Irish Residential Properties REIT plc - Building Communities and Creating Value - Irish Residential Properties ...
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Better living made simple
Irish Residential
Properties REIT plc
Building
Communities
and Creating
Value Davy & Peel Hunt
Ireland & UK Equity Conference
Agenda • Who We Are • Resilient Operating Performance and Robust Balance Sheet • Modern and Resilient Asset Base Supporting Strong Performance • Response to Covid Pandemic • Macro Economic Backdrop • Demand Drivers Underpinning Investment Case • Ireland has successfully attracted FDI for over 20 years • Continued growth of the IRES portfolio in 2020 • Acquisition of 146 units at Castleknock, Dublin 15 • Disposal of Non-Core Portfolio of 151 Apartments • Key Investment Attractions
I RES REIT – Who We Are
Attractive Portfolio
• Ireland’s largest private residential landlord, with 3,683 apartments / houses across 35 properties
Delivering Long-term
Secure Returns • c. 98% occupancy rate
• Modern portfolio, average age of 11 years, with capital allocation focused on growth
• Gross yield at fair value of 5.7% at June 2020 (5.6% at Dec 2019)
Delivered Resilient
Financial Performance in • Revenues grew 34%, NRI also increased by 30% year-on-year in H1
H1 Despite Covid-19 • NRI (NOI) margin 79.2%
• Continuation of dividend payments, 2.75c in H1 2020 (5.8c in FY19), growth of 1.8% yoy
• Minimum dividend pay-out ratio of 85% of rental profits
Clear Investment & • c.50% portfolio growth over the last 3 years
Growth Strategy
• 3-pronged strategy - acquisitions, forward purchases and development
• c.20% portfolio pipeline
• Recent recycling of assets, through acquisitions and dispositions
Robust Capital Structure • Robust balance sheet, strong liquidity, debt maturities from 2024 – 2032
• LTV of c.42% as at June 2020
As at 30 June 2020
Resilient Operating Performance and Robust Balance Sheet
Net Rental Income (€m) Occupancy Net Rental Margin
+39%
50.5 99.8% 81.2% 81.3% 81.4% 79.2%
98.7% 98.3% 97.9%
41.2 +30%
36.3
29.6
FY17 FY18 FY19 H120 FY17 FY18 FY19 H120 FY17 FY18 FY19 H120
Number of Units Gross Yield at Fair Value (%) NAV per share (cent)
+53% +26%
6.6%
3,666 3,739 155
6.1% 150
142
5.6% 5.7%
2,679 119
2,450
FY17 FY18 FY19 H120 FY17 FY18 FY19 H120 FY17 FY18 FY19 H1 20
As of June 2020
Modern and Resilient Asset Base Supporting Strong Performance
Distribution by Split Distribution by Properties by Distribution by
of Bedrooms1 Average Monthly Rent1 Location1 Age (Years)1
1% 1%
5%
14% 1% 8%
25%
29% 3%
36% 40% 5%
56%
22%
62%
12%
33%
2%
6% 3939
%
%
1 Bed 2 Bed €1,000 to €1,500 €1,500 to €2,000 South Dublin City Centre West Dublin €2,500 North Dublin Cork 11 to 13 14 to 16 17+
✓ Majority of portfolio
formed of spacious ✓ Focus on mid-tier
affordable market, ✓ Existing portfolio well
diversified across
Dublin in locations
✓ Young, modern, portfolio,
average age of 11.5 years
2-beds which support which is the most
working from home resilient segment with good employment
Favourable for ongoing
and public transport
maintenance and CAPEX
requirements
1 As at 30 June 2020, does not reflect recent disposition of 151 units in November 2020
Response to Covid-19 Pandemic
• The Company and the Manager responded swiftly to Covid-19, initiating the business continuity and crisis management plans
• Our priority has always been ensuring the health and wellbeing of our employees, partners, residents, tenants and suppliers
• The quality of the property portfolio, strength of the balance sheet and experienced management team have allowed IRES navigate this challenging
period successfully
• The operational performance of the residential element has been very resilient:
• Rental demand has remained strong, with demand levels in line with pre-Covid-19 levels
• Monthly residential rent collections have remained high
• Continuous focus on ESG throughout the year
• Ireland has entered its third wave of Covid-19, resulting in a third lockdown from 1 January 2021
• Significant government supports for individuals and employers to deal with increasing unemployment. The Pandemic Unemployment Payment
(‘PUP’) and Employment Wage Subsidy Scheme (‘EWSS’) remain in place until at least 31 March 2021 and Government considering extending
People Our Residents
• ‘Working from home' for staff other than • Active program of communications and
frontline site-staff Our Assets engagement
• Transitioned efficiently to remote working • Telephone support centre and new resident
• Focus on regular communications • Enhanced the cleaning and sanitisation mobile app
• Health & wellbeing supports • Ongoing R&M service • Support for smaller commercial tenants
• Virtual leasing of new units and turnovers • Ongoing communication of public health advice
• Continued our ongoing program of Capex
• Construction closed for 7 weeks in March
Governance 2020, leading to some delays, all sites
now opened Giving Back
• Regular CMT meetings • Continuing delivery of our growth • Support to medical front line staff through
• Regular Board meetings and briefing strategy across acquisitions, forward provision of accommodation and car parking
• Increased investor engagement purchases and development • Company and staff supported homeless
• New IR website given travel restrictions
charities and other charities significantly
• Investor perception study carried out
impacted by Covid-19
Macro Economic Backdrop
Economic Indicators Ireland has seen one of the shallowest contractions in GDP
in 2020 across the OECD3
2019 2020 2021 8%
4%
GDP1 5.6% 3.4% 4.9%
0%
Consumer Spending1 3.2% -9.0% 11.7%
-4%
Unemployment rate1 5.0% 18.4% 14.5%
-8%
Housing Completions2 21,000 17,500 22 – 27k 2020 2021 -12%
-16%
Irish ‘Covid-19 adjusted’ unemployment rate had increased Ireland’s expected deficit as a % of GDP sits well vs other
to 20% in Jan 2021 vs 30% peak in April2 countries3
0%
35% 700
30% 600 -5%
25% 500
-10%
20% 400
15% 300 -15%
10% 200 2020 2021
-20%
5% 100
0% 0
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
PUP Claimants Unemployment Rate
1 ESRI Macro Economic Forecasting – December 2020 2 CSO , 3 ERSI, Consensus economics
Demand Drivers Underpinning Investment Case
Irish Population growth forecast1 Composition of Annual Demand1
6,000 40
5,500 30 5 5
11 5
5,000 11
20
Thousands
11
4,500
10 18 17
4,000 11
0
3,500
2020-2029 2030-2039 2040-2051
1996 2000 2005 2010 2015 2020 2025 2030 2035
Natural increase Migration Obsolesce
Historic Low Proj. High Proj.
Available rental stock in Dublin2 Planning Permissions Granted1
80000
10000
8000 60000
6000
40000
4000
2000 20000
0
0
2007
2007
2008
2009
2010
2011
2012
2012
2013
2014
2015
2016
2017
2017
2018
2019
2020
2001
2004
2007
2010
2013
2016
2019
Rental Stock Dublin
Houses Apartments
1 CSO, 2 Daft.ie
Ireland has Successfully Attracted FDI for Over 20 Years
Ireland is home to many of the world’s leading high-performance companies
14/15 8/10
TOP 5 10/10 18/25 Top medical tech Top industrial
Global software Top pharma companies Top financial services companies automation companies
companies companies
1The IDA
Continued Growth of the IRES Portfolio in 2020
Investment activity continued through 2020 – 168 units added and disposition of 151 smaller fragmented holdings
Waterside Hansfield II Disposition Phoenix
Park Racecourse
See overleaf See overleaf
Process Forward Purchase Forward Purchase Disposition Acquisition
Date Q1 2020 Aug 2020 Nov 2020 Jan 2021
Units 55 95 151 146
Total Purchase Price €18.5m €31.1m €48m €60m
Gross Yield 6.9% 6.6% n.a. 5.3%
AMR €1,800 €1,423 n.a. Est. €1800
50% Portfolio Growth over last 2.5 years
Pipeline for Future Growth c.22%
Current Portfolio 3,683
Acquisition1 146
Forward purchases2 69
Under construction by IRES3 66
Development sites with Planning Permission4 543
TOTAL 824
IRES Proforma Portfolio 4,507
1 Phoenix Park Racecourse; 2 Merrion; 3 Bakers Yard and Priorsgate; 4 Beacon Square South (B4), Rockbrook and Priorsgate (Bruce House)Acquisition of 146 Units at Castleknock, Dublin 15
• Purchase Price: €60 million
• Unit Split: 20 x one-bed; 113 x two-bed; 13 x three-bed; the mix includes
apartments, duplexes, penthouses & houses.
• Scheme Breakdown: 120 units built between 2002 – 2007 (BER B3) and 26
units built between 2019-2020 (BER A2)
• Average rents: estimate at €1,800
• Gross Yields: the asset is expected to generate an initial gross yield of 5.3%
• Funding: Acquisition is to be funded by the Company’s existing credit facility
• Location: Western Dublin suburb of Castleknock (6kms to Dublin City Centre),
adjacent to the Phoenix Park, largest enclosed park in any European city
• Transport Infrastructure: Close to the City Centre, serviced by Ashtown train
station and local bus services, and the M50 national motorway network
• Amenities: schools, sporting facilities, shopping and employment, in a sought
after and mature residential location
Unit Breakdown (by beds)
14%
9%
77%
1 bed 2 bed 3 bed
11Disposal of Non-Core Portfolio of 151 Apartments
Unit Breakdown (by beds)
• Disposal of 151 residential units, 3 commercial units and a
development site across 10 high quality schemes
1%
8%
• The sales price of €48m (net of costs) achieved following a
competitive sales process
16%
75%
• The objective of the sale was to deliver operational and
asset management efficiencies from the portfolio
• Price achieved was in excess of the original acquisition cost
1 bed 2 bed 3 bed 4 Bed
and c.6% ahead of the December 2019 valuations
Portfolio Overview
Location Units Image Location Units Image
01 Russell Court 29 06 The Oaks 14
02 Belleville
Mills
& The 21 07 Beacon
Quarter
South 12
03 The Laurels 19 08 Spencer House 12
04 St Edmunds 18 09 East Arran
Street 12
05 Coopers Court 14
11Key Investment Attractions
Why the Irish Multifamily Sector
Favourable Economic
Population Structural fundamentals Yields on
Demographics Housing Supply and Multifamily
and Trend / Demand Government Assets Remain
Towards Smaller Imbalance Stimulus for Attractive
Households Covid-19
Why IRES REIT
Attractive Growth Modern Asset Base Robust Balance Sheet Established Effective Capital
Opportunities and Strong with Strong Operating with Strong Liquidity Operating Platform Allocation
Execution on Strategy’ MetricsBetter living made simple Thank you for your time For more information please visit https://investorrelations.iresreit.ie/
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