Trading Update and Notice of Results

10 January 2023

Irish Residential Properties REIT plc

Trading Update and Notice of Results

Continued Strong Rental Market Conditions

Irish Residential Properties REIT plc (the "Company" or "IRES"), Irelands largest provider of private rental accommodation with a portfolio of 3,938 homes, today provides an update on trading for the year ended 31 December 2022 ahead of the publication of its full year results on Friday 24 February 2023.

• Demand for IRES properties continues to far outstrip supply, with occupancy of 99.4% as at 31 December 2022, (99.1% at 31 December 2021).

• Stable operating performance has continued in line with the first half of 2022, with strong recurring cashflows.

• Continued optimisation of the IRES portfolio, adding 238 units during the year through the addition of 108 units at Ashbrook, 69 units at Tara View and 61 units at the School Yard.

• IRES continued to deliver on its value maximising portfolio management and recycling strategy with the disposal of 128 units at Hampton Wood at an attractive yield of 3.5%.

• The Company retains its strong financial position, with a robust balance sheet and ample liquidity. The business has recently entered into interest rate hedging arrangements in relation to its Revolving Credit Facility (RCF) which has resulted in 72% of the Groups total drawn debt being fixed. IRES has no debt maturities until April 2026 with laddering out to 2032.

Trading Performance

The underlying business maintained a strong performance during the second half of the year amid a challenging market environment. Rising Inflation has resulted in some further increases in employee costs, utilities and repairs and maintenance during the second half of the financial year. However, continued and active cost management initiatives and discipline will see the business delivering a broadly stable NRI margin for the full year (H1, 30 June 2022: 77.5%).

Our experienced team and portfolio of high-quality residential accommodation remain positive differentiators in the Irish private residential market and have again contributed to a consistently high occupancy rate of 99.4% as at 31 December 2022. This is supported by our mid-market residential sector positioning where demand remains strong. Our average monthly rent stood at 1,750 at 31 December 2022, approximately 13% below average rent levels for new tenancies in Dublin¹.

Portfolio Update

We continued to grow our portfolio during 2022 through accretive investment in acquisitions and new developments, while also recycling capital through selective disposals. In the first half of the year, we completed the acquisition of 108 units in Ashbrook and entered into a fixed forward commitment for 44 additional units to be delivered at Ashbrook in 2023. In July 2022, we took delivery of 61 new apartments at The School Yard, a building designed to high sustainability standards and achieving  LEED Gold accreditation, and all units were fully leased and income producing from early August 2022. In August 2022, we also took delivery of 64 new apartments and 5 townhouses at Tara View (formerly Project Merrion). Leasing is progressing well, and 77% of the apartments are currently leased.

With a continued focus on active portfolio and capital management, we disposed of 128 units at Hampton Wood, at a net initial yield of 3.5%, representing a significant return on our original investment. We continue to examine opportunities to optimise our portfolio.

Financing

The Companys strategy continues to be supported by a robust balance sheet and strong liquidity position. The Company has facilities of c.800 million, of which c.657 million is drawn, and has no debt maturing until April 2026, with our debt repayments laddered from 2026 to 2032.  Undrawn facilities of c.143 million were available for investment and c.7 million of cash as at 31 December 2022.

On 14 December 2022, the Company 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%. This is in addition to the Companys existing 200m equivalent of Private Placement Notes, which are fully fixed with a weighted average fixed interest rate of 1.92% (inclusive of swap costs and excluding transaction costs). As of the year end, approximately 72% of the Company's drawn debt is now fixed against interest rate volatility. The remaining 28% of our drawn facilities is variable based on EURIBOR.

Outlook

Despite the uncertainty of the wider macroeconomic environment, the Irish economic outlook remains positive with a GDP growth outturn of between 11-12% expected in 2022 (Source: Davy, 5th December 2022). Irelands GDP growth is expected to outpace all other EU countries again in 2023 with the European Commission forecasting 3.2% growth (Source: European Commission Autumn 2022 Economic Forecast). Unemployment levels remain low at 4.4% in November 2022 (Source: CSO).

With a robust balance sheet and the additional interest rate hedging arrangements, together with a strong operating platform, IRES is well placed to navigate any continued market uncertainties. The Board remains confident that IRES has the right strategy and business model to meet evolving occupier and wider stakeholder requirements and capitalise on strong market fundamentals to continue to deliver long-term returns for shareholders.

Margaret Sweeney, Chief Executive Officer of IRES, commented:

"Despite the ongoing macroeconomic challenges, I am pleased with the Companys resilient performance in 2022 and I believe that our high quality, diverse portfolio of assets, robust financial position and highly experienced property management team will ensure that our business remains in a strong position as we enter 2023. The new interest rate hedging arrangement we have entered into will further strengthen the Companys financial position by locking 72% of our drawn debt into a fixed rate, providing us with increased certainty of borrowing costs. The residential rental market remains strong as we continue to see powerful structural trends in demographics, robust employment levels and technological change. All of these dynamics are key drivers of growth in the private rental sector, which is translating into excellent operational performance in our portfolio. I am acutely aware of the increasing cost pressures facing our residents and we will continue our engagement programmes and initiatives which support our residents and the communities in which we operate. 

1. RTB Rent Index Q2 2022

Notice of Results

The Company will be releasing its preliminary financial and operating results for the period from 1 January 2022 to 31 December 2022 at 7.00am BST on Friday 24 February 2023.

An investor conference call will be hosted by IRES' management at 9.00am B.S.T. on Friday 24 February 2023.

The details for this call are outlined below:

Joining by Telephone:

• Ireland (Local)                   0153 695 84
• Austria                                0800 802 898
• Belgium                              0800 29 923
• Belgium (Local)                 078 48 16 83
• Canada                               1 833 2942 546
• Canada (Local)                  1 613 699 6539
• France                                 0800 94 5619
• France (Local)                    09 70 73 39 58
• Germany (Local)               032 22109 8334
• Greece                                800 848 1321
• Greece (Local)                   21 1176 8298
• Hong Kong (Local)            580 33 413
• India (Local)                       022 7127 9566
• Italy                                     800 684 570
• Italy (Local)                        06 9450 1060
• Japan (Local)                      03 4540 6747
• Netherlands (Local)          085 888 7233
• Poland (Local)                    0 22 307 63 50
• Romania (Local)                0376 300 018
• Russia (Local)                     7 495 2839 705
• Singapore (Local)              3163 4602
• South Africa                       080 017 2952
• South Africa (Local)          087 550 8441
• Spain                                   900 053 626
• Spain (Local)                      919 01 16 44
• Sweden                               0200 123 717
• Sweden (Local)                  010 884 80 16
• Switzerland (Local)           022 518 90 26
• United Kingdom                0800 640 6441
• United Kingdom (Local)   020 3936 2999
• United States                     1 855 9796 654
• United States (Local)        1 646 664 1960
• All other locations            +44 20 3936 2999

Participant access code: 867386 

To listen to the investor conference call using the Live Webcast Facility, please register at https://www.investis-live.com/ires-reit/63b5a971aba36a0c0005ac5f/wsckk

We recommend you register for the Live Webcast Facility at least 15 minutes before the start of the call.  Should you have difficulties accessing the Live Webcast Facility please contact your IT team or use the teleconference facility (referred to above) to dial in via telephone. It will not be possible to use the Live Webcast Facility to ask questions.

The Company's Results Presentation will be available on the IRES website at https://www.iresreit.ie/investors/reports-and-presentations/year/2023

A replay will be available after the call is completed and will be available until Friday, 10th March 2023 using the following details.

UK: 020 3936 3001 

USA: 1 845 709 8569 

All other locations: +44 20 3936 3001 

Access Code: 405883 

For further information please contact:

For Investor Relations:

Irish Residential Properties REIT plc     

Michelle Ang, Director Investor Relations    Tel: +353 (0) 87 956 1138

Margaret Sweeney, Chief Executive Officer     Tel: +353 (0) 1 557 0974

For Media Requests:

Melanie Farrell, FTI Consulting

ires@fticonsulting.com       Tel: +353 (0) 86 401 5250

About Irish Residential Properties REIT plc

Irish Residential Properties REIT plc, is a growth oriented Real Estate Investment Trust that is focused on acquiring, holding, managing and developing investments primarily focused on private residential rental accommodations in Ireland. The Group currently owns 3,938 apartments and houses for private rental in Dublin and Cork and has a further 44 units to be delivered in 2023 under a pre-purchase contract. The Company's shares are listed on Euronext Dublin. Further information in respect of the Company can be obtained from the Companys website at www.iresreit.ie 

Important information

This note applies if and to the extent that there are forward-looking statements in this Announcement.

This Announcement may contain forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. Except as required by law or by any appropriate regulatory authority, the Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise, including in respect of the Covid-19 pandemic, the uncertainty of its duration and impact, and any government regulations or legislation related to it.