Results for the Year Ended 31 December 2023

23 February 2024

Final Results

Irish Residential Properties REIT Plc

Strong and Resilient Financial and Operating Performance

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023

Irish Residential Properties REIT plc (“I-RES” or the “Company”), an Irish real estate investment company focused on residential rental accommodation, today issues its annual results for the year from 1 January 2023 to 31 December 2023.

Financial and Operational Highlights

• Strong revenue growth of 3.5% to €87.9 million for the year, driven by the full year impact of new supply in 2022 and organic rental growth across the existing portfolio.
• Revenue performance was supported by 99.4% occupancy levels, generating consistent recurring cashflows and demonstrating the strong demand for I-RES’ high-quality properties, as well as operational effectiveness in our leasing and turnovers. 
• Delivered Net Rental Income (“NRI”) of €67.9 million, an increase of 3.3% on prior year.
• Maintained NRI Margin broadly stable at 77.3% (2022: 77.5%), a strong result despite the ongoing inflationary environment due to a focus on cost management initiatives and efficiency benefits across the business achieved through I-RES’ new operating platform.
• Launched new vertically integrated digital platform “I-RES Living” as part of our wider operational and digital transformation strategy enhancing our offering to customers and driving efficiencies in the business.
• Adjusted EBITDA grew to €56.0 million, an increase of 3.3%, with an EBITDA margin of 63.8%.
• Finance costs for 2023 amounted to €26.7 million (2022: €16.8 million), reflecting the impact of higher interest rates. As at the end of 2023, 83% of the Company’s drawn debt is fixed at an overall average rate of 3.27%, providing increased certainty on financing costs over the medium term.
• EPRA earnings declined from €30.9 million to €27.6 million due to increased financing costs, offset by increased operating profit and the saving of the non-recurring. 
• The Board intends to declare a dividend of 2.00 cents per share for the period ended 31 December 2023, bringing the total dividend for 2023 to 4.45 cents per share in line with the requirements of Irish REIT legislation and the company’s dividend policy.

Asset Portfolio Valuation and Balance Sheet Management

• Effective capital allocation and risk management through successful asset recycling programme of c.€100m, reflecting a continued strategic focus on maintenance of a robust financial position. The company completed €96.5 million of disposals in 2023 from property sales, individual unit sales and non-income earning assets, approximately 200 units.
• As at 31 December 2023, I-RES’ portfolio had a total value of €1,274 million (2022: €1,499 million) with the change over the year due to the asset disposal programme and market driven yield expansion arising from increased interest rates and low transactional activity. The portfolio has a EPRA net initial yield of 4.9% representing a yield expansion of 0.5% since 31 December 2022, resulting in an IFRS NAV per share of 131.7 cents (2022: 160.0 cents). This yield expansion resulted in a non-cash fair value revaluation adjustment of €141.8 million and a loss before tax for 2023 of €114.5 million.

Strategic Review

• As previously announced on 8th January 2024, the Company is commencing a Strategic Review which will comprise a comprehensive consideration of all strategic options to maximise value for Shareholders, with the potential to unlock the inherent value contained within the I-RES portfolio of high-quality residential assets and the operating platform.
• Strategic options to be assessed will include, but not be limited to, new strategic initiatives, consolidation, combinations, mergers or other corporate action, a review of the Company’s status as a listed REIT, the sale of the entire issued share capital of the Company and selling the Company’s assets and returning value to Shareholders.
• The Review will be led by a Board Committee of newly appointed Chair Hugh Scott-Barrett, with non-executive directors Denise Turner and Phillip Burns. The Strategic Review will be comprehensive and will be supported by Savills, a leading real estate advisory firm with local and international knowledge, in conjunction with our existing international financial advisors and brokers.
• The Strategic Review will commence subsequent to the announcement of today’s financial results and the Board intends to provide status updates to Shareholders at key milestones throughout the Strategic Review process, beginning with an update ahead of the Company’s AGM in May.

Margaret Sweeney, I-RES’ Chief Executive Officer, said:

“This was an important period for our business, the first full year following the internalisation of operations and the deployment of an operational management platform. This required a sharp focus on operational efficiencies, cash collections and cost management.

Against that backdrop, the core and enduring strengths of the business continued to deliver revenue growth, strong operating and financial performance and stable cash flows despite the continuing challenging environment in 2023.

As outlined at the end of 2022, capital management and allocation was a top priority and I am pleased that we successfully delivered a €96.5m asset recycling programme in 2023 despite a challenging transaction environment overall for real estate in Ireland. Disposals were completed at relevant book value, representing an attractive return on original cost, were broadly neutral to our earnings profile, and the proceeds were used to strengthen our Balance Sheet by retiring higher cost debt.

We are confident in our continuing focus and progress on optimising our portfolio through asset recycling, including demand for individual units at accretive values, as well as maintaining operational excellence and cost management, and improving the sustainability credentials of our assets. We also continue to be focused on leveraging our platform for ancillary revenue, as well as maximising revenue from our existing assets. ”

Financial Highlights