2019 INTERIM RESULTS-CONFERENCE CALL/media/Files/I/... · 2019-08-09 · EPRA Earnings per Share...

A u g u s t 2 0 1 9

Irish Residential Properties REIT plc

2019 INTERIM RESULTS- CONFERENCE CALL1

This presentation has been prepared by Irish Residential Properties REIT PLC (the “Company” or “I-RES”) for information purposes only.

This presentation has been prepared in good faith but the information contained in it has not been independently verified and does not purport to be comprehensive. The Company is notundertaking any obligation to provide any additional information or to update this presentation or to correct any inaccuracies that become apparent. This presentation is neither a prospectus nor anoffer nor an invitation to apply for securities. The information contained in this presentation is subject to material updating, completion, revision, amendment and verification. Any prospectiveinvestor must make its own investigation and assessments and consult with its own adviser concerning any evaluation of the Company and its prospects.

No representation or warranty, express or implied, is given by or on behalf of the Company, its group companies, IRES Fund Management Limited (“IRES Fund Management”) or any of theirrespective shareholders, directors, officers, employees, advisers, representatives, agents or any other persons as to the accuracy, completeness, fairness or sufficiency of the information,projections, forecasts or opinions contained in this presentation. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in any of the information or opinions inthis presentation and neither of the Company or IRES Fund Management, nor any of their employees, officers, directors, advisers, representatives, agents or affiliates, shall have any liabilitywhatsoever (in negligence or otherwise, whether direct or indirect, in contract, tort or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arisingin connection with this presentation. Certain financial and statistical information contained in this presentation is subject to rounding adjustments. Accordingly, any discrepancies between the totalsand the sums of the amounts listed are due to rounding.

This presentation contains forward-looking statements which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue","target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Such forward-looking statements are based on the beliefs of its management as well asassumptions made and information currently available to the Company. Forward-looking statements speak only as of the date of this presentation and the Company and IRES Fund Managementexpressly disclaim any obligation or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation, including any changes in its expectations or anychanges 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 theCompany 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, andno reliance should be placed on, such forward-looking statements. There is no guarantee that the Company will generate a particular rate of return.

To the extent indicated, certain industry, market and competitive position data contained in this presentation come from third party sources. Third party industry publications, studies and surveysgenerally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While theCompany believes that each of these publications, studies and surveys has been prepared by a reputable source, neither the Company nor IRES Fund Management have independently verifiedthe data contained therein. In addition, certain of the industry, market and competitive position data contained in this presentation may come from the Company’s own internal research andestimates based on the knowledge and experience of the Company and IRES Fund Management in the Irish market. While the Company believes that such research and estimates are reasonableand reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly,undue reliance should not be placed on any of the industry, market or competitive position data contained in this presentation.

THIS PRESENTATION DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER FOR SALE OR SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES NOR SHALL IT OR ANYPART OF IT FORMS THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT TO PURCHASE SHARES

D I S C L A I M E R

Cautionary Statements

Highlights 2019

Financial Results H1, 2019

Growth Strategy

Positive Outlook

Appendix – Portfolio Details

2019 Interim Results – Conference Call Irish Residential Properties REIT plc 3

Highlights H1, 2019

4

Investments in line with our Growth Strategy

o Growth of c. 45% since Dec 2018 bringing portfolio to 3884 units

o Acquisition of 815 unit Marathon Portfolio contracted June 13th, 2019, completed August 1st, 2019

o 298 units contracted under pre-purchase contractso In addition development opportunity with Planning

permission received for 200 units

Funding Strategy

New Syndicated Revolving Credit Facility

o €450m Facility finalised in April 2019 o RCF increased to €600m in June 2019o 5 year term to 2024, with option to extend two further

yearso Lower costs

Equity Placing

o 85.6m new shares issued in 2 tranches in June/July 2019o At €1.55 per shareo Raised €131m (net proceeds) to fund growth strategy

Strong financial performance in the first six months

o C.18% increase in Net Rental Income and Earningso EPRA EPS up 12.9% to 3.5 cents (30 June 2018: 3.1

cents.)o €22.5m increase in portfolio valuation, 6% gross yield at

fair valueo EPRA NAV per share up 3.5% to 146.9 cents (31

December 2018: 142.0 cents)

2019 Interim Results – Conference Call Irish Residential Properties REIT plc

1 Excluding fair value of development land and investment properties under development2 For definitions, method of calculation and other details, refer to page 27 to 28 of the Company’s 2018 Annual Report

Revenue from Investment Properties (€ millions)

Occupancy % Average Monthly Rent (€)

EPRA NAV (€ millions)EPRA Earnings per Share (€ cents)

Net Rental Income (€ millions)

Operating Performance For the period ended 30 June 2019 2018

Revenue from Investment Properties (€m) 27.8 24.1

Net Rental Income (€m) 22.7 19.3

EPRA Earnings (€m) 15.3 13.0

Profit (€m) 34.1 69.5

Basic EPS (cents) 7.8 16.5

EPRA Earnings per share (cents) 3.5 3.1

Portfolio Performance 2019 2018

Total Number of Residential Units 2,771 2608

Overall Portfolio Occupancy Rate2 98.3% 98.7%Overall Portfolio Average Monthly Rent (€)2 1,598 1,539

Gross Yield at Fair Value1,26.0% 6.2%

21.7

24.1

27.8

1517192123252729

H1 2017 H1 2018 H1 2019

17.1

19.3

22.7

15161718192021222324

H1 2017 H1 2018 H1 2019

99.8 99.8 98.3

15

35

55

75

95

115

2017 2018 H1 2019

1,517 1,599 1,598

15

515

1,015

1,515

2,015

2017 2018 H1 2019

2.83.1

3.5

0.0

1.0

2.0

3.0

4.0

5.0

H1 2017 H1 2018 H1 2019

504

620

707

400 450 500 550 600 650 700 750

2017 2018 H1 2019

I•RES REIT Financial Results H1, 2019


Strong Financial Position

The Coast, Baldoyle, Dublin 136

As At 30 June 2019 31 December 2018

Total Property Value € 989.5m € 921.3m

Net Assets € 705.5m € 618.7m

EPRA Net Assets € 707.0m € 619.6m

Basic NAV per share (cents per share) 147.7 142.5

EPRA NAV per share (cents per share) 146.9 142.0

Group Total Gearing 38.6% 33.6%


• Successfully completed a placing of 86,550,000 new Ordinary Shares in the Company with gross proceeds of c. 134M

• Price : €1.55 per Placing Share, • Tranche I: 43,415,394 issued 18 June 2019• Tranche II: 43,134,606 issued on 10 July 2019

• Entered in a new Credit Facility • Date: April 2019 • Amount: €450 million• Increased to €600 million in June 2019• Term is 5 years to 2024 with option to extend

for 2 more years• Lower margin • Uncommitted accordion of € 50m

Funding

Beacon Square South (B4 render)72019 Interim Results – Conference Call Irish Residential Properties REIT plc

Multi-Channel Growth Strategy to Deliver Sustainable Long-Term Growth

• Continued evaluation of new acquisition opportunities in attractive urban locations

• Following criteria considered:

Good transportation links, community infrastructure –in particular, schools

Local employment

Family-friendly neighbourhoods

• Forward purchase agreements with local builders and developers for new supply of multi-family and single-family units

• Opportunity to add approx. 628 apartments at currently owned I•RES properties1

• Partially completed foundation infrastructure (e.g. parking) already in place at Rockbrook site

• Infill and conversion opportunities are available on currently owned commercial properties1

Acquisition ofCompleted Assets

1 DevelopmentPartnerships

2 Developmentof Existing I•RES Properties

3

Disciplined capital allocation policy to generate value and growing dividends for I•RES shareholders

1 Subject to planning and any other approvals

I•RES REIT Growth Strategy


2018 2019

• Acquisition in February 2019 for c. €14m1

• Gross yield: c. 6.2%

The Coast, Baldoyle52 units

• Acquisition in May ‘19 for c. €18.5m1

• To be handed over in Q1 ‘20• Expected gross yield: c. 7.0%

Waterside, Swords55 units

• Agreement entered in March 2019 for c. €38.2m1

• To be handed over in Q4 ‘19 • Expected gross yield: c. 6.7%• 39 units handed over at Taylor Hill as

at 30 June 2019

Donabate & Balbriggan 118 units

• Pre-purchase agreement in Nov 2018

• To be handed over by Q4 ’21 for c. €47.1m1

• Expected gross yield: c. 5.6%

Merrion Road 69 units

• Development agreement in Nov 2018 for €30m1

• To be handed over in mid-2020• Expected gross yield c. 6.6%

Hansfield Wood II 95 units

• Took delivery during 2018• Agreement entered into with local

developer in Nov 2017 • Leased at gross yield of c. 6.7%2

Hansfield Wood I 99 units

• Acquisition in May 2018 for €40m1

• Leased at gross yield of c. 6.6%3

Hampton Wood 128 units

Completed acquisition

Key:

Forward purchases / development agreements

Building a diverse, significant portfolio focused on Dublin area and other large cities in Ireland

6288151501702292,4504,511 units

I•RES Investment Propertiesas at 31 Dec 2017

2018 Acquisitions & Developments

2019 Acquisitions & Forward Purchases

2020Forward

Purchases

Acquisition of Marathon XVI

Portfolio (2019)

Opportunity for Development of

Existing Properties (2019- 2022)2

Pro Forma I•RES Portfolio

No. of units

• See details on slide 11

Development Pipeline628 units

• See details overleaf

Marathon XVI Portfolio815 units

69

2021Forward

Purchases1 Excluding transaction costs and including VAT.

2 Gross Yield as at 30 June 2019 (passing rent as at 30 June 2019, divided by purchase price (including VAT and excluding transaction costs))

Development

Strong Execution on Growth Strategy


Marathon XVI Portfolio Acquisition1Portfolio Transaction Highlights• A significant, diversified and income producing PRS portfolio of 815 residential

units

• Comprises 16 established properties in areas with strong rental demand and proximity to local amenities and transport links, generating annual rental income of €14.5m (including vacant units leased up)

15 schemes in prime locations in the Dublin Area and 1 scheme in Cork

• Passing rent per unit of c. €1,4862 with estimated rental value (ERV) of €1,803

• Consideration €285 million (including VAT and excluding transaction costs), estimated year 1 gross yield of 5.1% (estimated reversionary yield of 6.2%)

Capital allocation into income generating assets

Excellent opportunity to acquire established portfolio of scale in the Dublin market and entry to Cork market

Ability to leverage I•RES’ existing operating platform and infrastructure

Potential to capture reversionary rental income and replicate I•RES’ net rental income margins going forward

Accretive to earnings in first full year post acquisition

I•RES REIT Asset Locations in Dublin Area

M50

M50

M1

Dublin Airport

M50

M50

Asset Highlights

815 Residential units

€1,486Passing rent2

€1,803ERV2

98.7%Occupied

Significantly Expands Dublin Footprint

Dublin

1 The acquisition of the Marathon XVI Portfolio closed on august 1, 2019

20%+

Existing I•RES Properties

Marathon XVI Portfolio

Benefits

2 Per unit, per month. As at April 2019 2019 Interim Results – Conference Call Irish Residential Properties REIT plc 10

I•RES REIT Development Pipeline

Development and Intensification of Existing I•RES Properties is a Core Element of Growth Strategy

• During 2018, significant progress made with several planning applications for development projects:

planning applications have been submitted for 628 apartments at sites currently owned

of these, planning permissions have been received for 200 apartments

a planning application for the development of 428 residential units (including car parking and commercial) at Rockbrookhas been submitted to the Planning Board under the Strategic Housing Development application process

LocationNo. of

Residential Units at Completion

Status

Tallaght Cross West 18 Under Construction

Bakers Yard 61 Planning Permission Granted

Coldcut (Conversion) 1 Construction Completed

Priorsgate (Bruce House) 31 Planning Permission Granted

Priorsgate (Conversion) 5 Planning Permission Granted

Beacon Square South (B4) 84 Planning Permission Granted

Rockbrook 428 Planning application submitted

Total 628

Development Initiatives Planning Status

Beacon Square South (B4) Rockbrook Bakers Yard 11


Positive Outlook

Attractive market backdrop with strong economic fundamentals and significant demand and supply imbalance, continues

Three-pronged growth strategy continues to support building a leading residential rental business, with a c. 45% growth in the portfolio since Dec 2018

Our H1, 2019 results demonstrate continued strong earnings and dividend growth


13

A Place to Call Home

2018 Annual Shareholders’ Meeting Irish Residential Properties REIT plc


Portfolio DetailsIRISH RESIDENTIAL PROPERTIES REIT plc

1414

Property Location Year Built Date Acquired No of apartments owned1

Annualised Passing Rent.1,2,3

Value as at 30 June 20191,2

Gross Yield at Fair Value

City Centre1 Kings Court Smithfield 2006 10-Sept-13 83 € 1,586 25.8 6.2%2 The Marker Docklands 2012 18-Ju-14 85 € 3,253 75.1 4.3%3 Bakers Yard Portland Street North 2007/2008 7-Oct-14 86 € 1,646 26.7 6.8%4 City Square4 Gloucester Street 2006 7-Apr-16 24 € 505 8.6 5.9%

Total City Centre 278 € 6,990 136.2 5.8%Prime Suburbs5 Beacon South Quarter Sandyford 2007/2008 7-Oct-14 225 € 5,910 86.9 7.4%6 Grande Central Sandyford 2007 10-Sep-13 65 € 1,351 25.4 5.3%

7 Rockbrook Grande Central5 Sandyford 2007 31-Mar-15 81 € 1,908 33.6 5.7%

8 Rockbrook South Central5 Sandyford 2007 31-Mar-15 189 € 3,931 90.3 5.5%9 Forum Sandyford 2007 17-Feb-16 8 € 174 3.0 5.8%10 The Maple Sandyford 2017 12-Jul-17 68 € 1,662 32.0 5.2%11 Elmpark Green Merrion 2006 25-May-16 201 € 3,921 73.9 5.3%12 Bessboro Terenure 2008 11-Dec-15 40 € 820 16.1 5.1%Total Prime Suburbs 877 € 19,677 361.2 5.7%Secondary Suburbs13 Priorsgate Tallaght 2007 10-Sep-13 103 € 1,642 26.0 6.6%14 The Laurels Tallaght 2007 27-Jun14 19 € 347 3.9 8.9%15 Charlestown Finglas 2007 7-Oct-14 235 € 3,992 69.3 5.8%16 Tallaght Cross West Tallaght 2008 15-Jan-16 442 € 7,822 117.9 6.7%17 Coldcut Park Clondalkin 2012 31-Aug 16 90 €1,600 21.9 7.3%18 Hansfield Wood Ongar 2018 15-Nov-17 99 € 2,525 37.6 6.7%

Hansfield Wood II6 Ongar 2018 8-Oct-18 - n/a 25.6 n/a19 Hampton Wood Finglas 2018 21-May-18 128 € 2,631 41.6 6.3%Total Secondary Suburbs 1,116 € 20,559 343.8 6.9%Inchicore/Drimnagh18 Camac Crescent Inchicore 2008 10-Sep-13 90 € 1,518 21.9 6.9%19 Lansdowne Gate Drimnagh 2005 7-Oct-14 224 € 4,359 72.9 6.0%20 Tyrone Court Inchicore 2014 5-Jun-15 95 € 1,808 28.4 6.4%Total Inchicore/Drimnagh 409 € 7,685 123.2 6.4%Total investment properties owned as at 31 December 2018 2,680 € 54,911 964.4 6.0%21 The Coast Baldoyle 2006 20-Feb-19 52 € 863 14.0 6.2%22 Taylor Hill Balbriggan 2018 25-Mar-19 39 € 125 11.1 1.1%

Total investment properties owned as at 30 June 2019 2,771 € 55,899 989.5 6.0%

Note: 1 As at 30 June 20192 In millions of euros3 Annualised Passing Rent is defined as actual monthly rents under contract with tenants as at the stated date, multiplied by 12, to annualize the monthly rents, which is then used to calculate the Gross Yield. Actual monthly rents under contract for the portfolio as at 30 June 2019 was €4,659 multiply by 12 is €55,899.4 I-RES acquired an additional unit at City Square in April 20195 Total number of owned apartments at Grande Central as of 30 June 2019 is 1466 Includes apartments under development that are valued at €25.6 million as at 30 June 2019. On 8 October 2018, I-RES acquired the land for €3.3 million. 95 residential units will be completed over the next two years.

15

Existing Portfolio2019 Interim Results – Conference Call Irish Residential Properties REIT plc

Significant, Diverse Portfolio

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16

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01

23

25

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0708

0613

17

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09 10

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Dublin City Centre01 Kings CourtSmithfield D7 (83 Units)

02 The Marker ResidenceDocklands D2 (85 Units)

03 Bakers YardPortland Street North D1 (86 Units)

04 City SquareGloucester St D2 (23 units)

Prime Suburbs05 Beacon South QuarterSandyford D18 (225 Units)

06 Grande CentralSandyford D18 (65 Units)

07 Rockbrook Grande CentralSandyford D18 (81 Units)

08 Rockbrook South Central Sandyford D18 (189 units)

09 The ForumSandyford D18 (8 units)

10 The MapleSandyford D18 (68 Units)

11 Elmpark GreenMerrion Road D4 (201 Units)

12 BessboroTerenure D6 (40 Units)

Secondary Suburbs13 PriorsgateTallaght D24 (103 Units)

14 The LaurelsTallaght D24 (19 units)

15 CharlestownFinglas D11 (235 units)

16 Tallaght Cross WestTallaght D24 (442 Units)

17 Coldcut ParkClondalkin D22 (90 Units)

18 Hansfield WoodOngar, D15 (99 Units)

19 Hampton WoodFinglas, D11 (128 Units)

20 The CoastBaldoyle, D13 (52 units)

21 Waterside*UNDER CONSTRUCTION*Malahide, Co. Dublin (55 units)

22 Taylor Hill*UNDER CONSTRUCTION*Balbriggan, Co. Dublin (78 units)

Inchicore Drimnagh23 Camac CrescentInchicore D8 (90 units)

24 Lansdowne GateDrimnagh D12 (224 Units)

25 Tyrone CourtInchicore D8 (95 Units)

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