Despite charging an average rent of roughly €2,000 per month, Ireland’s largest private landlord, Ires Reit, is having troubles. The firm appeared to be prospering in a market with increasing demand and record rents, with over 4,000 properties in its portfolio. However, it is presently one of the Irish market’s worst-performing companies and is in the midst of a corporate crisis.
Ires Reit was established in 2014 by Capreit, a Canadian Real Estate Investment Trust, with the goal of professionalising the rental sector in Ireland. Small landlords with only a few homes dominated the rental business at the time. Ires purchased land and apartment towers at comparatively low costs after the financial crisis, taking advantage of the improving market and low property prices. The majority of its property holdings are flats outside of Dublin’s city centre.
Despite rare public demonstrations over its rent charges, which have continuously grown by around 30% since 2015, Ires Reit has defended its prices, arguing that its renters are happy with its services and that it provides good value for money. Due to the ongoing rent crisis and rising average rents, the firm typically reaches 99% occupancy rates. However, Ires Reit’s interest rate exposure is a major source of concern. Higher interest rates raise the cost of borrowing for businesses and limit consumers’ capacity to borrow, influencing the property market. Previously, the worth of the company’s holdings steadily increased, but it has lately been forced to write down the value of its assets. The company’s loan-to-value ratio has reached approximately 45%, close to the maximum allowed for Irish Real Estate Investment Trusts (Reits). According to analysts, Ires Reit’s property prices might fall by 10% by the end of 2024, putting the business at risk of exceeding this limit.
Ires Reit has begun selling assets to obtain funds to solve this issue. It recently agreed to sell 200 apartments to the Tuath Housing Agency for €72 million and is investigating other asset sales. Some investors, however, feel the company moved too late, resulting in reduced selling prices owing to rising interest rates.
As a result of these difficulties, shareholder dissatisfaction has increased. At the company’s annual general meeting in May, approximately 40% of shareholders voted against the chief executive and chief financial officer’s reappointment. Significant shareholders, including founding investor Capreit and Canadian business Vision Capital, have voiced unhappiness with the company’s management, stating that mismanagement has resulted in the erosion of shareholder value.
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