revision, amendment and verification. Any prospective
investor must make its own investigation and assessments and consult with its own adviser concerning any evaluation of the Company and its prospects.
No representation or warranty, express or implied, is given by or on behalf of the Company, its group companies, IRES Fund Management Limited (“IRES Fund Management”) or any of their
respective shareholders, directors, officers, employees, advisers, representatives, agents or any other persons as to the accuracy, completeness, fairness or sufficiency of the information,
projections, forecasts or opinions contained in this presentation. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in any of the information or opinions in
this presentation and neither of the Company or IRES Fund Management, nor any of their employees, officers, directors, advisers, representatives, agents or affiliates, shall have any liability
whatsoever (in negligence or otherwise, whether direct or indirect, in contract, tort or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising
in connection with this presentation. Certain financial and statistical information contained in this presentation is subject to rounding adjustments. Accordingly, any discrepancies between the totals
and the sums of the amounts listed are due to rounding.
This presentation contains forward-looking statements which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue",
"target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Such forward-looking statements are based on the beliefs of its management as well as
assumptions made and information currently available to the Company. Forward-looking statements speak only as of the date of this presentation and the Company and IRES Fund Management
expressly disclaim any obligation or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation, including any changes in its expectations 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.
To the extent indicated, certain industry, market and competitive position data contained in this presentation come from third party sources. Third party industry publications, studies and surveys
generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the
Company believes that each of these publications, studies and surveys has been prepared by a reputable source, neither the Company nor IRES Fund Management have independently verified
the data contained therein. In addition, certain of the industry, market and competitive position data contained in this presentation may come from the Company’s own internal research and
estimates based on the knowledge and experience of the Company and IRES Fund Management in the Irish market. While the Company believes that such research and estimates are reasonable
and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly,
undue reliance should not be placed on any of the industry, market or competitive position data contained in this presentation.
THIS PRESENTATION DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER FOR SALE OR SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES NOR SHALL IT OR ANY
PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT TO PURCHASE SHARES
2
Highlights
Trading 2019May 2020
Update
2019 Financial Results
Assets Portfolio and Growth Strategy
ESG Strategy
3
IRISH RESIDENTIAL PROPERTIES REIT plc
Trading Update May 2020
6 4
I•RES REIT - Key Investment Attractions
Attractive Market Backdrop Modern Asset Base with Robust Balance Sheet Established Operating Effective Capital
& Growth Opportunities strong growth potential with Strong Liquidity Platform Allocation
• Ireland - c. 20% projected • Portfolio of 3,7391 high- • Average interest rate • Leveraging knowledge, • Strategic deployment of
population growth by 2040 quality, modern assets. below 2.0% expertise and technology capital since IPO to grow
• High housing demand of CAPREIT portfolio
• Pipeline potential of • Long term laddered
(supply shortage) • Established platform with • Generated stable, growing
c.20% but delivery delays maturity of debt ranging
• Strong presence of due to Covid-19 from 2024 to 2032 65 personnel in Dublin dividends and NAV
international IT and appreciation
• Located in desirable areas • Occupancy of 99% at 30
Pharma companies as • Diversified sources of
in Dublin funding
April 2020 • Acquisition and
well as Food/Agri and development plans to
Business Services • Average asset age of • 81.4% Net Rental
strategically grow portfolio
c.11yrs2 Income margin in 2019
• Attractive place to live further
• Gross yields of 5.6%2
Delivering Progress Across Key Performance Indicators Since IPO3
No. of Units EPRA NAV per Share EPRA EPS Dividend per Share
1,204 3,666 €0.995 €1.546 1.6 cents 6.9 cents 0.68 cents 5.8 cents
2014 2019 2014 2019 2014 2019 2014 2019
1 As at 30 April 2020 2 As at 31 December 2019 3 As at financial years ending 31 December 2014 and 2019 5
Current macro environment challenging and uncertain as a
result of Covid-19
• Significant Government income supports in place for workers and employers experiencing job
disruption due to Covid-19, which provides some assistance to tenants during these challenging times to
maintain their rental payments. In addition to the Pandemic Unemployment payment, a temporary wage
subsidy scheme commenced on 26 March 2020 for a 12 week period
• A suspension on evictions and rent increases introduced for the duration of the Covid-19 emergency
period, 3 months from 27 March 2020. The current rent regulation, which provides for rent increases of up
to 4% per year in rental pressure zones, remains in place until 31 December 2021
• Non-essential construction sites closed for 7 weeks until 18 May 2020 with social distancing and other
requirements pertaining after this date. This has resulted in construction activity on the Company's active
development sites and forward purchase contracts being temporarily suspended with delays to completion
of developments including Hansfield Wood, Merrion Road and Bakers Yard
• Economic outlook unclear and economic forecasts continue to evolve as Ireland responds to the Covid-
19 pandemic
• The Government has put in place a five-stage plan to reopen Ireland’s economy and society in a
phased manner, from 19 May 2020 to 10 August 2020
6
Managing through Covid-19 uncertainty
Net Rental Income Margin %
Operational Highlights
• Trading to April 2020 in line with expectations, however, Covid-19 uncertainty continues,
particularly surrounding governmental measures taken and economic impacts
• Net rental income margin remained strong at 80.7% in Q1 2020
• Demand remains robust, with occupancy of 99% at 30 April 20201
• Residential rent collection rates of 98% in April 2020
Occupancy %
• Took delivery of 55 units at Waterside and 18 units at Tallaght Cross West during Q1 2020,
bringing the total units owned to 3,739 100
99.8 99.8
98 99.0
98.3
• In relation to our tenants, we have enhanced cleaning and disinfecting at all properties as
96
well as an extensive programme of communication
94
• Adapting and innovating for post Covid-19 world: enabling Wi-Fi in all properties to support 92
working from home, larger apartment sizes with balconies dominate portfolio 90
2017 2018 2019 Apr-20
Number of Units
Financial Highlights
• Strong financial position, with a robust balance sheet and strong liquidity position
• Dividend strategy continues, with a final dividend for the year ended 31 December 2019 of
€16.2 million, paid on 23 March 2020
1 This number excludes the units which have been made available to health service staff for the period of the Covid-19 crisis.
7
Strong balance sheet with laddered maturity of debt and diverse
funding mix
• Continue to execute on our funding strategy to: Funding Strategy RCF Notes
• Diversify sources of funding
• Extend and ladder the maturity of debt Facility €600m €200m note2
• Maintain a low cost of debt Syndicate of
Diversify sources Syndicate of 5 banks international
• Maintain prudent leverage levels within covenants institutional investors
5-year term (option to Average maturity of
Extended maturity
extend to 7 years) 9.7 years
• The Company has €9.5m of cash and €210m of committed
undrawn debt under its RCF1 providing a strong liquidity
Maturity dates 2024 (option to 2026) 2027 - 2032
position
1.75%, plus the one-
month or three-month
Maintain a low
EURIBOR 1.92%4
• Completed Private Placement of Notes of c.€200m2 in March interest cost
rate (at the option of I-
2020, with a weighted average interest rate of 1.92% and RES)3
weighted average maturity of 9.7 years, laddered over 7, 10
and 12 year maturities
1 As at 30 April 2020 2 Euro equivalent 3 €204m of the RCF is hedged at an effective swap interest rate of 1.66% 4 The Notes have a weighted average fixed interest rate of 1.92% inclusive of the swap. 8
Ireland’s structural drivers of growth expected to reassert in time
Eurozone GDP forecasts in 20211 Population growth forecast2
Strong
economic
fundamentals
Estimated demand c.2x supply levels3 Available rental stock in Dublin 4
Significant
demand/
supply
Imbalance persists
2020 Annual General Meeting Irish Residential Properties REIT plc
1 IMF at 14 April 2020 , 2 UN Population Growth Forecasts, 3 CSO, ESRI , 4 Daft.ie
9
IRISH RESIDENTIAL PROPERTIES REIT plc
2019 Financial Results
6 102019 Highlights
Revenue from Investment Properties Net Rental Income
Strong Financial Performance in 2019
€62.1m
• c. 22.8% increase in Net Rental Income and Earnings €50.5m
• EPRA EPS up 6.2% to 6.9 cents (2018: 6.5 cents) €50.6m
€41.2m
€44.7m
€36.3m
• €56.2m increase in portfolio valuation
– 5.6% gross yield at fair value
• EPRA NAV per share up 8.9% to 154.6 cents (2018:
YE 2017 YE 2018 YE 2019 YE 2017 YE 2018 YE 2019
142.0 cents)
Occupancy Average Monthly Rent
• Final dividend of 3.1 cents per share
€1,599 €1,596
99.8% 99.8% 98.3% €1,517
Investments in Line with Our Growth Strategy
• Growth of c. 37% since Dec 2018 bringing portfolio to
3,666 units, including:
2017 2018 2019 2017 2018 2019
– Acquisition of 815 unit Marathon Portfolio completed
August 2019 EPRA Earnings per Share (€ cents) EPRA NAV
– 118 houses delivered during 2019 under pre-purchase €811m
6.9c
contracts 6.0c
6.5c
• Entered into contracts for 219 units to be delivered in
2020 and 2021 €620m
• Further development opportunities available, with
€504m
Planning Permission received for 627 units
YE 2017 YE 2018 YE 2019 2017 2018 2019 11Financial Results 2019
Operating Performance
Period ended 31 December 2019 2018
Revenue from Investment Properties (€m) 62.1 50.6
Net Rental Income (€m) 50.5 41.2
EPRA Earnings (€m) 33.1 27.8
EPRA Earnings per share(cents) 6.9 6.5
Profit (€m) 86.3 119.8
Basic EPS (cents) 18.0 28.0
Portfolio Performance
2019 2018
Total Number of Residential Units 3,666 2,679
Overall Portfolio Occupancy Rate2 98.3% 99.8%
Overall Portfolio Average Monthly Rent2 €1,596 €1,599
Gross Yield at Fair Value1,2 5.6% 6.1%
1 Excluding fair value of development land and investment properties under development
2 For definitions, method of calculation and other details, refer to page 24 of the Company’s 2019 Preliminary Announcement
12
Grande Central, Sandyford, Dublin 13Financial Results 2019
Strong Financial Position
As at 31 December 2019 2018
Total Property Value € 1,359.2m € 921.3m
Net Assets € 810.2m € 618.7m
EPRA NetAssets € 811.0m € 619.6m
Basic NAV per share (cents per share) 155.3 142.5
EPRA NAV per share (cents per share) 154.6 142.0
Group Total Gearing 40.8% 33.6%
New Syndicated Revolving Credit Facility
• €450m facility finalised in April 2019
• RCF increased to €600m in June 2019
• 5 year term to 2024, with option to extend two further years
• Lower costs
Equity Placing
• 86.55m new shares placed in two tranches in June/July 2019 at
€1.55 per share
• Raised c.€131m (net proceeds) to fund growth strategy
13IRISH RESIDENTIAL PROPERTIES REIT plc
Assets Portfolio and Growth Strategy
14Large Asset Base Located Across Dublin
Key Highlights Portfolio Overview (including all committed forward purchases)
Units 36 37 39
South Dublin
01 Beacon South Quarter 225 38
02 Grande Central 65
30 31 33
03 Rockbrook Grande Central 81
Portfolio to reach 3,964(1) units 04 Rockbrook South Central 189
34
32
by 2021 based on committed 05
06
Bessboro
The Forum
40
8
35
28
forward purchases 07 Elmpark Green 201
26
08 The Maple 68
09 Time Place 67 27
10 Beechwood Court 101
11 Belville Court 29
12 Merrion(1) 69 15 20
City Centre 17
29
13 Kings Court 83 21 18
14 The Marker Residence 85 25
42 13 16
15 Bakers Yard 147 19 14
16 City Square 24
43 high quality properties in 17 Xavier Court 41
40
total – 42 of which are spread 18 Spencer House 12
05
19 Coopers Court 14 41
across Dublin 20 Richmond Gardens 98 07
21 East Arran Street 12 12
West Dublin
22 Priorsgate 103
23 The Laurels 19
23
24 Tallaght Cross West 460
25 Coldcut Park 91 22 24 10
08 02
26 Hansfield Wood(1) 194 06 09
03
27 Belleville & The Mills 21 01 04 11
Marathon acquisition provided 28 The Oaks 14
a first entry into the wider Irish 29 St Edmunds 18
market with one property in North Dublin
Cork through 50 well- 30 Charlestown 235
31 Hampton Wood 128 West City Units
established rental apartments 32 The Coast 52 40 Camac Crescent 90
Dublin
33 Carrington Park 142 41 Landsdowne Gate 224 Total No. of Units
34 Heywood Court 39 42 Tyrone Court 95
Cork
35
36
Northern Cross
Russell Court
128
29
Cork2 Units
3,964(1)
37 Taylor Hill 78 43 Harty's Quay 50
38 Semple Woods 40
39 Waterside(1) 55
Notes: (1) Portfolio expected as of Dec-21F, including units from Merrion, Waterside and Hansfield Wood (95units) under construction; (2) Not shown on map
15Market leading Portfolio of Assets with Strong Pipeline for Growth
Property Location Units Committed pipeline
South Dublin 1,074
Assets under
City Centre 455 Location
construction*
West City 409
Bakers Yard 61
West Dublin 807
Hansfield Wood 95
North Dublin 871
Merrion 69
Cork 50
Total at 31 December 2019(1) 3,666 Total Committed 225
*Delivery schedules impacted by Covid-19 restrictions
Units Delivered in 2020
Waterside 55
Tallaght Cross West 18
Uncommitted pipeline (developments)
Total at 30 April 2020 3,739
Planning Received not
Location
yet commenced
Committed pipeline 225
Priorsgate (Bruce House) 31
Owned and committed 3,964
Priorsgate (Conversion) 5
Uncommitted pipeline 548 Beacon Square South (B4) 84
Pro Forma I-RES Portfolio 4,512 Rockbrook 428
Total uncommitted 548
1 Figures as at 31 Dec 2019. Residential only, excludes commercial and land;
16Modern asset base, with strong occupancy levels, supported by
competitive rental levels
Distribution by Split of Distribution by Average Properties by Distribution by Age
Bedrooms(1) Monthly Rent(1) Location(1)(2) (Years) (1)
5% 1% 1% 6%
1% 5%
12% 10% 3%
23% 21%
33% 5%
15%
40%
54%
64% 42% 59%
€1,000 to€1,500 €1,500 to€2,000 Prime Suburbs Secondary Suburbs €2,500 Inchicore / Drimnagh City Centre 11 to 13 14 to 16 17 to 22
✓ ✓ Focus on mid-tier affordable
market, which is the most
✓ ✓
Existing Portfolio entirely Young, modern, portfolio,
Majority of portfolio defensive segment average age of 11 years
located in locations with
formed of 2-beds
amenities and good
which suit home working I-RES average rent of €1,5963 Favourable for managing
transportation links
compared with average rents ongoing maintenance and
in Dublin of €1,762 - €2,2494 capex requirements
1 Portfolio including Marathon; 2 Excluding the Cork property; 3 As at 31 December 2019 4The Daft.ie Rental Price Report Q1 2020
17I•RES REIT Growth Strategy remains intact and continues to
provide optionality
Multi-Channel Growth Strategy to Deliver Sustainable Long-Term Growth
1 2 3
Acquisition of Development Development
Completed Assets Partnerships of Existing I•RES Properties
• Continued evaluation of new • Forward purchase agreements • Opportunity to add approx.
acquisition opportunities in with local builders and 609 apartments at currently
attractive urban locations developers for new supply of owned I•RES properties
multi-family and single-family
• Following criteria considered: units • Partially completed foundation
infrastructure (e.g. parking)
▪ Good transportation links, already in place at Rockbrook
community infrastructure – site
in particular, schools
▪ Local employment
▪ Family-friendly
neighbourhoods
Disciplined capital allocation policy to generate value and growing dividends for I•RES shareholders
18Strong Execution on Growth Strategy 2018 and 2019
Hampton Wood Hansfield Wood II The Coast Waterside Marathon XVI Portfolio
Key: 128 units 95 units 52 units 55 units 815 units
Completed acquisition • Acquisition in May 2018 for • Development agreement in • Acquisition in May ‘19 for c. • Acquisition of 815 unit Marathon
• Acquisition in February 2019 for
€40m1 Nov 2018 for €30m1 €18.5m1 Portfolio completed August 2019 for
c. €14m1
Forward purchases / • Leased at gross yield: c.6.3%2 • To be handed over in mid-2020 • Delivered in Q1 ‘20 €285 million
• Leased at gross yield: c.6.1% 2
development agreements • Expected gross yield: c.6.6% • Expected gross yield: c.6.5% • Expected gross yield: c.5.1%
Development
2018 2019
Hansfield Wood I Merrion Road Donabate & Balbriggan Tallaght Cross West Development
99 units 69 units 118 units 18 units Pipeline
• Pre-purchase agreement in NoV 2018
• Took delivery during 2018 • To be handed over by Q4 ’21 for c. • Agreement entered in March 2019 • Delivered in Q1 ‘20
• Agreement entered into with local €47.1m1 for c. €38.2m1 • Expected Gross yield: c.5% 609 units
developer in November 2017 • Expected gross yield: c.5.6% • Handed over in Q4 ‘19
• Leased at gross yield: c.7%2 • Expected gross yield: c.6.7%
Building a diverse, significant portfolio, primarily focused on the Dublin area and other large cities in Ireland
4,512 units
No. of units 2,679 172 815 150 69 627 Pro Forma I•RES
Portfolio
I•RES Investment Properties 2019 Acquisition of 2020 2021 Opportunity for
as at 31 Dec 2018 Acquisitions Marathon XVI Forward Forward Development of
& Forward Portfolio (2019) Purchases Purchases Existing Properties
Purchases (2019- 2022) 19
1 Excluding VAT but including transaction costs 2Gross Yield as at 31 December 2019 (passing rent as at 31 December 2019, divided by purchase price (including VAT and excluding transaction costs))IRISH RESIDENTIAL PROPERTIES REIT plc
ESG Strategy
20ESG is Central to IRES’ Strategy
Key Highlights ESG Framework Overview
• Sustainability is central to IRES’
mission and strategy
• ESG objectives focus on the
sustainability of building
development and management
practices, community engagement,
and tenant comfort and safety IRES Built Environment IRES Communities Governance
• Support to Covid-19 Crisis through
• IRES meets Irish energy codes • Committed to support • Committed to identify and
provision of accommodation and car sustainable community optimise opportunities for
parking to health care staff on a pro • Pursues further opportunities to
reduce carbon footprint development continued improvement in ESG
bono basis as well as company and performance
1. Energy Reduction • Improve resident experience
employee support for various ✓ Highly experienced Board
charitable causes over the last 2 ✓ Building Energy Rating • Greater employee engagement
Certificates (54% BER: A-B) • Community building events ✓ ESG Steering Committee led
months
such as volunteering and by CEO
✓ Irish Green Building Council
• Strong drive to deliver high-quality Member fundraising ✓ Ongoing review of policies
and high performing buildings ✓ Focus on occupant safety and training
✓ In 2019: 6757kg of CO2 saved
• IRES “Green Ambassador” to help 2. Waste Diversion ✓ Ground Blitz day
maintain and improve ✓ Dragons at the Docks boat
✓ 100% diverted from landfill
environmental performance race
✓ Recycling of glass bottles on
• Through our commitment to place all sites ✓ Sponsor to Naomh Olaf GAA
making and community building, we Club
✓ Increased segregation of non-
seek to distinguish IRES in the domestic waste ✓ Charity fundraising events by
market employees
3. Water Conservation
✓ Water conserving taps and
fixtures
21A Place to Call Home
2018 Annual Shareholders’ Meeting Irish Residential Properties REIT plc
17
2223
You can also read
