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Ires Reit broadens funding base with €200m private placement


Note placement: Margaret Sweeney, CEO of Ires Reit

Note placement: Margaret Sweeney, CEO of Ires Reit

Note placement: Margaret Sweeney, CEO of Ires Reit

The State's biggest private landlord, Ires Reit, intends to use at least part of the proceeds from a €200m private note placement to repay a €600m revolving credit facility and broaden its funding base.

The listed property group said yesterday that the private placement was heavily oversubscribed and also attracted new institutional investors and life insurance investors from the United States.

Ires Reit directly issued €130m of notes in two tranches, while a subsidiary issued two tranches of notes totalling $75m.

The two euro-denominated tranches include an amount of €90m with a 1.83pc interest rate, or coupon, and which matures in March 2030. The second euro tranche amounted to €40m of senior secured notes with a 1.98pc coupon, and which fall due in March 2032.

The dollar-denominated issue included $50m in notes that mature in March 2027 and which carry a 3.44pc coupon, and $25m of notes maturing in 2030 with a 3.63pc interest rate.

Ires Reit CEO Margaret Sweeney said the placement reflected "the strong support of investors for the company".

"The closing of this transaction is part of our proactive financing strategy to reduce the cost and significantly extend the maturity of our debt facilities, as well as diversifying the range of debt providers to the company," she said.

"This also gives the company access to a broader range of funding options in the future to support the company's growth strategy," Ms Sweeney added.

Other listed Irish companies also undertake private loan note placements from time to time to broaden their funding base.

Among those active in the market on that front in recent years were Kingspan, Greencore and Smurfit Kappa.

Ires Reit controls almost 3,700 residential units that attracted an average monthly rent of €1,596 in 2019.

Last year, it refinanced its revolving credit facility, increasing it to €600m from €450m, and securing a €50m accordion.

It obtained a lower interest rate than the previous facility.

An accordion gives a company the right to increase its line of credit.

The revolving credit facility is provided by a syndicate of banks including Bank of Ireland, AIB, HSBC, Barclays and Ulster Bank.

The firm also completed two equity placings last year in two tranches, raising net proceeds of €131m.

That money was used to bankroll the acquisition of 815 apartments, mainly in Dublin, for about €285m. The apartments were sold by Marathon Asset Management, with Ires paying about €45m more than the original asking price.

Ires Reit floated on the stock market in 2014, raising €200m.

Releasing full-year results last month, Ires Reit said the demand for private rented residential accommodation is likely to remain strong "for some time to come", underpinned by population growth, inward investment, economic growth and continuing urbanisation.

"At the same time, supply continues to be constrained," it noted.

Ires Reit generated €50.5m in net rental revenue in 2019, and made a profit of €86.3m. The profit figure was down from €119.8m in 2018.

Apart from owning a swathe of apartments, the group also owns a number of development sites with planning permission for a total of 627 units.

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