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Ires Reit stays wary of political shocks as rental income soars

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Ires Reit chief executive Margaret Sweeney. Picture: Naoise Culhane

Ires Reit chief executive Margaret Sweeney. Picture: Naoise Culhane

Ires Reit chief executive Margaret Sweeney. Picture: Naoise Culhane

Political risk is set to become a major factor in Ires Reit's ability to grow its portfolio value and earnings, analysts warned as the country's biggest private sector landlord reported results yesterday.

Ires reported net rental income of €50.5m for last year, a 23pc increase on 2018 mainly as a result of additional properties.

It bought 987 residential units last year, including built stock and forward purchase contracts. Profit for the period fell to €86.3m from €119.8m in 2018, on the back of a lower revaluation gain on the portfolio last year.

Ires now has a portfolio of almost 3,000 homes, mainly in Dublin.

Its blocks range from the super high-end Marker apartments at Grand Canal Square in the Dublin docks, and the Elmpark development, close to St Vincent's Hospital and RTÉ in Dublin 4, to modern developments in Tallaght, Finglas and Inchicore.

Average rent last year was €1,600 per unit, per month, down slightly on 2018.

However, on a like-for-like basis, Ires saw 3.1pc rental growth on accommodation it owned prior to 2019, with rents in these properties increasing to €1,650 a month.

CEO Margaret Sweeney, said that despite continued improvement in house building in Ireland during 2019, there is a "significant" shortage of accommodation.

"Supply remains limited due to a lack of construction," Ms Sweeney said.

"This macro environment, coupled with our continued investment and professional property management, provides significant opportunities for Ires to continue to grow as a leading provider of private rented residential homes in Ireland."

However, the shift to left wing parties in this month's general election and the huge focus on rents during the campaign mean more stringent rent controls are increasingly likely, Goodbody's head of real estate Colm Lauder noted.

That would impact IRES' ability to grow NAV and earnings. A tougher rent regime for landlords would hit Ires ability to lift existing rents in line with the current market.

Ires itself acknowledged "there is increased uncertainty in relation to future Government policy on housing and regulation of the private rental market, particularly in relation to rent regulation".

Ires noted this uncertainty is likely to continue "for some months" until there is clarity on Government formation.

Shares in Ires were trading up around 1.2pc yesterday, which Mr Lauder said "reflects the lingering political risk in the Irish residential market".

Ires boasted a staggering 98.3pc occupancy rate across its units, meaning that none of its units are vacant for any real amount of time. In addition, it benefits from economies of scale on property management and maintenance.

Irish Independent