Results for the Year Ended 31 December 2024
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Irish Residential Properties REIT plc (IRES)
20 February 2025 Final Results Irish Residential Properties REIT Plc
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
Earnings growth underpinned by strategic progress Key Highlights
Irish Residential Properties REIT plc (“I-RES” or the “Company”), the leading provider of rental homes in Ireland, today issues its annual results for the twelve month period from 1 January 2024 to 31 December 2024. Eddie Byrne, I-RES’ Chief Executive Officer, said: “2024 has been a year of solid progress for I-RES. Following the conclusion of our Strategic Review in August, we delivered improvements across key performance metrics, including achieving earnings growth in 2024. Our ongoing asset recycling programme remains a key value driver, delivering strong sales premiums, improving portfolio composition, and providing us with excess capital to deploy against our menu of accretive growth options, including through the share buyback programme which we intend to launch shortly. Looking ahead, our clear focus is to maximise value for shareholders through the implementation of our strategic initiatives. We will also continue to engage constructively and consistently with Government as it reviews the rental regulations. As an Irish long-term investor with permanent capital at our disposal, we are uniquely positioned to navigate the evolving market landscape and deliver sustainable growth into the future.” Financial and Operational Highlights
Balance Sheet and Capital Allocation
Continued Progress on Strategic Review Initiatives
Outlook
Financial Highlights
(1) For definitions, method of calculation and other details, refer to the Business Review, Business Performance Measures and Glossary (2) The non-recurring costs of €3.4 million were incurred in relation to dealing with Shareholder Activism & EGM of €1.5 million, completion of the Strategic Review of €1.1 million and abortive transaction costs of €0.8 million (31 December 2023: €0.9 million relating to Shareholder Activism). The general and administrative costs of €15.3 million reflected in the Consolidated Financial Statements for the year ended 31 December 2024 (31 December 2023: €12.7 million) contain the non-recurring costs and €11.9 million of recurring general and administrative expenses (2023: €11.7 million).
For further information please contact: Investor Relations: Eddie Byrne, Chief Executive Officer Tel: +353 (1) 5570974 email: investors@iresreit.ie
Media enquiries: Cathal Barry, Drury Tel: +353 (0) 87 227 9281 Gavin McLoughlin, Drury Tel: +353 (0) 86 035 3749 email: iresreit@drury.ie Results Presentation: webcast and conference call details: I-RES will host a live audio webcast and conference call of the results presentation this morning at 09:00am BST. Access details are listed below: Ireland: 1 800 816 490 UK: +44 20 3936 2999 Global Dial-In Numbers: click HERE Access Code: 797552 Webcast Link: HERE
This report and a copy of the presentation slides will also be available to download on the investor relations section of the I-RES website at 07:00am BST: https://www.iresreit.ie/investors
About Irish Residential Properties REIT plc Irish Residential Properties REIT plc (“I-RES”) is a growth oriented Real Estate Investment Trust providing quality professionally managed homes in sustainable communities in Ireland. I-RES aims to be the provider of choice for the Irish living sector, known for excellent service and for operating responsibly, minimising its environmental impact, and maximising its contribution to the community. The Company's shares are listed on Euronext Dublin. Further information at www.iresreit.ie.
Forward-Looking Statements This Report includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, “maintain”, “forecast”, “potential”, “target” or “believe”, or, in each case, their negative or other comparable terminology, or by discussions of strategy, plans, objectives, trends, goals, projections, future events or intentions. Such forward-looking statements are based on the beliefs of management as well as assumptions made and information currently available to the Company. Forward-looking statements speak only as of the date of this report and save as required by law, the Irish Takeover Rules, the Euronext Dublin Listing Rules and/or by the rules of any other securities regulatory authority, the Company expressly disclaims any obligation or undertaking to release any update of, or revisions to, any forward-looking statements or risk factors in this report, including any changes in its expectations, new information, or any changes in events, conditions or circumstances on which these forward-looking statements are based. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on, such forward-looking statements. There is no guarantee that the Company will generate a particular rate of return. Business Review
Incremental improvement across key performance metrics The Company delivered a strong financial and operational performance in 2024, making progress against strategic objectives and delivering incremental improvements across numerous key performance indicators particularly in the second half of the year. Our high-quality portfolio of modern and sustainable properties remained fully occupied at the end of the year at 99.4%, reflecting the consistent efficiency of our property management operations, the mid-market positioning of our assets, and the continued strength of demand in the Irish Private Rental Sector (“PRS”) market. Revenue, on a like-for-like basis, increased by 1.7% in the period, with organic revenue increases supplemented by ongoing initiatives to increase ancillary revenue streams. Organic annual rental increases in Ireland, which are limited to the lower of 2% or the Harmonised Index of Consumer Prices (“HICP), were impacted by the lower rate of prevailing HICP inflation in H2, which remained in the range of 0% and 1.5% since June 2024. Reported revenue for the year reduced by 2.9% to €85.3 million, driven by the impact of disposing of 66 units in 2024 which were completed as part of our ongoing asset recycling plan and the disposal of c. 5% of our portfolio completed during the second half of 2023. On a like-for-like basis, Net Rental Income (“NRI”) increased by 1.7% for the year. NRI margin for 2024 was 76.8% (2023: 77.3%) with this increasing from 76.5% in H1 despite disposals completed in H2. As highlighted by this H2 margin performance, we are implementing additional income generating and cost management initiatives to improve the profitability of our assets and we continue to review which other units in the portfolio could also benefit from similar initiatives. Building on our progress in 2023 of rolling out our Resident App (I-RES Living), we launched our new corporate and resident websites during 2024, further assisting in streamlining tenant engagement. Whilst we experienced operating cost inflation in areas such as staff costs, we have also been impacted by Employment Regulation Orders (EROs) which are focused on the contract cleaning and security industries. We have managed to offset the majority of these inflationary impacts through reduced expenditure on utilities (reduced consumption and pricing), stable OMC service charges and repairs and maintenance costs, and strong collections during the period in excess of 99%. Adjusted G&A expenses include costs such as employees’ salaries, director fees, professional fees for audit, legal and advisory services, depository fees, property valuation fees, insurance costs and other general and administrative expenses, and excludes non-recurring costs. In 2024 costs increased by 1.6% with the increase driven by costs associated with the launch of our new corporate and resident websites and Chair and CEO recruitment costs. Financing costs, which include the amortisation of certain financing expenses, interest and commitment fees, reduced by 12.4% in the period to €23.4 million from €26.7 million. The primary driver of the decreased financing costs relates to lower debt levels, post successful completion of the asset disposal programme in 2023 alongside the ongoing asset recycling programme. The weighted average cost of interest for the period was 3.79% compared with 2023 at 3.85%. In January 2024, I-RES reduced the overall facility size of the Revolving Credit Facility (“RCF”) from €600 million to €500 million which has generated commitment fee savings during the year. The Company delivered growth of 1.4% in adjusted EPRA earnings at €28.9 million and adjusted EPRA EPS of 5.5c during 2024, driven by ancillary revenue initiatives, rigorous cost management programmes, and lower finance costs. Reported EPRA earnings of €25.5 million and reported EPRA EPS of 4.8c reduced by 7.5% owing to the impact of non-recurring charges recorded in the period. Adjusted Earnings (excluding fair value movements) increased 8.7% from €28.1 million to €30.5 million. Non-recurring costs totalled €3.4 million in 2024. These costs related primarily to Shareholder Activism of €1.5 million and the Strategic Review which concluded in August at a cost of €1.1 million. In addition, in H2, the Company terminated the contract to forward purchase 44 units in Ashbrook, Clontarf as the vendor did not achieve practical completion by the Longstop Practical Completion Date. I-RES recognises its investment properties at fair value at each reporting period, with any unrealised gain or loss on remeasurement recognised in the profit or loss account. In the period, the fair value loss recorded on investment properties was €33.7 million, reflecting yield expansion in the wider Irish residential market in the first half of the year and was the driver for the recorded loss before tax of €6.7 million. We are encouraged by the yield stabilisation witnessed in the market in H2 following two years of expansion. Yield movements in the period were offset by continued positive rental growth, along with cost reduction measures, which have improved the profitability of certain assets. Our Gross Yield was 7.0% at period end, well in excess of our weighted average cost of interest of 3.79%.
Yields
Our average monthly rent increased to €1,814 from €1,774 at 31 December 2023 representing an increase of 2.3% reflecting continued strong organic growth and the optimisation of the portfolio, through the selective disposal of underperforming and lower quality assets. Despite this our portfolio is currently estimated to be 18% below market rent. Occupancy of 99.4% (2023: 99.4%) reflects an effective full occupancy rate which is supported by our mid-market residential sector positioning and continues to highlight the supply/demand imbalance in the market. AMR and Occupancy
Operational and Financial Results Net Rental Income and Profit for the year ended
Balance Sheet and Capital Structure Our total investment property value at 31 December 2024 was €1,232.2 million (including assets held for sale). This represents a 3.3% reduction compared to the prior year. Factors contributing to the movement in value include the impact of the disposal of 66 units (c. 2% of units in the portfolio) as part of our ongoing asset recycling programme and yield expansion primarily in H1. Offsetting these movements were continued positive rental growth and capital investments made to maintain the high-quality properties within our portfolio. We continue to reinvest in our portfolio of assets, to ensure we maintain our exceptional levels of occupancy and tenant demand, whilst future proofing our assets. I-RES seeks to use gearing to enhance shareholder returns over the long term. I-RES takes a proactive approach to its debt strategy to ensure the Group has laddering of debt maturities and the Group’s leverage ratio and interest coverage ratio are maintained at a sustainable level. Our capital structure remains strong, with no debt maturities before 2026 and laddering out to 2032 thereafter. Net LTV at 31 December 2024 stood at 44.4%, down from 45.4% at 30 June 2024 and broadly in line with 31 December 2023 of 44.3%. Our leverage level remains well below the 50% maximum allowed by the Irish REIT regime and the Group’s debt financial leverage ratio covenant. Our debt facilities are made up of our €500 million RCF and the c. €200 million (Euro Equivalent) Private Placement Notes. The remaining undrawn committed facilities are c. €145 million. The Private Placement Notes were issued in March 2020 and are made up of €130 million and $75 million notes. On closing I-RES entered into a cross-currency interest rate swap resulting in an overall weighted average fixed interest rate of 1.92% inclusive of swap costs and excluding transaction costs for the full principal of the notes. The maturity of the notes is laddered over circa six, nine and eleven years, with the first repayment due in March 2027. Drawn debt facilities are predominantly hedged against interest rate volatility, with 85% of the debt fully fixed. The Group has a weighted average drawn debt maturity of 2.3 years and no debt maturities before 2026. The weighted average cost of interest is 3.79% for 2024 (31 December 2023: 3.85%). The IFRS NAV per share is 126.2c, down from 131.7c at 31 December 2023. This is primarily driven by the fair value reduction of our properties in H1 2024, although in the second half of the year yields have stabilised resulting in like for like valuations broadly in line with 30 June 2024 (IFRS NAV per share 126.4c).
Progress Against Strategic Review initiatives In August, the Company concluded its Strategic Review which commenced in February and explored all strategic options available to maximise value for shareholders. The Review was overseen by a Board sub-Committee, led by Chair Hugh Scott-Barrett, and including CEO Eddie Byrne and non-executive directors Denise Turner, Philip Burns and Richard Nesbitt. The Board sub-Committee was supported by international financial and real estate advisors. The Board unanimously concluded in August 2024 that a sale of the Company or its assets would be unlikely to maximise shareholder value. Following the conclusion of the Strategic Review, the Board remains committed to regularly and carefully assessing the suitability of our strategic direction for prevailing market conditions and remains open minded to all the options analysed as part of the Review including the sale of the Company. The Strategic Review identified several initiatives which the Board feels will drive value maximisation for shareholders over the medium-term, and the Company has continued to work on those initiatives in the second half of the year and has made the following progress. Asset Recycling Programme In 2024, the Company has completed the disposal of 41 units in total as part of the overall disposal target of 315 units, selling 20 assets in line with book value in a bulk sale and selling a further 21 units to individual purchasers achieving sales premiums on average of c. 25%. An investment sale of 25 units outside of the 315-unit programme was also completed in line with book values. Together this takes the total number of units disposed of to 66 in 2024 generating total gross proceeds of c. €19 million. The Company expects to complete the disposal of at least a further 50 units in 2025, at an average sales premium of between 15% and 20%, generating total gross proceeds of c. €18 million. At 31 December 2024, 13 units are in a sales process which we expect to complete in the coming months.
Revenue and Cost Initiatives In the second half of the year the Company has implemented additional income generating and cost reduction initiatives across c. 6% of the portfolio and we continue to review which other units in the portfolio could also benefit from similar initiatives. The impact of these initiatives began to impact the NRI margin in H2, aiding the full year margin outturn of 76.8% which was up from 76.5% in H1 despite asset disposals completed in H2. The Company is committed to continuing its rigorous cost control measures to improve the profitability of our assets. As part of the Strategic Review, we assessed the current internalised operating model versus an outsourced model. Our analysis highlighted that the current operating model is the optimal model for I-RES. This conclusion was arrived at for a number of reasons including cost efficiencies (VAT leakage on outsourced model), operating providers’ capabilities (limited number of providers who could operate such a portfolio), a reduction in key KPI’s (occupancy and collections) and strategic focus (internal resources focused on I-RES). The Company also completed a strategic exit from the Cork market in the second half of the year. This is an important step towards improving cost structures and margins moving forward. Focusing on the greater Dublin area maximises efficiencies and the future operating leverage of the Group. Public Policy Initiatives A new Government with a significant majority was elected in January 2025 on a five-year mandate, which is positive news for the real estate sector as a long-term focus is necessary for housing policy. The Company has continued to advocate for a balanced regulatory system aimed at delivering more homes while still protecting renters and simultaneously attracting institutional capital to address the chronic undersupply of housing which currently exists in the Irish market. The Company welcomes the Irish Government’s commitment in the Programme for Government to encourage institutional investment, continue with its commitment to review rent regulations and attract private sector capital to its Secure Tenancy Affordable Rental (“STAR”) scheme. The Board believes the current REIT structure offers shareholders advantages over non-REIT structures, including increased liquidity, tax efficiency, and access to the exceptional dynamics of the Irish PRS market. However, certain elements of the Irish REIT structure remain restrictive when compared to other European countries, and the Company will continue to maintain active engagement with policymakers and advocate for reform.
Capital Allocation As outlined by the Company in the Q3 Trading Update announcement released on 22 November 2024, the Board remains committed to maximising value for shareholders and addressing the discount between the Company’s current market capitalisation and Net Asset Value. In line with this objective, proceeds from the ongoing asset recycling programme are expected to be deployed towards:
Proceeds realised from the disposal programme enabled the Company to successfully maintain Net LTV within the target range at the end of 2024 (44.4%) while continuing to reduce higher cost debt during the period. Financing costs reduced by 12.4% during 2024 to €23.4 million (2023: €26.7 million). The Company has also been pleased with initial progress on the asset disposal programme during 2024, in particular disposals of units to individual purchasers which have successfully delivered strong sales premiums compared to book values. Therefore, having satisfied the first objective of the capital allocation strategy through prudently maintaining the Company’s LTV level within the target range and retiring higher cost debt, the Board has given consideration to an appropriate means of returning excess capital to shareholders in a tax efficient manner and is pleased to announce its intention to commence a share buyback programme with a maximum aggregate consideration of up to €5 million. The Board believes a share buyback is an appropriate method to return excess capital at this time, given the reduction in share capital would be both accretive to earnings and net asset value per share. A further announcement will be released by the Company in due course upon the formal commencement of this share buyback programme. The Board will continue to monitor the capital allocation strategy for the Group, taking into account the prevailing market environment and the appropriate use of the Company’s funds to best deliver on the long-term objective of maximising value for shareholders. In light of the current market environment and taking account of the current steep discount between the Company’s share price and its Net Asset Value per share, the Board believes it is appropriate to continue to focus on the above value accretive allocation strategies. Dividend In line with Irish REIT legislation, the Board intends to declare a dividend of 2.20 cents per share for the six months ended 31 December 2024, bringing the total dividend for 2024 to 4.08 cents per share, in line with the requirements of Irish REIT legislation and representing the company’s dividend policy of paying out 85% of property income from the property rental business. Governance In January the Board announced that Hugh Scott-Barrett had been appointed to succeed Declan Moylan as Chair with effect from 23 February 2024. In March the Board announced that Eddie Byrne had been appointed to succeed Margaret Sweeney as CEO with effect from 1 May 2024. Both appointments followed an extensive and rigorous selection process led by international recruitment consultants, considering both internal and external candidates. On behalf of the Board, we wish both Declan and Margaret every success for the future. As part of the Co-Operation Agreement with Vision Capital Corporation (“Vision”), the I-RES Board recommended the appointment of two Vision nominees, Richard Nesbitt and Amy Freedman at the Company’s AGM in May 2024. Richard and Amy were elected to the Board on 10 May 2024. Under the Company’s constitution the maximum permitted number of Directors on the Board is nine. To facilitate the appointment of the two Vision nominees, the Company’s executive director Brian Fagan did not seek re-election to the Board at the 2024 AGM, thus ensuring the Board continues to meet its independence requirements in line with best practice corporate governance. Mr Fagan’s position as CFO was not impacted by this change. In May 2025 Phillip Burns, having served nine years on the Board, will not seek re-election as a non-executive director at the Company’s Annual General Meeting. We are grateful to Phillip for his outstanding contributions and commitment to the Board and its Committees and the Board would like to wish him every success for the future. Board size is a matter that the Nomination Committee keeps under continuous review. The Board is of the view that a Board of nine Directors is not optimal for the size of the Company. This is a matter which the Board intend to address as current Board members retire. In this regard, when Phillip retires in May 2025, the Board does not intend to replace him on the Board. The Nomination Committee is satisfied that the resulting Board composition will provide a suitable balance of skills, independence, knowledge and experience.
Outlook Looking ahead to 2025, the Company will continue to execute strategic initiatives in order to maximise shareholder value with a focus on crystalising value through the sale of individual units at a premium to book value and initiatives which boost NRI through increasing revenues and reducing costs. We will also continue to focus on returning surplus capital to shareholders whilst protecting our balance sheet strength for as long as our share price trades at a deep discount to NAV. A significant opportunity exists for the new Irish government to address the country’s housing crisis, by implementing a system that gives protection and certainty to renters, while also delivering a viable investment case for the development of new private rental accommodation at scale. Since the formation of the new Irish government in January 2025, we have continued to maintain active engagement with policymakers to advocate for these reforms and will update shareholders on progress in due course. Sustainability remains central to our strategy, with a commitment to achieving Net Zero carbon by 2050 and further investment in renewable energy and smart technologies. We will maintain a disciplined approach to capital allocation, focusing on long-term value creation and balance sheet management, while seeking to deliver attractive returns to our shareholders through our ongoing ordinary dividend, supplemented by periodic returns of excess capital when considered appropriate. We are well-positioned to drive growth and shareholder value and approach the year ahead with confidence.
On behalf of the Board
Hugh Scott-Barrett Eddie Byrne Non-executive Chairman Chief Executive Officer 20 February 2025
Sustainability The business continued to make progress on our Environmental, Social and Governance (“ESG”) ambitions through environmental action and social impact. This was achieved against the backdrop of a dynamic regulatory landscape and in the midst of a leadership transition with the appointment of a new CEO. The Irish residential rental market faces increasing scrutiny, with heightened expectations for transparency, affordability and environmental responsibility. The Board Sustainability Committee has continued its work to embed ESG principles into our approach and is committed to aligning our efforts with stakeholder expectations, while ensuring the continued sustainability of our core business. Our vision – to be Ireland’s leading provider of rental housing, recognised for quality and value, delivering sustainable growth while being a great place to work, and maximising our contribution to the community, underpins this. Collaboration with stakeholders will remain a cornerstone of our approach as we address systemic challenges together. Our three ESG pillars of Operating Responsibly, Protecting the Environment and Building Communities will continue to shape our efforts, deliver our impact and guide our decision making in 2025. 1. Operating Responsibly The regulatory landscape for residential property rental evolved significantly in 2024, driven by the emerging requirements of the EU Corporate Sustainability Reporting Directive (CSRD) that came into effect under Irish Law in July 2024. Disclosure & Data We continue to address current and emerging regulatory requirements including stricter energy efficiency standards and disclosure requirements. We have been actively working towards disclosing a Sustainability Statement in accordance with the requirements of the Corporate Sustainability Reporting Directive (CSRD). The Board, in particular through the Sustainability Committee and the Audit Committee, has played an active role in the CSRD process by inputting into the double materiality process and, on the recommendation of those two Committees, the Board has endorsed the output. We will continue the preparations for reporting throughout 2025. To enable us to meet the evolving reporting requirements and make more informed decisions, we have made further investment into data capture and analysis. This has included capturing accurate data for resident energy use, building footprints, waste management, water and supplier footprints. This data collection will also allow us to better capture inefficiencies in our business which, in addition to allowing us to utilise better environmental solutions, in many cases will enable us to reduce costs. This will continue to evolve in 2025. To ensure the robustness of our approach, our ESG data and approach is assured by a third party assessor. Risk Management We have developed comprehensive frameworks to identify and mitigate ESG risks. As part of this process in 2023, we conducted a Carbon Risk Real Estate Monitor (CREMM) assessment to review potential risks of stranded assets and to help map out our transition to net zero for each property. In 2024 our Cyber Security Steering Group (SSG), successfully completed a cyber security assessment and updated our Cyber Strategy for 2024-2026, with the goal of elevating our cyber risk management to a ‘managed’ level of maturity. Responsible Sourcing We evolved our responsible sourcing programme in 2024, including issuing a supplier ESG questionnaire to 60 of our existing supplier partners. In addition, we hosted a sustainability focused supplier education forum in which 40 of our existing supplier partners participated. The survey and the education forum focused on evaluating our suppliers’ level of alignment with our ESG strategy and priorities, starting the quantification of our scope 3 supply chain emissions impacts, identifying emission reduction opportunities, and driving collective action towards documented science-based targets. Recognition All of this work culminated in maintaining and improving our ESG ratings, improving from a 2 star to a 3-star rating with GRESB and a CDP score of B. We also continue to report to the EPRA and maintained our EPRA Gold accreditation for 2024. 2. Protecting the Environment While we have made significant strides, we acknowledge the challenges of transitioning to a low-carbon economy and are investing in innovative solutions to overcome them. We are fully committed to achieve Net Zero carbon by 2050 and continued to measure and report on our organisational footprint. Carbon Emissions In 2024, our like-for-like combined scope 1 GHG Emissions (I-RES Headquarters) and Scope 2 GHG emissions (wholly managed assets) decreased by 12.7% year on year. To reduce our overall carbon footprint, we proactively installed solar panels in 6 properties, adopted smart home technologies to reduce energy consumption and we enabled car sharing in 7 properties. 100% of I-RES’ wholly owned asset common areas are powered by renewable energy.
In March 2024, the EU revised the Energy Performance Buildings Directive (EPBD) and introduced stricter energy performance requirements (BER ratings) for residential properties. Our efforts to meet the EPBD standards included retrofitting 3 units to improve energy efficiency and BER ratings by 7 steps. This was achieved by upgrading insulation and installing energy-efficient appliances to meet or exceed these standards. These retrofits were completed as trials to allow us to identify what opportunities we have for energy efficiency upgrades across our portfolio. We will continue to assess and roll out this 7-step property improvement approach across our portfolio. 3. Building Communities Residents We can deliver significant social value in Ireland – to our team and to our residents. As a provider of residential spaces and services, our team is deeply connected to local communities. We are fully committed to delivering on the Five Principles of our Resident Promise – Quality, Peace of Mind, Sustainability, Service and Community and our initiatives continue to support our 5,000 plus residents. Employees Our people are our greatest asset, and we are committed to listening to our employees so that we can continuously develop our culture and ensure I-RES is a great place to work. Our annual employee survey continues to seek employee insights to further that aim. Our Diversity & Inclusion (D&I) committee have integrated the broader thinking and insights into our training, policy development and employee engagement initiatives. In 2024 we celebrated maintaining our silver status in Diversity & Inclusion from the Irish Centre for Diversity and are actively working on a plan to achieve gold. We continued our employee training programs focused on ESG principles, ensuring every team member is aware of and aligned with our ESG vision and key initiatives. Over the course of the last 12 months, we have invested substantially in our HR function including the appointment of a HR Director sitting on the Senior Leadership Team in order to ensure that we have appropriate structures in place to allow us to develop career paths for all our staff through training, learning and development, performance appraisal, reward structures and succession planning. In addition, we have made a number of changes to our employee policies in areas that enhance I-RES as a great place to work for all our employees. Looking Forward The challenges we face also bring opportunities and remind us of the importance of collaboration and resilience in creating a sustainable future. Over 2025 and beyond, we will continue to drive accountability and transparency while promoting sustainable practices and investments working towards publication of a CSRD aligned Sustainability Statement and the delivery of our Net Zero Carbon Transition Plan. We will be continuing our focus on carbon reduction initiatives across scope 1, 2 and 3 and measuring our social value impact, and we will continue to support our colleagues in their roles and in our community initiatives, fundraising, charitable donations and resident engagements. Market Landscape Macroeconomic Landscape Remains Positive In 2024, Ireland's economy demonstrated continued strength, with Modified Domestic Demand growth projected at 3.1%[1]. The country's economic performance was bolstered by strong export sectors, particularly technology and pharmaceuticals. Unemployment remained near record lows at approximately 4.2%[2], reflecting a solid labour market underpinned by ongoing job growth and continued inward investment. Inflation moderated considerably during the year, with the Consumer Price Index trending from 4.1%2 in January to 1.4%2 in December. Inflation is forecasted to remain broadly stable at around 2.0% for 20251. For 2025, the outlook remains positive, with projected GDP growth of 2.5%1, supported by a robust export sector and ongoing foreign direct investment (FDI). Nonetheless, risks such as global economic slowdowns, potential trade disruptions and domestic challenges in housing affordability could affect the pace of growth. Irish Housing Market Remains Underpinned by Robust Trends The Irish housing market continues to be supported by several long-term tailwinds that are expected to sustain demand and price pressures over the medium-term. The supply of housing remains significantly below levels required to meet current and future demand. To address this chronic supply and demand imbalance, an annual target of 50,500[3] new home completions between 2025 and 2030 has been set by the Irish government. This figure is significantly ahead of the 30,330 units completed in 20242, which was a decrease of 6.7% on completions in 2023. Therefore, policymakers are highly focused on stimulating the supply of new developments. Ireland’s population, underpinned by a strong economy and net inward migration, is expected to grow by 18% between 2024 and 2035[4]. Additionally, the labour market remains at near full employment, with an unemployment rate of just 4.2% as of 20242, and forecast to remain low in 2025. Immigration continues to be a major driver, with net migration expected to be over 100,000 people annually by 2025, contributing to increased demand for both rental and owner-occupied homes. Furthermore, Ireland’s position as a key destination for foreign direct investment (FDI), particularly in sectors like technology and pharmaceuticals, ensures a steady influx of highly skilled workers. Strong demand dynamics are reflected in Greater Dublin Area (GDA) house prices, which have continued to experience upward pressure during 2024. The median house price in Dublin reached €472,000 in 2024, reflecting an annual increase of 8.3% from the previous year2. Rental prices have also seen a significant rise, with the average rent in Dublin increasing by 5.2% year-on-year. The outlook for both house prices and rents in the GDA indicates continued growth, with limited new housing stock projected to keep prices elevated through 2025, compounded by ongoing challenges in affordability and housing supply. Development and Transaction activity continues to remain below historical levels Following on from 2023, where transaction volumes in the Irish residential sector remained at historically low levels (€240 million, c. 73% below the 10-year historical average), volumes remained relatively subdued in 2024 but increased to €466 million worth of completed deals[5]. Contributing factors include interest rates, which, while reducing, are still above levels seen over the last decade, and the prevailing restrictive regulatory system which the Company believes has led to a very significant reduction of private capital investment into Irish PRS. In the years 2018 to 2022, a total of €9.5 billion was invested into the residential sector in Ireland by institutional investors, accounting for the supply of 2,000 new apartment units per year. However, following the introduction of rent caps and increases in interest rates, no new forward-looking transactions have been completed in the Irish market across 2023 and 2024, and therefore post 2025, PRS completions are expected to decline materially5. Initial indicators of this predicted vacuum of units emerged during 2024, with Dublin apartment completions declining by 24.1%2. Significant opportunity exists for new Irish government to increase housing supply Various public and private market reports have repeatedly flagged that the Irish rental regulatory system is not viable for institutional capital in its current form and is having a significantly negative impact on supply in the private rental market. It is imperative that the new government continue with the review of the effectiveness of RPZs before the current legislation expires in December 2025 and the Company welcomes the statements made to this effect in the recently published Programme for Government. We believe there is an opportunity to develop a system that gives protection and certainty to renters, while also delivering a viable investment case for the development of new private rental accommodation at scale and we continue to actively advocate for this reform with policymakers.
Business Performance Measures
The Group, in addition to the Operational and Financial results presented above, has defined business performance indicators to measure the success of its operating and financial strategies: Average Monthly Rent (“AMR”) AMR is calculated as actual monthly residential rents, net of vacancies, as at the stated date, divided by the total number of residential units owned in the property available to rent. Through active property management strategies, the lease administration system and proactive capital investment programmes, I-RES increases rents as market conditions permit and subject to applicable laws. It has been presented as the Company believes this measure is indicative of the Group’s performance of its operations. Occupancy Occupancy rate is calculated as the total number of residential units occupied over the total number of residential units owned as at the reporting date available to rent. I-RES strives, through a focused, hands-on approach to the business, to achieve occupancies that are in line with, or higher than, market conditions in each of the locations in which it operates. Occupancy rate is used in conjunction with AMR to measure the Group’s performance of its operations. AMR and Occupancy
The Group’s AMR increased to €1,814 at 31 December 2024 a 2.3% increase representing an increase in line with regulatory cap of the lower of HICP or 2% and optimisation of the portfolio, while residential occupancy remained consistently high at 99.4%, indicative of the strong market fundamentals in the Irish residential rental sector. During the period, c.14% of the portfolio units were turned over and where applicable we applied rental increases in line with regulations.
Gross Yield at Fair Value Gross Yield is calculated as the Annualised Passing Rents as at the stated date, divided by the fair market value of the investment properties as at the reporting date, excluding the fair value of development land. Through generating higher revenue compared to the prior year and maintaining high occupancies, I-RES’ objective is to increase the Annualised Passing Rent for the total portfolio, which will positively impact the Gross Yield. It has been presented as the Company believes this measure is indicative of the rental income generating capacity of the total portfolio. Gross Yield at Fair Value
The portfolio Gross Yield at Fair Value was 7.0% as at 31 December 2024 compared to 6.7% as at 31 December 2023, excluding the fair value of development land, investment properties under development and assets held for sale. The movement represents the impact of softening yields on the portfolio valuation. EPRA Net Initial Yield
EPRA Earnings per Share EPRA Earnings represents the earnings from the core operational activities of the Group. It is intended to provide an indicator of the underlying performance of the property portfolio and therefore excludes all components not relevant to the underlying and recurring performance of the portfolio, including any revaluation results and profits/losses from the sale of properties. EPRA EPS is calculated by dividing EPRA Earnings for the reporting period attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the reporting period. It has been presented as the Company believes this measure is indicative of the Group’s performance of its operations. EPRA Earnings per Share
The decrease in EPRA Earnings to €25.5 million (31 December 2023: €27.6 million) is driven by the impact of non-recurring costs offset by strong operational performance and lower financing costs. Adjusted EPRA EPS was 5.5 cents for the year ended 31 December 2024 compared to 5.4 cents for the same period last year. The increase is primarily driven by strong operational performance and lower financing costs in the period. EPRA Net Asset Value In October 2019, EPRA introduced three EPRA NAV metrics to replace the then existing EPRA NAV calculation that was previously being presented. The three EPRA NAV metrics are EPRA Net Reinstatement Value (“EPRA NRV’), EPRA Net Tangible Asset (“EPRA NTA”) and EPRA Net Disposal Value (“EPRA NDV”). Each EPRA NAV metric serves a different purpose. The EPRA NRV measure is calculated to highlight the value of net assets on a long term basis. EPRA NTA assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability. No deferred tax liability is calculated for I-RES as it is a REIT, and taxes are paid at the shareholder level on distributions. Any gains arising from the sale of a property are expected either to be reinvested for growth, debt repayment or 85% of the net proceeds are distributed to Shareholders to maintain the REIT status. Lastly, EPRA NDV provides the reader with a scenario where deferred tax, financial instruments, and certain other adjustments are calculated to the full extent of their liabilities.
(1) Following changes to the Irish REIT legislation introduced in October 2019, if a REIT disposes of an asset of its property rental business and does not (i) distribute the gross disposal proceeds to shareholders by way of dividend, subject to having sufficient distributable reserves; (ii) reinvest them into other assets of its property rental business (whether by acquisition or capital expenditure) within a three-year window (being one year before the sale and two years after it); or (iii) use them to repay debt specifically used to acquire, enhance or develop the property sold, then the REIT will be liable to tax at a rate of 25% on 85% of the gross disposal proceeds. For the purposes of EPRA NTA, the Company has assumed any such sales proceeds are reinvested or used to repay debt within the required three-year window. (2) Deferred tax is assumed as per the IFRS balance sheet. To the extent that an orderly sale of the Group’s assets were undertaken over a period of several years, during which time (i) the Group remained a REIT; (ii) no new assets were acquired or sales proceeds reinvested; (iii) any developments completed were held for three years from completion; and (iv) those assets were sold at 31 December 2024 valuations, the sales proceeds would need to be distributed to shareholders by way of dividend within the required time frame or else a tax liability amounting to up to 25% of distributable reserves plus current unrealised revaluation gains could arise for the Group. (3) This is the purchaser costs amount as provided in the valuation certificate. Purchasers’ costs consist of items such as stamp duty on legal transfer and other purchase fees that may be incurred and which are deducted from the gross value in arriving at the fair value of investment for IFRS purposes. Purchasers’ costs are in general estimated at 9.96% for commercial and 4.46% for residential.
Principal risks and uncertainties
The Directors of the Company set out below the principal risks and uncertainties that I-RES is currently exposed to and that may impact performance in the coming financial year in pursuing its current strategy. I-RES through its risk management processes proactively identifies, assesses, monitors and manages these risks. While risk can never be fully eliminated, the risk management process is designed to identify, evaluate and respond to the material existing and emerging risks that I-RES faces in delivering on its agreed strategy and in that context therefore can only provide reasonable, but not absolute assurance that risks will not materialise. The process aims to understand and appropriately manage and mitigate identified risks. The principal risks and uncertainties, along with their strategic impact on the business and mitigating factors, have been outlined below. I-RES has also provided its belief on how the risk has changed or trended during the year ended 31 December 2024.
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated Statement of Cash Flows
The accompanying notes form an integral part of these consolidated financial statements.
Notes to Consolidated Financial Statements
Irish Residential Properties REIT plc (“I-RES” or the “Company”) was incorporated in Ireland on 2 July 2013. On 16 April 2014, I-RES obtained admission of its ordinary shares to the primary listing segment of the Official List of Euronext Dublin and to trading on the main market for listed securities of Euronext Dublin. I-RES’ registered office is South Dock House, Hanover Quay, Dublin 2, Ireland. The ordinary shares of I-RES are traded on the main market for listed securities of Euronext Dublin under the symbol “IRES”.
This financial information has been derived from the information to be used to prepare the Group’s consolidated financial statements for the year ended 31 December 2024 in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”), IFRS Interpretations Committee (“IFRIC”) interpretations and those parts of the Companies Act 2014 applicable to companies reporting under IFRS. The financial information for the years ended 31 December 2024 and 31 December 2023 has been prepared under the historical cost convention, as modified by the fair value of investment properties, derivative financial instruments at fair value and share options at grant date through the profit or loss in the consolidated statement of profit or loss and other comprehensive income. The financial information presented herein does not amount to statutory financial statements that are required by Section 347 of the Companies Act 2014 to be annexed to the annual return of the Group. The financial information does not include all the information and disclosures required in the annual financial statements. The purpose of this financial information is for the provision of information to shareholders. The statutory financial statements for the year ended 31 December 2023 have been attached to the annual return of the Company and filed with the Registrar of Companies. The audit report on those statutory financial statements was unqualified and did not contain any matters to which attention was drawn by way of emphasis. The statutory financial statements for the year ended 31 December 2024 will be annexed to the next annual return of the Group and filed with the Registrar of Companies. This announcement has been prepared on the basis of the results and financial position that the Directors expect will be reflected in the audited statutory accounts when these are completed. The preliminary announcement has been approved by the Board of Directors. It is expected that the annual report and statutory consolidated financial statements for the year ended 31 December 2024 will be approved by the Directors and reported on by the auditors in March 2025. The consolidated financial statements of the Group are prepared on a going concern basis of accounting. The consolidated financial statements of the Group have been presented in Euro, which is the Company’s functional currency. The consolidated financial statements of the Group cover the 12-month period from 1 January 2024 to 31 December 2024. The Group has not early adopted any forthcoming International Accounting Standards Board (“IASB”) standards. Note 2(s) sets out details of such upcoming standards. Going concern The Group meets its day-to-day working capital requirements through its cash and deposit balances. The Group’s plans indicate that it should have adequate resources to continue operating for the foreseeable future. The Group has a strong consolidated statement of financial position with sufficient liquidity and flexibility in place to manage through the potential headwinds in the current market. The Group can draw an additional €61 million from its RCF (as defined below in note 10) while maintaining a maximum 50% Loan to value ratio as at 31 December 2024, as required by REIT legislation. As at 31 December 2024, the undrawn RCF amount is €144 million. The Group generated positive cashflows from operations for the year ended 31 December 2024. Accordingly, the Directors consider it appropriate that the Group adopts the going concern basis of accounting in the preparation of the consolidated financial statements.
‘2. Material Accounting Policies (continued)
These consolidated financial statements incorporate the financial statements of I-RES and its subsidiaries, IRES Residential Properties Limited, IRES Fund Management Limited, IRES Residential Properties (Tara View) Limited and IRES Residential Properties (Orion) Limited. I-RES controls these subsidiaries by virtue of its 100% shareholding in the companies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Subsidiaries Subsidiaries are entities controlled by I-RES. I-RES controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. The financial information of subsidiaries (except owners’ management companies) is included in the consolidated financial statements from the date on which control commences until the date on which control ceases. I-RES does not consolidate owners’ management companies in which it holds majority voting rights. For further details, please refer to note 23.
Investment properties The Group considers its income properties to be investment properties under IAS 40, Investment Property (“IAS 40”) and has chosen the fair value model to account for its investment properties in the consolidated financial statements. Under IFRS 13, Fair Value Measurement (“IFRS 13”), fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Investment properties are treated as acquired at the time when the Group assumes the significant risks and returns of ownership, which normally occurs when the conveyancing contract has been performed by both buyer and seller and the contract has been deemed to have become unconditional and completed. Investment properties are deemed to have been acquired when the buyer has assumed control of ownership and the contract has been completed.
Investment properties comprise investment interests held in land and buildings (including integral equipment) held for the purpose of producing rental income, capital appreciation or both, but not for sale in the ordinary course of business.
All investment properties are initially recorded at cost, which includes transaction and other acquisition costs, at their respective acquisition dates and are subsequently stated at fair value at each reporting date, with any gain or loss arising from a change in fair value recognised through profit or loss in the consolidated statement of profit or loss and other comprehensive income for the period. Gains and losses (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) arising on the disposal of investment properties are also recognised through profit or loss in the consolidated statement of profit or loss and other comprehensive income.
‘2. Material Accounting Policies (continued) ‘c) Investment properties and investment properties under development (continued)
The fair value of investment properties is determined by qualified independent valuers at each reporting date, in accordance with the Royal Institution of Chartered Surveyors (“RICS”) Valuation Standards and IFRS 13. Each independent valuer holds a recognised relevant professional qualification and has recent experience in the locations and segments of the investment properties valued. At each reporting date, management undertakes a review of its investment property valuations to assess the continuing validity of the underlying assumptions, such as future income streams and yields used in the independent valuation report, as well as property valuation movements when compared to the prior year valuation report and holds discussions with the independent valuer.
Investment properties under development Investment properties under development include those properties, or components thereof, that will undergo activities that will take a substantial period of time to prepare the properties for their intended use as income properties.
The cost of a development property that is an asset acquisition comprises the amount of cash, or the fair value of other consideration, paid to acquire the property, including transaction costs. Subsequent to the acquisition, the cost of a development property includes costs that are directly attributable to these assets, including development costs and borrowing costs. These costs are capitalised when the activities necessary to prepare an asset for development or redevelopment begin and continue until the date that construction is substantially complete and all necessary occupancy and related permits have been received, whether or not the space is leased. Borrowing costs are calculated using the Company’s weighted average cost of borrowing.
Properties under development are valued at fair value by qualified independent valuers at each reporting date with fair value adjustments recognised in profit or loss in the consolidated statement of profit or loss and other comprehensive income. In the case of investment property under development, the valuation approach applied is the “residual method”, with a deduction for the costs necessary to complete the development together with an allowance for the remaining risk.
Development land Development land is also stated at fair value by qualified independent valuers at each reporting date with fair value adjustments recognised in profit or loss in the consolidated statement of profit or loss and other comprehensive income. In the case of development land, the valuation approach applied is the comparable sales approach, which considers recent sales activity for similar land parcels in the same or similar markets. Land values are estimated using either a per acre or per buildable square foot basis based on highest and best use. Such values are applied to the Group’s properties after adjusting for factors specific to the site, including its location, highest and best use, zoning, servicing and configuration.
‘2. Material Accounting Policies (continued) ‘c) Investment properties and investment properties under development (continued)
Key estimations of inherent uncertainty in investment property valuations The fair values derived are based on anticipated market values for the properties, being the estimated amount that would be received from a sale of the assets in an orderly transaction between market participants. The valuation of the Group’s investment property portfolio is inherently subjective as it requires, among other factors, assumptions to be made regarding the ability of existing residents to meet their rental obligations over the entire life of their leases, the estimation of the expected rental income in the future, an assessment of a property’s ability to remain an attractive technical configuration to existing and prospective residents in a changing market and a judgement to be reached on the attractiveness of a building, its location and the surrounding environment. While these and other similar matters are market-standard considerations in determining the fair value of a property in accordance with the RICS methodology, they are all subjective assessments of future outturns and macroeconomic factors, which are outside of the Group’s control or influence and therefore may prove to be inaccurate long-term forecasts.
As a result of all these factors, the ultimate valuation the Group places on its investment properties is subject to some uncertainty and may not turn out to be accurate, particularly in times of macroeconomic volatility. The RICS property valuation methodology is considered by the Board to be the valuation technique most suited to the measurement of the fair value of property investments. It is also the primary measurement of fair value that all major and reputable property market participants use when valuing a property investment. See note 5 for a detailed discussion of the significant assumptions, estimates and valuation methods used.
At the time of acquisition of a property or a portfolio of investment properties, the Group evaluates whether the acquisition is a business combination or asset acquisition. The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
When an acquisition does not represent a business as defined under IFRS 3, the Group classifies these properties, or portfolio of properties, as an asset acquisition. Identifiable assets acquired and liabilities assumed in an asset acquisition are measured initially at their fair values at the acquisition date. Acquisition-related transaction costs are capitalised to the property.
Property, plant and equipment are stated at historical cost less accumulated depreciation and mainly comprise of the leased head office, head office fixtures and fittings and information technology hardware. These items are depreciated on a straight-line basis over their estimated useful lives; the right of use building has a useful life of 20 years and the fixtures and fittings have a useful life ranging from one to five years.
‘2. Material Accounting Policies (continued)
Financial assets and financial liabilities Under IFRS 9, financial assets and financial liabilities are initially recognised at fair value and are subsequently accounted for based on their classification as described below. Their classification depends on the purpose for which the financial instruments were acquired or issued, their characteristics and I-RES’ designation of such instruments. The standard requires that all financial assets and financial liabilities be classified as fair value through profit or loss (“FVTPL”), amortised cost or fair value through other comprehensive income (“FVTOCI”).
Derecognition of financial assets and financial liabilities The Group derecognises a financial asset when: • the contractual rights to the cash flows from the financial asset expire; or • it transfers the rights to receive the contractual cash flows in a transaction in which either: ◦ substantially all of the risks and rewards of ownership of the financial asset are transferred; or ◦ the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
When the Group enters into transactions whereby it transfers assets recognised in its consolidated statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
Offsetting Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
2. Material Accounting Policies (continued) ‘f) IFRS 9, Financial Instruments (“IFRS 9”) (continued) Classification of financial instruments The following summarises the classification and measurement I-RES has elected to apply to each of its significant categories of financial instruments:
Cash and cash equivalents Cash and cash equivalents include cash and short-term investments with an original maturity of three months or less. Interest earned or accrued on these financial assets is included in other income.
Other receivables Such receivables arise when I-RES provides services to a third party, such as a resident, and are included in current assets, except for those with maturities more than 12 months after the consolidated statement of financial position date, which are classified as non-current assets. Loans and other receivables are included in other assets initially at fair value on the consolidated statement of financial position and are subsequently accounted for at amortised cost.
Other liabilities Such financial liabilities are initially recorded at fair value and subsequently accounted for at amortised cost and include all liabilities other than derivatives. Derivatives are at fair value through other comprehensive income.
FVTPL Financial instruments in this category are recognised initially and subsequently at fair value. Gains and losses arising from changes in fair value are presented within gain on derivative financial instruments in the consolidated statement of profit or loss in the period in which they arise. Financial assets and liabilities at FVTPL are classified as current, except for the portion expected to be realised or paid more than 12 months after the consolidated statement of financial position date, which is classified as non-current. Derivatives are categorised as FVTPL unless designated as hedges.
2. Material Accounting Policies (continued) ‘f) IFRS 9, Financial Instruments (“IFRS 9”) (continued) Derivative financial instruments and hedge accounting The Group utilises derivative financial instruments to hedge foreign exchange risk and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are remeasured at fair value, with changes generally recognised through profit or loss.
The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.
At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges When a derivative is designated as a cash flow hedging instrument, hedge accounting is used in line with IFRS 9. The effective portion of changes in the fair value of the derivative is recognised in other comprehensive income (“OCI”) and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
For all hedged forecast transactions, the amount accumulated in the hedging reserve is reclassified to financing costs in the same period or periods during which the hedged expected future cash flows affect profit or loss.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve are immediately reclassified to profit or loss.
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.
2. Material Accounting Policies (continued) ‘g) IFRS 16, Leases (continued) As a lessee When the Group acts as a lessee, at commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and the type of asset leased.
Lease payments included in the measurement of the lease liability comprise the following: – fixed payments, including in-substance fixed payments; – variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; – amounts expected to be payable under a residual value guarantee; and – the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded through profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
2. Material Accounting Policies (continued) ‘g) IFRS 16, Leases (continued)
The Group presents right-of-use assets that do not meet the definition of investment property in ‘Property, plant and equipment’ and lease liabilities in ‘Lease liability’ in the statement of financial position.
As a lessor When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards incidental to ownership of the underlying assets. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of the assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset, the present value of lease payments and any option included in the lease. The Group has determined that all of its leases are operating leases.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
On modification of a contract that contains a lease component and a non-lease component, I-RES allocates the consideration in the contract to each of the components on the basis of their relative stand-alone prices.
Tenant inducements Incentives such as cash, rent-free periods and move-in allowances may be provided to lessees who enter into a lease. The incentives are written off on a straight-line basis over the term of the lease as a reduction of rental revenue.
Early termination of leases When the Group receives rent loss payments from a tenant for the early termination of a lease, it is reflected in the accounting period in which the rent loss payment occurred.
Expected credit loss (“ECL”) The Group recognises a loss allowance for expected credit losses on trade receivables and other financial assets. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. Loss allowances for trade receivables (including lease receivables) are always measured at an amount equal to lifetime ECLs. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, that includes forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
For individual residential customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 30 days past due based on historical experience of recoveries of similar assets.
2. Material Accounting Policies (continued)
I-RES retains substantially all of the risks and benefits of ownership of its investment properties and therefore accounts for leases with its tenants as operating leases. Rent represents lease revenue earned from the conveyance of the right to use the property, including access to common areas, to a lessee for an agreed period of time. The contract also contains a performance obligation that requires I-RES to maintain the common areas to an agreed standard. This right of use and performance obligation is governed by a single rental contract with the tenant. In accordance with IFRS 16 Leases, I-RES has evaluated the lease and non-lease components of its rental revenue and has determined that common area maintenance services constitute a single non-lease element, which is accounted for as one performance obligation under IFRS 15 and is recognised separately to Rental Income as revenue under IFRS 15.
Rental revenue includes amounts earned from tenants under the rental contract which are allocated to the lease and non-lease components based on relative stand-alone selling prices. The stand-alone selling prices of the lease components are determined using an adjusted market assessment approach and the stand-alone selling prices of the service components are determined using the input method based on the expected costs plus an estimated market-based margin for similar services.
Rental income from the operating lease component is recognised on a straight-line basis over the lease term in accordance with IFRS 16 Leases. When I-RES provides incentives to its tenants, the cost of such incentives is recognised over the lease term, on a straight-line basis, as a reduction of revenue.
Revenue from maintenance services represents the service component of the REIT’s rental contracts and is accounted for in accordance with IFRS 15. These services consist primarily of the recovery of utilities, property and other common area maintenance and amenity costs where I-RES has determined it is acting as a principal.
These services constitute a single non-lease component, which is accounted for as one performance obligation under IFRS 15 as the individual activities that comprise these services are not distinct in the context of the contract. The individual activities undertaken to meet the performance obligation may vary from time to time but cumulatively the activities undertaken to meet the performance obligation are relatively consistent over time. The tenant simultaneously receives and consumes the benefits provided under the performance obligation as I-RES performs the obligation and consequently revenue is recognised over time, typically on a monthly basis, as the services are provided.
The Group operates and is managed as one business segment, namely property investment, with all investment properties located in Ireland. The operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, which has been identified as the I-RES Board.
Cash and cash equivalents consist of cash on hand and balances with banks. Investing and financing activities that do not require the use of cash or cash equivalents are excluded from the consolidated statement of cash flows and are disclosed separately in the notes to the consolidated financial statements. Interest paid is classified as financing activities.
2. Material Accounting Policies (continued)
Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
I-RES elected for REIT status on 31 March 2014. As a result, from that date I-RES does not pay Irish corporation tax on the profits and gains from its qualifying rental business in Ireland, provided it meets certain conditions.
Corporation tax is payable in the normal way in respect of income and gains from any residual business (generally including any property trading business) not included in the Property Rental Business. I-RES is liable to pay other taxes such as VAT, stamp duty, land tax, local property tax and payroll taxes in the normal way.
Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The equity of I-RES consists of ordinary shares issued. Shares issued are recorded at the date of issuance. Direct issue costs in respect of the issue of shares are accounted for as a deduction from retained earnings. The excess consideration for shares above nominal value is recorded as share premium.
The NAV is calculated as the value of the Group’s assets less the value of its liabilities, measured in accordance with IFRS and in particular will include the Group’s property assets at their fair value assessed independently by valuers.
I-RES has determined that the options and restricted share units issued to senior executives qualify as “equity-settled share-based payment transactions” as per IFRS 2. In addition, any options issued to the directors and employees also qualify as equity-settled share-based payment transactions. The fair value of the options measured on the grant date will be expensed over the graded vesting term with a corresponding increase in equity. The fair value for all options granted is measured using the Black-Scholes model.
2. Material Accounting Policies (continued)
‘n) Share-based payments (continued)
The grant-date fair value of restricted share units issued to senior employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The fair value for all restricted share units granted is measured using a Monte Carlo simulation. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Property taxes are paid annually and recognised as an expense evenly throughout the year.
Security deposits are amounts received from tenants at the beginning of a tenancy. When a tenant is no longer in occupancy, the Group will assess whether there was damage to the property above normal wear and tear for which deductions may be made to their deposit. Once the inspections and repairs are calculated, the remaining security deposit is returned to the tenant.
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which a company pays fixed contributions into a separate entity. Once the contributions have been paid, the Company has no further obligations. The contributions are recognised as an expense when they are due. The amounts that are not paid are shown as accruals in the consolidated statement of financial position. The assets of the plan are held separately from those of the Company in an independently administered fund.
Non-current assets are classified as held-for-sale if it is highly probable that the assets will be recovered primarily through sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial calculation as held-for-sale and subsequent gains or losses on remeasurement are recognised in the consolidated statement of profit or loss and other comprehensive income.
2. Material Accounting Policies (continued)
The following standards and amendments are under review and are not expected to have a significant impact on reported results or disclosures of the Group. They were not effective at the financial year end 31 December 2024 and have not been applied in preparing these consolidated financial statements. The Group will apply the new standards from the effective date. The potential impact of these standards on the Group is under review.
Lack of Exchangeability – Amendments to IAS 21 Effective Date 1 January 2025
Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 Effective Date 1 January 2026
IFRS 18 Presentation and Disclosure in Financial Statements Effective Date 1 January 2027
The preparation of the consolidated financial statements in accordance with IFRS requires the use of estimates, assumptions and judgements that in some cases relate to matters that are inherently uncertain and which affect the amounts reported in the consolidated financial statements and accompanying notes. Areas of such estimation include, but are not limited to, valuation of investment properties and valuation of financial instruments. Changes to estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates under different assumptions and conditions. The valuation estimate of investment properties is deemed to be significant. See note 19(a) and note 5 for a detailed discussion of valuation methods and the significant assumptions and estimates used.
For the year 1 January 2024 to 31 December 2024 Disposals
For the year 1 January 2023 to 31 December 2023 Disposals
Valuation basis Investment properties are carried at fair value, which is the amount at which the individual properties could be sold in an orderly transaction between market participants at the measurement date, considering the highest and best use of the asset, with any gain or loss arising from a change in fair value recognised through profit or loss in the consolidated statement of profit or loss and other comprehensive income for the year. The Group uses Savills and CBRE as external independent valuers. The Group’s investment property is rotated between these valuers on a periodic basis. The valuers fair valued all of the Group’s investment properties as at 31 December 2024. The valuers employ qualified valuation professionals who have recent experience in the location and category of the respective properties. Valuations are prepared on a bi-annual basis at the interim reporting date and the annual reporting date. The information provided to the valuers and the assumptions, valuation methodologies and models used by the valuers, are reviewed by management. The valuers meet with the Audit Committee and discuss directly the valuation results as at 30 June and 31 December. The Board determines the Group’s valuation policies and procedures for property valuations. The Board decides which independent valuers to appoint for the external valuation of the Group’s properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. Investment property producing income For investment property producing income, the income approach/yield methodology involves applying market-derived yields to current and projected future income streams. These yields and future income streams are derived from comparable property transactions and are considered to be the key inputs in the valuation. Other factors that are taken into account include the tenure of the lease, tenancy details and planning, building and environmental factors that might affect the property. Development land In the case of development land, the approach applied is the comparable sales approach, which considers recent sales activity for similar land parcels in the same or similar markets. Land values are estimated using either a per acre or per buildable square foot basis based on highest and best use. Such values are applied to the Group’s properties after adjusting for factors specific to the site, including its location, zoning, servicing and configuration. Assets held for sale At 31 December 2024, I-RES has identified 13 units across 5 properties as assets held for sale amounting to €4.0 million. Management has committed to a plan to sell these properties, which are available for immediate sale, and we expect the disposals to close in the next twelve months. Information about fair value measurements using unobservable inputs (Level 3) At 31 December 2024, the Group considers that all of its investment properties fall within Level 3 fair value as defined by IFRS 13. As outlined in IFRS 13, a Level 3 fair value recognises that the significant inputs and considerations made in determining the fair value of property investments cannot be derived from publicly available data, as the valuation methodology in respect of a property also has to rely on a number of unobservable inputs including technical reports, legal data, building costs, rental analysis (including rent moratorium), professional opinion on profile, lot size, layout and presentation of accommodation. In addition, the valuers utilise proprietary databases maintained in respect of properties similar to the assets being valued. The Group tests the reasonableness of all significant unobservable inputs, including yields and stabilised net rental income (“Stabilised NRI”) used in the valuation and reviews the results with the independent valuers for all valuations. The Stabilised NRI represents cash flows from property revenue less property operating expenses, adjusted for market-based assumptions such as market rents, short term and long term vacancy rates, bad debts, management fees and repairs and maintenance. These cashflows are estimates for current and projected future income streams.
‘5. Investment Properties (continued) Sensitivity analysis Stabilised NRI and “Equivalent Yields” are key inputs in the valuation model used. Equivalent Yield is the rate of return on a property investment based on current and projected future income streams that such property investment will generate. This is derived by the external valuers and is used to set the term and reversionary yields. For example, completed properties are valued mainly using a term and reversion model. For the existing rental contract or term, estimated Stabilised NRI is based on the expected rents from residents over the period to the next lease break option or expiry. After this period, the reversion, estimated Stabilised NRI is based on expectations from current market conditions. Thus, a decrease in the estimated Stabilised NRI will decrease the fair value and an increase in the estimated Stabilised NRI will increase the fair value. The Equivalent Yields magnify the effect of a change in Stabilised NRI, with a lower yield resulting in a greater effect on the fair value of investment properties than a higher Equivalent Yield. For investment properties producing income, properties held for sale and investment properties under development, an increase of 1% in the Equivalent Yield would have the impact of a €179 million reduction in fair value while a decrease of 1% in the Equivalent Yield would result in a fair value increase of €253 million. An increase between 1% - 4% in Stabilised NRI would result in a fair value increase extending from €12 million to €49 million respectively in fair value, while a decrease between 1% - 4% in Stabilised NRI would have an impact ranging from €12 million to €49 million reduction respectively. I-RES believes that this range of change in Stabilised NRI is a reasonable estimate in the next twelve months based on expected changes in net rental income. The direct operating expenses recognised in the consolidated statement of profit or loss and other comprehensive income for the Group is €19.8 million for the year ended 31 December 2024 (31 December 2023: €19.9 million), arising from investment property that generated rental income during the period. The direct operating expenses are comprised of the following significant categories: property taxes, utilities, repairs and maintenance, wages, insurance, service charges and IT costs. The direct operating expenses recognised in the consolidated statement of profit or loss and other comprehensive income arising from investment property that did not generate rental income for the year ended 31 December 2024 and 31 December 2023 was not material. An investment property is comprised of various components, including undeveloped land and vacant residential and commercial units; no direct operating costs were specifically allocated to these separate components.
5. Investment Properties (continued) Quantitative information A summary of the Equivalent Yields and ranges along with the fair value of the total portfolio of the Group as at 31 December 2024 is presented below: As at 31 December 2024
(1) WA Stabilised NRI is the NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”). The WA Stabilised NRI is an input to determine the fair value of the investment properties. (2) The Equivalent Yield disclosed above is provided by the external valuers. (3) Development land is fair valued based on the value of the undeveloped site per square foot or per unit of planning permission. (4) Including assets held for sale.
As at 31 December 2023
(1) WA Stabilised NRI is the NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”). The NRI is input to determine the fair value of the investment properties. (2) The Equivalent Yield disclosed above is provided by the external valuers. (3) Development land is fair valued based on the value of the undeveloped site per square foot or per unit of planning permission.
5. Investment Properties (continued) The following table summarises the changes in the investment properties portfolio during the periods: Reconciliation of carrying amounts of investment properties
(1) Straight-line rent adjustment for commercial leasing. (2) Includes cash outlays for leasing. (3) Assets held for sale amounting to €4.0 million were transferred from investment properties during the period.
The vast majority of the residential leases are for one year or less. The carrying value of the Group investment properties of €1,228.2 million at 31 December 2024 (€1,274.4 million at 31 December 2023) was based on external valuations carried out as at that date. The valuations were prepared in accordance with the RICS Valuation – Global Standards, 2020 (Red Book) and IFRS 13.
Leases as lessee (IFRS 16) The Group has used an incremental borrowing rate of 2.48% to determine the lease liability. Information about leases for which the Group is a lessee is presented below. Right-of-use assets
Amounts recognised in profit or loss For the year ended 31 December 2024, I-RES recognised interest on lease liabilities of €296,000 (31 December 2023: €212,000). Amounts recognised in statement of cash flows For the year ended 31 December 2024, I-RES’s total cash outflow for leases was €471,000 (31 December 2023: €416,000). Refer to note 22 for movements in the lease liability. Lease as lessor The Group leases out its investment property consisting of its owned residential and commercial properties as well as a portion of the leased property. All leases are classified as operating leases from a lessor perspective. See note 15 for an analysis of the Group’s rental income.
(1) Includes prepaid costs such as OMC Service charges, insurance and in 2023 costs associated with ongoing transactions.
(1) The carrying value of all accounts payable and accrued liabilities approximates their fair value. (2) Includes property related accruals, development accruals and professional fee accruals,
The Revolving Credit Facility of €500 million is secured by a floating charge over assets of the Company, IRES Residential Properties Limited and a fixed charge over the shares held by the Company in its subsidiaries, IRES Residential Properties Limited and IRES Fund Management Limited, on a pari passu basis. This facility is being provided by Barclays Bank Ireland PLC, The Governor and Company of the Bank of Ireland, Allied Irish Banks, p.l.c. and HSBC Continental Europe. The interest on the RCF is set at the annual rate of 1.75%, plus the one-month or three-month EURIBOR rate (at the option of I-RES). There are commitment fees charged on the undrawn loan amount of the RCF. The effective interest rate for the RCF during the year was 4.78% (2023: 4.46%). On 14 December 2022, I-RES entered into hedging arrangements to fix the interest cost on €275m of the RCF. See further details in note 18.
‘10. Bank indebtedness (continued) On 11 February 2022, the Company exercised an option for an extension with all five banks (Ulster Bank Ireland DAC, The Governor and Company of the Bank of Ireland, Allied Irish Banks, p.l.c., Barclays Bank Ireland PLC and HSBC Continental Europe) for the entire €600 million facility with a new maturity date of 18 April 2026. On 22 December 2023, the Company served a notice of cancellation per the agreement to reduce the facility by €100m with effect from 4 January 2024, thus reducing the overall facility to €500 million. The financial covenants in relation to the RCF principally relate to Loan to Value and Interest Cover Ratio. I-RES has complied with all its debt financial covenants to which it was subject during the period. Gross Loan to Value has remained below the required 50% at 45.0%. In November 2023, the Company agreed with the RCF syndicate and Private Placement Noteholders to amend the current Interest Cover covenant from 200% to 175% until maturity of the RCF in April 2026. Interest Cover has remained above the requirement of 175% at 242% for the year ended 31 December 2024.
On 11 March 2020, I-RES successfully closed the issue of €130 million notes and IRES Residential Properties Limited, its subsidiary, closed the issue of USD $75 million notes on a private placement basis (collectively, the “Notes”). The Notes have a weighted average fixed interest rate of 1.92% inclusive of a USD/Euro swap and an effective interest rate of 2.07%. Interest is paid semi-annually on 10 March and 10 September. The Notes have been placed in four tranches:
(1) The principal amount of the USD Series A Senior Secured Notes is USD $50 million. (2) The principal amount of the USD Series B Senior Secured Notes is USD $25 million.
The Notes are secured by a floating charge over the assets of the Group and a fixed charge over the shares held by the Company in IRES Residential Properties Limited on a pari passu basis. The financial covenants in place in relation to the Private Placement Notes are aligned with the RCF. See note 10 for further details. In the event that the interest cover ratio falls below 200% but above 175%, a coupon bump of 0.75% will apply against the principal of the outstanding notes. This would remain in place until the interest cover was brought above 200%.
Options are issuable pursuant to I-RES’ share-based compensation plan, namely, the long-term incentive plan (“LTIP”). For details on options granted under the LTIP, please refer to the statutory financial statements prepared for the year ended 31 December 2023. As at 31 December 2024, the maximum number of additional options, or Restricted Share Units (“RSU”) issuable under the LTIP is 44,984,779 (31 December 2023: 19,786,557). LTIP
The fair value of options has been determined as at the grant date using the Black-Scholes model.
Restricted Stock Units (“RSUs”) were first awarded in the year ended 31 December 2020. Under the Remuneration Policy, recipients of RSUs are granted a variable number of equity instruments depending on their salary. The awards are subject to vesting against market and non-market based conditions. A summary of the awards is set out in the table below. All awards are outstanding at 31 December 2024.
During the period, 557,339 awards granted in 2021 did not vest and therefore lapsed. There is between a 24 month and 61 month holding period post vesting, but this is not subject to measurement as all conditions terminate on vesting. The LTIP awards are measured as follows: Market-based condition: The expected performance of I-RES shares over the vesting period is calculated using a Monte Carlo simulation. Inputs are share price volatility for I-RES and the average growth rate. These inputs are calculated with reference to relevant historical data and financial models. It should be recognised that the assumption of an average growth rate is not a prediction of the actual level of returns that will be achieved. The volatility assumption in the distribution gives a measure of the range of outcomes that may occur on either side of this average value. This is used to amortise the fair value of an expected cost over the vesting period. On vesting, any difference in amounts accrued versus actual is amended through reserves.
‘12. Share-based Compensation (continued) Non-market-based conditions: The fair value of the shares to be issued is determined using the grant date market price. The expected number of shares is calculated based on the expectations of the number of shares which may vest at the vesting date and amortised over the vesting period. At each reporting date, the calculation of the number of shares is revised according to current expectations or performance. The awards are subject to various criteria as outlined in the table above. The TSR measure is relative to constituents of the FTSE EPRA/NAREIT Europe Developed Index for the 2021-2022 awards. The 2023 and 2024 awards are relative to the residential subsector of this index for TSR. Results and inputs are summarised in the table below:
The expected volatility is based on historic market volatility prior to the issuance. The total share-based compensation expense relating to options for the year ended 31 December 2024 was €nil (31 December 2023: €nil) and total share-based compensation expense relating to restricted stock unit awards for the year ended 31 December 2024 was €305,000 (31 December 2023: €153,000).
All equity shares outstanding are fully paid and are voting shares. Equity shares represent a shareholder’s proportionate undivided beneficial interest in I-RES. No equity share has any preference or priority over another. No shareholder has or is deemed to have any right of ownership in any of the assets of I-RES. Each share confers the right to cast one vote at any meeting of shareholders and to participate pro rata in any distributions by I-RES and, in the event of termination of I-RES, in the net assets of I-RES remaining after satisfaction of all liabilities. Shares are to be issued in registered form and are transferable. The number of shares authorised is as follows:
The number of issued and outstanding ordinary shares is as follows:
Cash and cash equivalents include cash at bank held in current accounts. The management of cash is discussed in note 19. The Group holds funds in excess of its regulatory minimum capital requirement at all times.
I-RES generates revenue primarily from the rental income from investment properties. Rental income represents lease revenue earned from the conveyance of the right to use the property, including access to common areas, to a lessee for an agreed period of time. The rental contract also contains an undertaking that common areas and amenities will be maintained to a certain standard. This right of use of the property and maintenance performance obligation is governed by a single rental contract with the tenant. I-RES has evaluated the lease and non-lease components of its rental revenue and has determined that common area maintenance services constitute a single non-lease element, which is accounted for as one performance obligation under IFRS 15 and is recognised separately to Rental Income.
General and administrative expenses include costs such as director fees, executives’ and employees’ salaries, professional fees for audit, legal and advisory services, depositary fees, property valuation fees, insurance costs and other general and administrative expenses. Non-recurring G&A costs were primarily related to the Activism interaction and EGM (€1.5 million), costs incurred in relation to the Strategic Review (€1.1 million) and abortive transaction costs of €0.8 million.
Cross-currency swap On 12 February 2020, I-RES entered into a cross-currency swap to (i) hedge the US-based loan of USD $75 million into €68.9 million effective 11 March 2020 and (ii) convert the fixed interest rate on the US-based loan to a fixed Euro interest rate, maturing on 10 March 2027 and 10 March 2030 (see note 11 for derivative fixed rates). This hedging agreement is accounted for as a cashflow hedge in accordance with the requirements of IFRS 9. Hedges are measured for effectiveness at each reporting date with the effective portion being recognised in equity in the hedging reserve and the ineffective portion being recognised through profit or loss within financing costs. For the year ended 31 December 2024 the ineffective portion that has been recorded in the consolidated statement of profit or loss and other comprehensive income was a loss of €104,000 (31 December 2023: gain of €86,000). The fair value of the effective portion of €4,095,000 (31 December 2023: loss of €3,035,000) was included in the cash flow hedge reserve along with a gain on hedging of €418,000 (31 December 2023: gain on hedging of €362,000). The fair value of the cash flow hedge was an asset of €2,767,000 and a liability of €nil at 31 December 2024 (31 December 2023: asset of €969,000 and liability of €1,594,000). Interest rate swap On 14 December 2022, I-RES entered into hedging arrangements in respect of its RCF, specifically interest rate swap agreements aggregating to €275 million until maturity of the facility, converting this portion of the facility into a fixed interest rate of 2.5% plus margin of 1.75%. For the year ended 31 December 2024, the fair value of the effective portion of €1,730,000 (31 December 2023: loss of €3,125,000) has been recorded in the consolidated statement of profit or loss and other comprehensive income. The fair value of the interest rate swaps was an asset of €3,000 and a liability of €1,557,000 at 31 December 2024 (31 December 2023: asset of €1,910,000 and liability of €2,073,000).
The Group classifies and discloses the fair value for each class of financial instrument based on the fair value hierarchy in accordance with IFRS 13. The fair value hierarchy distinguishes between market value data obtained from independent sources and the Group’s own assumptions about market value. The hierarchy levels are defined below: Level 1 - Inputs based on quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs based on factors other than quoted prices included in Level 1 and may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals; and Level 3 - Inputs which are unobservable for the asset or liability and are typically based on the Group’s own assumptions as there is little, if any, related market activity. The Group’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement and considers factors specific to the asset or liability. The following table presents the Group’s estimates of fair value on a recurring basis based on information available as at 31 December 2024, aggregated by the level in the fair value hierarchy within which those measurements fall. As at 31 December 2024, the fair value of the Group’s private placement debt is estimated to be €175.3 million (31 December 2023: €168.4 million) due to changes in interest rates since the private placement debt was issued and the impact of the passage of time on the fixed rate of the private placement debt. The fair value of the private placement debt is based on discounted future cash flows using rates that reflect current rates for similar financial instruments with similar duration, terms and conditions, which are considered Level 2 inputs. The private placement debt is recorded at amortised cost of €201.0 million (31 December 2023: €196.1 million).
As at 31 December 2024, the fair value of the Group’s RCF is estimated to be €356.9 million (31 December 2023: €373.4 million). The fair value is based on the margin rate and EURIBOR forward curve at the reporting date. The RCF is recorded at amortised cost of €355.2 million at 31 December 2024 (31 December 2023: €371.3 million).
‘19. Financial Instruments, Investment Properties and Risk Management (continued) ‘a) Fair Value of Financial Instruments and Investment Properties (continued)
(1) See note 5 for detailed information on the valuation methodologies and fair value reconciliation. (2) The valuation of the interest rate swap instrument is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. The fair value is determined using the market-standard methodology of netting the discounted future fixed cash payments and the discounted variable cash receipts of the derivatives. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. If the total mark-to-market value is positive, I-RES will include a current value adjustment to reflect the credit risk of the counterparty and if the total mark-to-market value is negative, I-RES will include a current value adjustment to reflect I-RES' own credit risk in the fair value measurement of the interest rate swap agreements. (3) The cross-currency swaps are valued by constructing the cash flows of each side and then discounting them back to the present using appropriate discount factors, including consideration of credit risk, in those currencies. The cash flows of the more liquid quoted currency pair will be discounted using standard discount factors, while the cash flows of the less liquid currency pair will be discounted using cross-currency basis-adjusted discount factors. Following discounting, the spot rate will be used to convert the present value amount of the non-valuation currency into the valuation currency.
‘19. Financial Instruments, Investment Properties and Risk Management (continued)
The main risks arising from the Group’s financial instruments are market risk, interest rate risk, liquidity risk and credit risk. The Group’s approach to managing these risks is summarised as follows: Market risk Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks. The Group’s financial assets currently comprise short-term bank deposits, trade receivables, deposits on acquisition and derivatives. Short-term bank deposits are held to meet the cash flow needs of the Group. These are denominated in Euro. Therefore, exposure to market risk in relation to these is limited to interest rate risk. The Group also has private placement notes that are denoted in USD. The Group’s risk management strategy is to mitigate foreign exchange variability to the extent that it is practicable and cost effective to do so. The Group utilises cross currency swaps to hedge the foreign exchange risk associated with the Group’s existing, fixed foreign-currency denominated borrowings. The use of cross-currency interest rate swaps is consistent with the Group’s risk management strategy to effectively eliminate variability in the Group’s functional currency equivalent cash flows on a portion of its borrowings due to variability in the USD-EUR exchange rate. The hedges protect the Group against adverse variability in foreign exchange rates and the effective portion is recognised in equity in the hedging reserve, with the ineffective portion being recognised through profit or loss within financing costs. Derivatives designated as hedges against foreign exchange risks are accounted for as cash flow hedges. Hedges are measured for effectiveness at each accounting date and the accounting treatment of changes in fair value revised accordingly. Specifically, the Company is hedging (1) the foreign exchange risk on the USD interest payments and (2) the foreign exchange risk on the USD principal repayment of the USD borrowings at maturity. This hedging relationship qualifies for foreign currency cash flow hedge accounting. On 12 February 2020, I-RES entered into cross-currency swaps to (i) exchange the USD loan of USD $75 million into €68.9 million effective 11 March 2020 and (ii) convert the fixed interest rate on the USD loan to a fixed Euro interest rate, maturing on 10 March 2027 and 10 March 2030. At the inception of the hedging relationship the Company has identified the following potential sources of hedge ineffectiveness:
Whilst sources of ineffectiveness do exist in the hedging relationship, the Company expects changes in value of both the hedging instrument and the hedged transaction to offset and systematically move in opposite directions given that the critical terms of the hedging instrument and the hedged transactions are closely aligned at inception as described above. Therefore, the Company has qualitatively concluded that there is an economic relationship between the hedging instrument and the hedged transaction in accordance with IFRS 9.
‘19. Financial Instruments, Investment Properties and Risk Management (continued) ’b) Risk management (continued) Cash flow hedges At 31 December 2024, the Group held the following instruments to hedge exposures to changes in foreign currency and interest rates:
The amounts at the reporting date relating to items designated as hedged items were as follows:
The amounts relating to items designated as hedging instruments and hedge ineffectiveness were as follows:
‘19. Financial Instruments, Investment Properties and Risk Management (continued) ’b) Risk management (continued) Master netting or similar agreements The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under these agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. In certain circumstances, all outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions. The ISDA agreements do not meet the criteria for offsetting in the statement of financial position. This is because the Group does not have any currently legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events. The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.
Managing interest rate benchmark reform and associated risks The Group does not have any exposures to IBORs on its financial instruments due to IBOR reform as fixed to fixed rates are used. IBOR reform does not impact the Group’s risk management and hedge accounting. The Group has EURIBOR on its RCF, which is not impacted by the interest rate benchmark reform. Interest Rate Risk With regard to the cost of borrowing I-RES has used and may continue to use hedging where considered appropriate, to mitigate interest rate risk. As at 31 December 2024, I-RES’ RCF was drawn for €355.9 million. The interest on the RCF is paid at a rate of 1.75% per annum plus the one-month or three-month EURIBOR rate (at the option of I-RES) or at a floor of zero if EURIBOR is negative. As previously noted, on 14 December 2022, I-RES entered into interest rate swaps in respect of its RCF, aggregating to €275 million until maturity of the facility, converting this portion of the facility into a fixed interest rate of 2.5% plus margin of 1.75%. As of the year end, approximately 85% of the Company's drawn debt is now fixed against interest rate volatility. The Company’s private placement debt has a fixed rate of 1.92%. For the year ended 31 December 2024, a 100-basis point change in 1 month Euribor interest rates across the period would have had the following effect:
(1) Based on the fixed margin of 1.75% plus the 1-month EURIBOR during year ended 31 December 2024 and a hedged interest rate of 2.50% for the period interest rate swaps in place.
‘19. Financial Instruments, Investment Properties and Risk Management (continued) ’b) Risk management (continued)
(1) Based on the fixed margin of 1.75% plus the 1-month EURIBOR rate during year ended 31 December 2023 and a hedged interest rate of 2.50% for the quantum and period of interest rate swaps in place. Liquidity risk Liquidity risk is the risk that the Group may encounter difficulties in accessing capital markets and refinancing its financial obligations as they come due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors the level of expected cash inflows on trade and other receivables, together with expected cash outflows on trade and other payables and capital commitments. The following tables show the Group’s contractual undiscounted maturities for its financial liabilities:
(1) Based on carrying value at maturity dates. (2) Based on current in-place interest rate for the remaining term to maturity. (3) Based on forward foreign exchange rates as at 31 December 2024. (4) Based on 1-month EURIBOR forward curve as at 31 December 2024.
‘19. Financial Instruments, Investment Properties and Risk Management (continued) ’b) Risk management (continued)
(1) Based on carrying value at maturity dates. (2) Based on current in-place interest rate for the remaining term to maturity. (3) Based on forward foreign exchange rates as at 31 December 2023. (4) Based on 1-month EURIBOR forward curve as at 31 December 2023.
The carrying value of bank indebtedness and trade and other payables (other liabilities) approximates their fair value. Credit risk Credit risk is the risk that: (i) counterparties to contractual financial obligations will default; or (ii) the possibility that the Group’s tenants may experience financial difficulty and be unable to meet their rental obligations. The Group monitors its risk exposure regarding obligations with counterparties through the regular assessment of counterparties’ credit positions. The Group mitigates the risk of credit loss with respect to tenants by evaluating the creditworthiness of new tenants and obtaining security deposits wherever permitted by legislation. The Group monitors its collection experience on a monthly basis and ensures that a stringent policy is adopted to provide for all past due amounts. All residential accounts receivable balances exceeding 30 days are written off to bad debt expense and recognised in the consolidated statement of profit or loss and other comprehensive income. Subsequent recoveries of amounts previously written off are credited in the consolidated statement of profit or loss and other comprehensive income. The Group’s allowance for expected credit loss amounted to a charge of €145,000 for the year ended 31 December 2024 and is recorded as part of property operating costs in the consolidated statement of profit or loss and other comprehensive income (31 December 2023: gain of €90,000). Cash and cash equivalents are held with major Irish and European institutions which have credit ratings between A- and A+. The Company deposits cash with a number of individual institutions to avoid concentration of risk with any one counterparty. The Group has also engaged the services of a depository to ensure the security of cash assets. Risk of counterparty default arising on derivative financial instruments is controlled by dealing with high-quality institutions and by a policy limiting the amount of credit exposure to any one bank or institution. Derivative financial instrument counter parties have credit ratings in the range of A- to A+.
‘19. Financial Instruments, Investment Properties and Risk Management (continued) ’b) Risk management (continued) Capital management The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, I-RES may issue new shares or consider the sale of assets to reduce debt. I-RES, through the Irish REIT Regime, is restricted in its use of capital to making investments in real estate property in Ireland. I-RES intends to continue to make distributions if its results of operations and cash flows permit in the future. The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. At 31 December 2024, capital consists of equity and debt and Group Net LTV was 44.4% (2023: 44.3%). I-RES seeks to use gearing to enhance shareholder returns over the long term. The level of gearing is monitored carefully by the Board. The Board monitors the return on capital as well as the level of dividends paid to ordinary shareholders. Subject to distributable reserves, it is the policy of I-RES to distribute at least 85% of the Property Income of its Property Rental Business for each accounting period as required under the REIT legislation.
I-RES elected for REIT status on 31 March 2014. As a result, from that date the Group is exempt from paying Irish corporation tax on the profits and gains it makes from qualifying rental businesses in Ireland provided it meets certain conditions. Instead, dividends paid to shareholders in respect of the Property Rental Business are treated for Irish tax purposes as income in the hands of shareholders. Corporation tax is still payable in the normal way in respect of income and gains from any residual business (generally including any property trading business) not included in the Property Rental Business. I-RES is also liable to pay other taxes such as VAT, stamp duty, local property tax and payroll taxes in the normal way. Within the Irish REIT Regime, for corporation tax purposes the Property Rental Business is treated as a separate business from the residual business. A loss incurred by the Property Rental Business cannot be offset against profits of the residual business. An Irish REIT is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of dividend), on or before the filing date for its tax return for the accounting period in question, at least 85% of the Property Income of the Property Rental Business arising in each accounting period. Failure to meet this requirement would result in a tax charge calculated by reference to the extent of the shortfall in the dividend paid. A dividend paid by an Irish REIT from its Property Rental Business is referred to as a property income distribution. Any normal dividend paid from the residual business by the Irish REIT is referred to as a non-property income distribution dividend. The Directors confirm that the Group has remained in compliance with the Irish REIT Regime up to and including the date of this Report. Income tax expense recognised in the consolidated statement of profit or loss and other comprehensive income
’20. Taxation (continued) Reconciliation of the effective tax rate
The main driver of taxation for I-RES in the prior period related to Capital Gains Tax (“CGT”). This arose on the profit on disposal of the Rockbrook site. CGT was payable on this as the site constituted a disposal of an asset of the residual business as opposed to the property rental business of the Group. There is an unrecognised deferred tax asset of €19,800 at 31 December 2024 (31 December 2023: €nil), which is not related to the property rental business.
Under the Irish REIT Regime, subject to having sufficient distributable reserves, I-RES is required to distribute to shareholders at least 85% of the Property Income of its Property Rental Business for each accounting period. On 8 August 2024, the Directors resolved to pay an additional dividend of €10.0 million for the six months ended 30 June 2024. The dividend of 1.88 cents per share was paid on 13 September 2024 to shareholders on record as at 23 August 2024. On 23 February 2024, the Directors resolved to pay an additional dividend of €10.6 million for the year ended 31 December 2023. The dividend of 2.00 cents per share was paid on 28 March 2024 to shareholders on record as at 8 March 2024. On 2 August 2023, the Directors resolved to pay an additional dividend of €12.9 million for the six months ended 30 June 2023. The dividend of 2.45 cents per share was paid on 1 September 2023 to shareholders on record as at 11 August 2023. On 23 February 2023, the Directors resolved to pay an additional dividend of €14.9 million for the year ended 31 December 2022. The dividend of 2.81 cents per share was paid on 3 April 2023 to shareholders on record as at 10 March 2023. Distributable reserves in accordance with the Irish REIT Regime were calculated as follows:
Breakdown of operating income items related to financing and investing activities
Interest expense
Changes in operating assets and liabilities
’22. Supplemental Cash Flow Information (continued) Changes in liabilities due to financing cash flows
Transactions with Key Management Personnel For the purposes of the disclosure requirements of IAS 24, the term ‘‘key management personnel’’ is defined as those persons having authority for planning, directing and controlling the activities of the Company. I-RES has determined that the key management personnel comprise the Board of Directors. See note 28 for further details on remuneration. Owners’ management companies not consolidated As a result of the acquisition by the Group of apartments or commercial space in certain residential rental properties, the Group holds voting rights in the relevant owners’ management companies (“OMCs”) associated with those developments. Where the Group holds the majority of those voting rights, this entitles it, inter alia, to control the composition of such OMCs’ boards of directors. However, as each of those OMCs is incorporated as a company limited by guarantee for the purpose of owning the common areas in residential or mixed-use developments, they are not intended to be traded for gains. I-RES does not consider these OMCs to be material for consolidation as the total assets of the OMCs is less than 1% of the Group’s total assets. The total service fees billed by OMCs for the year ended 31 December 2024 were €9.5 million (2023 €9.9 million). As at 31 December 2024, €0.1 million was payable and €1.0 million was prepaid by the Group to the OMCs. As at 31 December 2023, €0.1 million was payable and €1.0 million was prepaid by I-RES to the OMCs.
At Beacon South Quarter, in addition to the capital expenditure work that has already been completed, water ingress works were identified in 2016 and I-RES is working with the Beacon South Quarter owners’ management company to resolve these matters. The amount of potential costs relating to these structural remediation works cannot be currently measured with sufficient reliability.
As at 31 December 2024 there are no material commitments.
(Loss)/Earnings per share amounts are calculated by dividing profit for the reporting period attributable to ordinary shareholders of I-RES by the weighted average number of ordinary shares outstanding during the reporting period.
(1) Diluted weighted average number of shares includes the additional shares resulting from dilution of the long-term incentive plan options as of the reporting period date. (2) At 31 December 2024, 4,596,499 options (31 December 2023: 4,596,499) were excluded from the diluted weighted average number of ordinary shares because their effect would have been anti-dilutive.
EPRA issued Best Practices Recommendations most recently in October 2019, which gives guidelines for performance matters. EPRA Earnings represents the earnings from the core operational activities (recurring items for I-RES). It is intended to provide an indicator of the underlying performance of the property portfolio and therefore excludes all components not relevant to the underlying and recurring performance of the portfolio, including any revaluation results and results from the sale of properties. EPRA Earnings per share amounts are calculated by dividing EPRA Earnings for the reporting period attributable to shareholders of I-RES by the weighted average number of ordinary shares outstanding during the reporting period.
’26. Loss per Share (continued) EPRA Earnings per Share
In October 2019, EPRA introduced three EPRA NAV metrics to replace the then existing EPRA NAV calculation that was previously being presented. The three EPRA NAV metrics are EPRA Net Reinstatement Value (“EPRA NRV’’), EPRA Net Tangible Asset (“EPRA NTA”) and EPRA Net Disposal Value (“EPRA NDV”). Each EPRA NAV metric serves a different purpose. The EPRA NRV measure is to highlight the value of net assets on a long term basis. EPRA NTA assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability. Lastly, EPRA NDV provides the reader with a scenario where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liabilities. The table below presents the transition between the Group’s shareholders’ equity derived from the consolidated financial statements and the various EPRA NAV. EPRA NAV per Share
‘27. Net Asset Value per Share (continued)
(1) Following changes to the Irish REIT legislation introduced in October 2019, if a REIT disposes of an asset of its property rental business and does not (i) distribute the gross disposal proceeds to shareholders by way of dividend; (ii) reinvest them into other assets of its property rental business (whether by acquisition or capital expenditure) within a three-year window (being one year before the sale and two years after it); or (iii) use them to repay debt specifically used to acquire, enhance or develop the property sold, then the REIT will be liable to tax at a rate of 25% on 85% of the gross disposal proceeds, subject to having sufficient distributable reserves. For the purposes of EPRA NTA, the Group has assumed any such sales proceeds are reinvested within the required three-year window. (2) Deferred tax is assumed as per the IFRS statement of financial position. To the extent that an orderly sale of the Group’s assets was undertaken over a period of several years, during which time (i) the Group remained a REIT; (ii) no new assets were acquired or sales proceeds reinvested; (iii) any developments completed were held for three years from completion; and (iv) those assets were sold at 31 December 2024 valuations, the sales proceeds would need to be distributed to shareholders by way of dividend within the required time frame or else a tax liability amounting to up to 25% of distributable reserves plus current unrealised revaluation gains could arise for the Group. (3) This is the purchaser costs amount as provided in the valuation certificate. Purchasers’ costs consist of items such as stamp duty on legal transfer and other purchase fees that may be incurred and which are deducted from the gross value in arriving at the fair value of investment for IFRS purposes. Purchasers’ costs are in general estimated at 9.96% for commercial, 4.46% for residential apartment units and 12.46% for houses and duplexes.
The average number of employees in the period was 98 (2023: 94). The total number of employees at the reporting period end was 98 (31 December 2023: 95).
28. Employee Costs and Auditor Remuneration (continued)
(1) Included in the auditor remuneration for the Group is an amount of €171,000 (31 December 2023: €167,000) that relates to the audit of the Company’s financial statements. (2) Non-audit remuneration relates to the review of the interim financial statements. (3) Non-assurance services relate to Accountants’ report under Property Services Regulatory Authority (PSRA) regulations.
The name of the holding company of the Group is Irish Residential Properties REIT plc. The legal form of the Company is a public limited company. The place of registration of the holding company is Dublin, Ireland and its registration number is 529737. The address of the registered office is South Dock House, Hanover Quay, Dublin 2, Ireland.
At the date of authorisation of the consolidated financial statements, there are no adjusting or non-adjusting events after the reporting period. Glossary of Terms The following explanations are not intended as technical definitions, but rather are intended to assist the reader in understanding terms used in this report. “Adjusted Earnings (excluding fair value movements)” Adjusted EPRA Earnings plus Gain/(Loss) on Disposal of investment property “Adjusted General and Administrative Expenses” General and administrative expenses adjusted to remove non-recurring costs; “Annualised Passing Rent” Defined as the actual monthly residential and commercial rents under contract with residents as at the stated date, multiplied by 12, to annualise the monthly rent; “ Assets Held For Sale (AHFS)” Investment properties being held for sale which are expected to be disposed on within the next 12 months. “Average Monthly Rent (AMR)” Actual monthly residential rents, net of vacancies, as at the stated date, divided by the total number of apartments owned in the property; “Basic Earnings per share (Basic EPS)” Calculated by dividing the profit/(loss) for the reporting period attributable to ordinary shareholders of the Company in accordance with IFRS by the weighted average number of ordinary shares outstanding during the reporting period; “Companies Act, 2014” The Irish Companies Act, 2014; “Diluted weighted average number of shares” Includes the additional shares resulting from dilution of the long-term incentive plan options as of the reporting period date; “Adjusted EBITDA” Represents earnings before lease interest, financing costs, depreciation of property, plant and equipment, gain or loss on disposal of investment property, net movement in fair value of investment properties and gain or loss on derivative financial instruments and non-recurring costs to show the underlying operating performance of the Group; “Adjusted EBITDA Margin” Calculated as Adjusted EBITDA over the revenue from investment properties; “EPRA” The European Public Real Estate Association; “EPRA Diluted EPS” Calculated by dividing EPRA Earnings for the reporting period attributable to shareholders of the Company by the diluted weighted average number of ordinary shares outstanding during the reporting period. EPRA Earnings measures the level of income arising from operational activities. It is intended to provide an indicator of the underlying income performance generated from leasing and management of the property portfolio, while taking into account dilutive effects and therefore excludes all components not relevant to the underlying net income performance of the portfolio, such as unrealised changes in valuation and any gains or losses on disposals of properties;
“EPRA Earnings” EPRA Earnings is the profit after tax excluding revaluations and gains and losses on disposals and associated taxation (if any); “Adjusted EPRA Earnings” Represents EPRA Earnings adjusted for non-recurring costs to show the underlying EPRA Earnings of the Group; “EPRA EPS” Calculated by dividing EPRA Earnings for the reporting period attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the reporting period. EPRA Earnings measures the level of income arising from operational activities. It is intended to provide an indicator of the underlying income performance generated from leasing and management of the property portfolio and therefore excludes all components not relevant to the underlying net income performance of the portfolio, such as unrealised changes in valuation and any gains or losses on disposals of properties; “Adjusted EPRA EPS” EPRA EPS calculated using Adjusted EPRA Earnings; “EPRA NAV” EPRA introduced three EPRA NAV metrics to replace the existing EPRA NAV calculation that was previously being presented. The three EPRA NAV metrics are EPRA Net Reinstatement Value (“EPRA NRV’), EPRA Net Tangible Asset (“EPRA NTA”) and EPRA Net Disposal Value (“EPRA NDV”). Each EPRA NAV metric serves a different purpose. The EPRA NRV measure is to highlight the value of net assets on a long-term basis. EPRA NTA assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability. Any gains arising from the sale of a property are expected either to be reinvested for growth or 85% of the net proceeds are distributed to the shareholders to maintain the REIT status. Lastly, EPRA NDV provides the reader with a scenario where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liabilities. “EPRA NAV per share” Calculated by dividing each of the EPRA NAV metric by the diluted number of ordinary shares outstanding as at the end of the reporting period; “Equivalent Yields (formerly referred as Capitalisation Rate)” The rate of return on a property investment based on current and projected future income streams that such property investment will generate. This is derived by the external valuers and is used to estimate the term and reversionary yields; “Group Total Gearing or Net Loan to Value (Net LTV)” Calculated by dividing the Group’s aggregate borrowings (net of cash) by the fair value of the Group’s property portfolio, including assets held for sale; “Loan to Value (LTV)” Calculated by dividing the Group’s aggregate borrowings by the fair value of the Group’s property portfolio; “Gross Yield” Calculated as the Annualised Passing Rent as at the stated date, divided by the fair value of the investment properties, including units classified as assets held for sale and excluding fair value of development land as at the reporting date; “Irish REIT Regime” Means the provisions of the Irish laws and regulations establishing and governing real estate investment trusts, in particular, but without limitation, section 705A of the Taxes Consolidation Act, 1997 (as inserted by section 41(c) of the Finance Act, 2013), as amended from time to time; “LEED” LEED stands for Leadership in Energy and Environmental Design. It is a rating system to certify sustainable buildings and neighbourhoods; “Like for Like” Like-for-like amounts are presented as they measure operating performance adjusted to remove the impact of properties that were only owned for part of the relevant period or comparative period; “Market Capitalisation” Calculated as the closing share price multiplied by the number of shares outstanding; “Net Asset Value” or “NAV” Calculated as the value of the Group’s or Company’s assets less the value of its liabilities measured in accordance with IFRS; “Net Asset Value per share” Calculated by dividing NAV by the basic number of ordinary shares outstanding as at the end of the reporting period; “Net Rental Income (NRI)” Measured as property revenue less property operating expenses; “Net Rental Income Margin” Calculated as the NRI over the revenue from investment properties; “Occupancy Rate” Calculated as the total number of apartments occupied divided by the total number of apartments owned as at the reporting date available to rent; “Property Income” As defined in section 705A of the Taxes Consolidation Act, 1997. It means, in relation to a company or group, the Property Profits of the Company or Group, as the case may be, calculated using accounting principles, as: (a) reduced by the Property Net Gains of the Company or Group, as the case may be, where Property Net Gains arise, or (b) increased by the Property Net Losses of the Company or Group, as the case may be, where Property Net Losses arise; “Property Profits” As defined in section 705A of the Taxes Consolidation Act, 1997; “Property Net Gains” As defined in section 705A of the Taxes Consolidation Act, 1997; “Property Net Losses” As defined in section 705A of the Taxes Consolidation Act, 1997; “Property Rental Business” As defined in section 705A of the Taxes Consolidation Act, 1997; “Sq. ft.” Square feet; “Sq. m.” Square metres; “Stabilised NRI” Measured as property revenue less property operating expenses adjusted for market-based assumptions such as long-term vacancy rates, management fees, repairs and maintenance; “Total Property Value” Total investment property plus any property classified as assets held for sale “Vacancy Costs” Defined as the value of the rent on unoccupied residential apartments and commercial units for the specified period.
Forward-Looking Statements I-RES Disclaimer This Report includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, “maintain”, “forecast”, “potential”, “target” or “believe”, or, in each case, their negative or other comparable terminology, or by discussions of strategy, plans, objectives, trends, goals, projections, future events or intentions. Such forward-looking statements are based on the beliefs of management as well as assumptions made and information currently available to the Company. Forward-looking statements speak only as of the date of this report and save as required by law, the Irish Takeover Rules, the Euronext Dublin Listing Rules and/or by the rules of any other securities regulatory authority, the Company expressly disclaims any obligation or undertaking to release any update of, or revisions to, any forward-looking statements or risk factors in this report, including any changes in its expectations, new information, or any changes in events, conditions or circumstances on which these forward-looking statements are based. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on, such forward-looking statements. There is no guarantee that the Company will generate a particular rate of return.
Shareholder Information Head Office South Dock House Hanover Quay Dublin 2, Ireland Tel: +353 (0)1 557 0974 Website: www.iresreit.ie Directors Hugh Scott-Barrett (Chair) Eddie Byrne (CEO) Amy Freedman Denise Turner Joan Garahy Phillip Burns Richard Nesbitt Stefanie Frensch Tom Kavanagh Investor Information Analysts, shareholders and others seeking financial data should visit I-RES’ website at https://investorrelations.iresreit.ie or contact: Chief Executive Officer Eddie Byrne Tel: +353 (0)1 557 0974 E-mail: investors@iresreit.ie Company Secretary Anna-Marie Curry Tel: +353 (0) 1 557 0974 E-mail: companysecretary@iresreit.ie
Computershare Investor Services (Ireland) Limited 3100 Lake Drive Citywest Business Campus Dublin 24, Ireland Tel: +353 (0)1 447 5566 Depositary BNP Paribas Securities Services, Dublin Branch Trinity Point 10-11 Leinster Street South Dublin 2, Ireland Auditor KPMG 1 Stokes Place St. Stephen’s Green Dublin 2, Ireland Legal Counsel McCann FitzGerald Riverside One Sir John Rogerson’s Quay Dublin 2, D02 X576 Ireland Stock Exchange Listing Shares of I-RES are listed on Euronext Dublin under the trading symbol “IRES”. [1] Central Bank of Ireland, Quarterly Bulletin Q4 2024 [2] CSO [3] Government Reports [4] Savills Research [5] CBRE Ireland Research Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
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| ISIN: | IE00BJ34P519 |
| Category Code: | FR |
| TIDM: | IRES |
| LEI Code: | 635400EOPACLULRENY18 |
| OAM Categories: | 1.1. Annual financial and audit reports |
| Sequence No.: | 376669 |
| EQS News ID: | 2088877 |
| End of Announcement | EQS News Service |
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