IRES REIT Buys 761 Apartments
IRES REIT has announced that is exchanging contracts to acquire a portfolio of 761 apartments from NAMA.
IRES will pay €211.3m for The Orange Collection, equating to a gross yield of 5.2%, or 5.9% based on projected rents. The acquisition will bring IRES' portfolio to 1,202 units, making it the largest professional residential landlord in Ireland. Increasing gearing to 50% would imply remaining spending power of c.€60m.
Conor MacCarrick of Invesco commented: “We see potential for significant rental inflation in coming years as: (i) market rents are well in excess of passing rents (by c.15% in Orange according to the portfolio's marketing brochure); and (ii) market rents continue to grow at strong rates (Dublin rents grew at 15.6% year-on-year in Q214 according to Daft.ie).
“With execution risk receding substantially (IRES is now >80% invested) and tangible evidence of healthy operating growth (average rents grew by 18.9% between September and June), we reaffirm our Buy recommendation.” (August 2014)