Building
Communities
and Creating
Value
_
Irish Residential
Properties REIT plc
Annual Report 2021
TEMP RD VERSION TEMP RD VERSION
Irish Residential Properties REIT plc Annual Report
2021
I-RES at a Glance 2
Financial Highlights 3
Strong Track Record of Growth 5
Market Outlook 6
Professionally Managed
Modern Accommodation 7
Modern Diverse Portfolio 9
A Place to Call Home 10
Strategic Report 11
Chairman’s Statement
12
Chief Executive Officer’s Statement
15
Manager’s Statement
20
Business Review
21
Market Update
33
Sustainability Review
35
Business Objectives and Strategy
47
Investment Policy
48
Risk Report
50
Governance 63
I-RES Board of Directors
64
Corporate Governance Statement
67
Report of the Audit Committee
78
Report of the Remuneration Committee
83
Report of the Nomination Committee
101
Report of the Sustainability Committee
105
Report of the Related Party Committee
109
Report of the Directors
111
Statement of Directors’ Responsibilities
119
Financial Statements 121
Independent Auditor’s Report to the Members
of Irish Residential Properties REIT plc
122
Consolidated Statement of Financial Position
127
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
128
Consolidated Statement of Changes in Equity
129
Consolidated Statement of Cash Flows
130
Notes to Consolidated Financial Statements
131
Company Statement of Financial Position
170
Company Statement of Profit or Loss and
Other Comprehensive Income
171
Company Statement of Changes in Equity
172
Company Statement of Cash Flows
173
Notes to Company Financial Statements
174
Supplementary Information 185
Supplementary Information
186
IRES REIT, IRES Fund Management Limited
and CAPREIT Senior Management
189
Glossary of Terms
190
Forward-Looking Statements
192
Shareholder Information
193
Chairman’s Statement
Declan Moylan
“ Strong performance
and continued growth.”
12
Page
CEO’s Statement
Margaret Sweeney
“ Resilience, underpinned
by our high quality and
diverse portfolio.”
15
Page
Corporate Profile
Irish Residential Properties REIT plc
(the “Company”, “I-RES”, together
with IRES Residential Properties
Limited, the “Group”) is a growth
oriented Real Estate Investment Trust
("REIT") that is primarily focused on
investing in, holding, manging and
developing private residential rental
December 2021, the Group owns
and manages 3,829 apartments and
houses for private rental in Ireland.
The Company’s shares are listed
on the Main Securities Market of
Euronext Dublin.
2021 Annual Report
1
2021 Annual Report
Ashbrook
Clontarf, Dublin 3
86 units
Additional 22 residential units
to be acquired in H1 2022
I-RES
2
22%
63%
14%
1%
25%
67%
6%
2%
4%
6%
5%
7%
6%
60%
12%
Bedroom
Split
Average
Monthly
Rent
Age
28%
23%
26%
11%
1%
Location
11%
22%
63%
14%
1%
25%
67%
6%
2%
4%
6%
5%
7%
6%
60%
12%
Bedroom
Split
Average
Monthly
Rent
Age
28%
23%
26%
11%
1%
Location
11%
Majority 2-bedroom apartments
1 bed
2 bed
3 bed
4 bed
Mid-tier affordable residential sector
€1,000 to €1,500
€
1,500 to €2,000
€2,000 to €2,500
>€2,500
22%
63%
14%
1%
25%
67%
6%
2%
4%
6%
5%
7%
6%
60%
12%
Bedroom
Split
Average
Monthly
Rent
Age
28%
23%
26%
11%
1%
Location
11%
22%
63%
14%
1%
25%
67%
6%
2%
4%
6%
5%
7%
6%
60%
12%
Bedroom
Split
Average
Monthly
Rent
Age
28%
23%
26%
11%
1%
Location
11%
Well diversified across attractive Dublin locations
Young modern portfolio, average age of 12 years,
with 94% buildings have A-C rating
South Dublin
North Dublin
West Dublin
City Centre
West City
Cork
<2
2 to 4
5 to 7
8 to 10
11 to 13
14 to 16
17-22
I-RES at a glance
_
Elmpark Green, Merrion Road
Dublin 4
194
Residential Units
2021 Annual Report
3
(2020:€74.7m, +6.7%)
Financial Highlights
_
For the year
2021 2020
% change
Operating Performance
Revenue from Investment Properties (€ millions) 79.7 74.7 6.7%
Net Rental Income (€ millions) 63.0 59.8 5.4%
Adjusted EPRA Earnings (€ millions) 37.0 36.3 1.9%
EPRA Earnings (€ millions) 31.6 34.0 (7.1%)
Profit (€ millions) 67.5 58.3
Basic EPS (cents) 12.8 11.2
Adjusted EPRA Earnings per share (cents) 7.0 7.0
EPRA Earnings per share (cents) 6.0 6.5
Interim Dividend per share (cents) 2.91 2.75
Dividend per share (cents) 3.08 3.22
As at
31 December 2021 31 December 2020
% change
Balance Sheet
Total Property Value (€ millions) 1,493.4 1,380.4 8.2%
Net Asset Value (€ millions) 881.4 841.7 4.7%
IFRS Basic NAV per share (cents) 166.5 160.3 3.9%
Group Total Gearing 40.7% 39.2%
Gross Yield at Fair Value 5.6% 5.5%
EPRA Net Initial Yield 4.2% 4.2%
Other
Market Capitalisation (€ millions) 887.4 785.5
Total Number of Shares Outstanding 529,453,946 525,078,946
Weighted Average Number of Shares – Basic 527,412,302 522,069,110
166.5c
Basic
NAV
per share
(2020: 160.3c, +3.9%)
4.2%
EPRA
Net Initial Yield
(2020: 4.2%, -bps)
(2020: €1,380.4m, +8.2%)
€1,493.4m
Total
Property
Value
6.0c
EPRA
EPS
99.1%
Occupancy
€79.7m
Revenue from
Investment
Properties
(2020: 98.4%, +70bps)
(2020: 6.5c, -7.7%)
4
I-RES
Merrion Road
Dublin 4
69
Residential Units
To be completed in 2022
2021 Annual Report
5
Strong Track Record of Growth
_
Sustainable accretive growth in our
residential rentalassetsportfolio is
an integral part of our strategy. We
have delivered circa47%growthin
the portfolio size over the last 3 years
and continue to invest in the supply
of accommodation for rent. Due to
the limited supply of completed rental
properties of scale that fit our business
model and continued growing demand,
we outlined a three-pronged strategy
for growth in 2018. This, coupled with
the strong fundamentals of the sector
and our operational excellence, has
allowed us to continue generating
strong returns and growing dividends
for our shareholders.
Wecontinued to deliver on our investment and growth
strategy in 2021, adding146residential unitsat The
Phoenix Park Racecourse in Dublinbringing our overall
portfolio of homes for rent to3,829. In January 2022
we executed on two contracts for the acquisition
of 152 residential units located in Ashbrook, Clontarf,
Dublin 3 in two phases. The Company took delivery
of 86 completed units in Q1 2022, with a further 22
due in the first half of 2022. We have also committed
to acquiring the remaining 44 apartments under a
forward purchase contract, with delivery anticipated
for H2 2023.
The Net Rental Income (“NRI”) increasedby5.4%
to €63.0 million,principally driven by organic rental
growthand the further addition of146residential units
during 2021. The Group has a pipeline of 862 units
representing c. 21.5% growthpotential in the portfolio,
which will be delivered over the coming years. We
have a strong balance sheet and ample liquidity to
position the business for future growth.
50
.5
59.8
41
.2
63
.0
9.8
2018 2019 2020
2018
2,
67
92019
3,666
3,688
2020
3,82
9
2018
99.8
2019
98
.3
98.4
2020
99
.1
688
,
Ne
t
Rent
al In
come
(€ millions)
Ov
er
all
Po
rt
fo
li
o
Occu
pa
nc
y
Ra
te
(%)
To
tal Numb
er
of
Resident
ial Unit
s
2018 2019 2020 2021 2018 2019 2020 2021
2018 2019 2020 2021
921.3
2018
1,359.2
2019
1,380.4
2020
1,49
3.
42021
142.5
2018
155.3
2019
160.3
2020
166.5
2021
33.6
2018
39.9
2019
39.2
2020
40
.7
2021
To
tal
Pr
op
erty
Va
elu
(€ millions)
Ba
sic
NAV pe
r sh
ar
e
(ce
nt
)Gearin
g
(%)
50
.5
59.8
41
.2
63
.0
9.8
2018 2019 2020
2018
2,
67
92019
3,666
3,688
2020
3,82
9
2018
99.8
2019
98
.3
98.4
2020
99
.1
688
,
Ne
t
Rent
al In
come
(€ millions)
Ov
er
all
Po
rt
fo
li
o
Occu
pa
nc
y
Ra
te
(%)
To
tal Numb
er
of
Resident
ial Unit
s
2018 2019 2020 2021
2018 2019 2020 20212018 2019 2020 2021
921.3
2018
1,359.2
2019
1,380.4
2020
1,49
3.
42021
142.5
2018
155.3
2019
160.3
2020
166.5
2021
33.6
2018
39.9
2019
39.2
2020
40
.7
2021
To
tal
Pr
op
erty
Va
elu
(€ millions)
Ba
sic
NAV pe
r sh
ar
e
(ce
nt
)Gearin
g
(%)
50
.5
59.8
41
.2
63
.0
9.8
2018 2019 2020 2018
2,
67
92019
3,666
3,688
2020
3,82
9
2018
99.8
2019
98
.3
98.4
2020
99
.1
688
,
Ne
t
Rent
al In
come
(€ millions)
Ov
er
all
Po
rt
fo
li
o
Occu
pa
nc
y
Ra
te
(%)
To
tal Numb
er
of
Resident
ial Unit
s
2018 2019 2020 2021
2018 2019 2020 2021
2018 2019 2020 2021
921.3
2018
1,359.2
2019
1,380.4
2020
1,49
3.
42021
142.5
2018
155.3
2019
160.3
2020
166.5
2021
33.6
2018
39.9
2019
39.2
2020
40
.7
2021
To
tal
Pr
op
erty
Va
elu
(€ millions)
Ba
sic
NAV pe
r sh
ar
e
(ce
nt
)Gearin
g
(%)
I-RES
6
Supply Demand
Imbalance Remains
There remains a significant
supply shortage across
all segments of housing
stock in Ireland and this
has been exacerbated by
the pandemic which has
caused some disruption to
new construction projects.
In September 2021, the
Government set out its
‘Housing for All’ strategy,
which indicated a need
for 33,000 new homes
to be provided each
year until 2030, to meet
demand from Ireland’s young
and growing population.
In 2021 there were an
estimated 21,000 new
housing completions in
the year, on par with pre-
pandemic levels of 21,200
in 2019. The Central Bank of
Ireland
1
forecasts housing
supply will reach 25,000
and 30,000 in 2022 and
2023 respectively.
The Rental Market
Demand for rental
accommodation has
remained strong, with
circa 1,397
2
units available
for rent as at 1 February
2022 nationally, down 63%
from the same date in 2021.
In Dublin, there were only
712
2
homes available to rent,
down 73% from the same
date in 2021 and the lowest
level since the beginning
of the dataset in 2006. This
lack of supply is leading to
upward pressure on rental
prices as demand continues
to grow.
Growing Population
The combined effect of
positive net migration and
natural increase resulted
in an overall increase in
the population of 55,900
(1.1%) in the year to April
2020.
3
Ireland’s population,
which stood at 4.74 million
in 2016, is projected to
increase to 5.7 million by
2040. Thepopulation of
Dublin in April 2021 was
estimated to be almost
1.43 million persons, 28.5%
of the totalpopulation
4
of Ireland.
Strong Foreign Direct
Investment (“FDI”) sector
The Industrial Development
Agency (‘IDA’) Ireland
continues to report
positive results, with over
29,000 jobs created in
2021 – representing the
largest increase in FDI
employment in a single
year. There are now over
275,000 people, or 11%
of the total workforce
5
,
employed in FDI-related
businesses. FDI companies
continue to contribute
strongly to Ireland’s strong
tax revenues, which rose
to a record high of €68.4
billion in 2021
6
. Since 2019,
the biggest contributor to
this growth is corporation
tax (+41%) reflecting
the ongoing buoyancy
of large multinationals
in the technology and
pharmaceutical sectors.
Market Outlook
_
(1) The Central Bank of Ireland - Quarterly Bulletin January 2022
(2) Daft.ie - Q4 2021 Rental Price Report
(3) CSO - Population and Migration Estimates April 2020
(4) CSO - Population and Migration Estimates April 2021
(5) IDA Ireland 2021 Results
(6) 2021 Exchequer returns
Grande Central,
Sandyford
146
Residential Units
2021 Annual Report
7
Professionally Managed Modern Accommodation
_
01
Bringing new standards
to the rental market
We are transforming the residential
rental market for the better by offering
professional property management
services. Each building has dedicated
staff to ensure residents receive the
highest possible standards of service.
02
Rapid response
Weput our residents first at all times
by offering a 24-hour on-call service
for emergencies such as loss of
heat,wateror essential services.
We have a telephone support centre
and a mobile app for tenants to send
all requests. We alsomaintainhigh
service and safety standards such
as twice-yearly fire drills that exceed
regulatory requirements.
03
Top-quality staff
Our highly trained operations
staffparticipatein regular external
and internal professional development
programmes in areas such as health
and safety, process efficiencies and
property management.
The I-RES
Advantage
_
Intensive training
and development
for all staff
members
Safety standards
exceed regulatory
requirements
Team of
tradespeople
and caretakers
Advanced
technology to
maximise efficiency
24-hour emergency
service line
Dedicated
property manager
for every building
15
Dublin
Bray
Dún
Laoghaire
Blackrock
DUBLIN
AIRPORT
Malahide
DROGHEDA
Ranelagh
Terenure
Drimnagh
Inchicore
Finglas
Swords
Santry
Connolly
Station
Clonsilla
Lucan
Carrickmines
Rockbrook
Sandyford
Cabinteely
Knocklyon
Clontarf
Docklands
Tallaght
Portmarnock
Howth
Donabate
Skerries
Laytown
Stamullen
Slane
Navan
Kilmessan
Dunshaughlin
Kilcock
Dunboyne
Celbridge
Clane
Bellewstown
Duleek
Bettystown
NAAS
Rush
Balbriggan
M50
M50
M50
M50
N11
N11
N31
N2
N3
M4
N7
N81
N7
M1
Dalkey
Killiney
Blanchardstown
PHOENIX
PARK
Raheny
29
28
1
4
6
2
34
5
3
12
10
33
35
32
21
20
22
19
26
24
31
30
9
8
23
18
25
7
17
16
15
13
14
11
Drumcondra
Liffey
Valley
Shopping
Centre
Blanchardstown
Shopping Centre
Pavillion’s
Shopping
Centre
Dundrum
Town
Centre
Beaumont
Hospital
Tallaght
Hospital
James
Connolly
Memorial
Hospital
St Vincents
Hospital
St.James’s
Hospital
Heuston
Station
Cherry
Orchard
Hospital
Crumlin
Children’s
Hospital
University
College
Dublin
Dublin
City
University
TU Dublin
Bolton St.
TU Dublin
Tallaght
Ballsbridge
Baldoyle
Rathmines
Castleknock
27
I-RES
8
3,779
Units in Dublin
50
Units in Cork
LUAS Red Line
LUAS Green Line
DART Line
Commuter Train
15
Dublin
Bray
Dún
Laoghaire
Blackrock
DUBLIN
AIRPORT
Malahide
DROGHEDA
Ranelagh
Terenure
Drimnagh
Inchicore
Finglas
Swords
Santry
Connolly
Station
Clonsilla
Lucan
Carrickmines
Rockbrook
Sandyford
Cabinteely
Knocklyon
Clontarf
Docklands
Tallaght
Portmarnock
Howth
Donabate
Skerries
Laytown
Stamullen
Slane
Navan
Kilmessan
Dunshaughlin
Kilcock
Dunboyne
Celbridge
Clane
Bellewstown
Duleek
Bettystown
NAAS
Rush
Balbriggan
M50
M50
M50
M50
N11
N11
N31
N2
N3
M4
N7
N81
N7
M1
Dalkey
Killiney
Blanchardstown
PHOENIX
PARK
Raheny
29
28
1
4
6
2
34
5
3
12
10
33
35
32
21
20
22
19
26
24
31
30
9
8
23
18
25
7
17
16
15
13
14
11
Drumcondra
Liffey
Valley
Shopping
Centre
Blanchardstown
Shopping Centre
Pavillion’s
Shopping
Centre
Dundrum
Town
Centre
Beaumont
Hospital
Tallaght
Hospital
James
Connolly
Memorial
Hospital
St Vincents
Hospital
St.James’s
Hospital
Heuston
Station
Cherry
Orchard
Hospital
Crumlin
Children’s
Hospital
University
College
Dublin
Dublin
City
University
TU Dublin
Bolton St.
TU Dublin
Tallaght
Ballsbridge
Baldoyle
Rathmines
Castleknock
27
2021 Annual Report
9
Modern Diverse Portfolio
_
We are committed to investing in communities by providing high-quality
housing in attractive, well serviced locations where people want to live, work
and build their lives. The focus of our investment and development strategy is
therefore on family friendly urban locations which feature high grade community
facilities, good public transportation links, well developed educational and social
infrastructure, and sustainable employment opportunities.
CITY CENTRE
1 Richmond Gardens,
Fairview
2
Kingscourt,
Smithfield
3 The Marker
Residence,
Grand Canal Square
85 Units
4 Bakers Yard,
North Circular Road
5 City Square,
Gloucester Street
6 Xavier Court,
Sherrard Street Upper
SOUTH DUBLIN
7 Time Place,
Sandyford
8 Beechwood Court,
Stillorgan
9 Belville Court,
Cabinteely
10
Bessboro,
Terenure
11 Beacon South
Qua r t er,
Sandyford
12
Elmpark Green,
Merrion Road
13 Grande Central,
Sandyford
14
Rockbrook
Grande Central,
Sandyford
15
Rockbrook
South Central,
Sandyford
16 The Forum,
Sandyford
17 The Maple,
Sandyford
NORTH DUBLIN
18 Semple Woods,
Donabate
19
Charlestown,
Finglas
20
Northern Cross,
Malahide Road
21 Carrington Park,
Santry
22 The Coast,
Baldoyle
23 Taylor Hill,
Balbriggan
24 Heywood Court,
Santry
25
Waterside,
Malahide
26 Hampton Wood,
Finglas
WEST DUBLIN
27 Phoenix Park
Racecourse,
Castleknock
28
Priorsgate,
Tallaght
29
Tallaght Cross West,
Tallaght
30 Pipers Court,
Clonsilla
31 Hansfield Wood,
Clonsilla
32 Coldcut Park,
Clondalkin
WEST CITY
33
Tyrone Court,
Inchicore
34
Camac Crescent,
Inchicore
35
Lansdowne Gate,
Drimnagh
CORK
36 Hartys Quay,
Co. Cork
To be acquired
in 2022:
Ashbrook
Clontarf
108 units
Dublin 4
69 units
To be completed
in 2022:
61 units
I-RES
10
I-RES invests in sustainable communities by providing high-
quality homes for people who want to live and work there for
the long term. Our round-the-clock service, outstanding levels
of care, maintenance and building quality, and commitment to
our residents, add up to quality standards of living for residents.
A Place to Call Home
_
The Maple
Sandyford
68
Residential Units
2021 Annual Report
11
Strategic
Report
_
In this Section:
Chairman’s Statement
12
Chief Executive Officer’s Statement
15
Manager’s Statement
20
Business Review
21
Market Update
33
Sustainability Review
35
Business Objectives and Strategy
47
Investment Policy
48
Risk Report
50
2021 Annual Report
11
I-RES
12
During the period,
wecontinued to meet
theneeds of our residents,
delivering strong returns
for our shareholders
and progressed with the
Internalisation of the
Investment Manager.
We remain focused on delivering
on the strategic priorities set by
theBoard, and we will continue
to invest in acquisitions and
developments which will add
incremental value to our portfolio
andprovide attractive, risk-adjusted
returns for ourshareholders.
Delivering on our Growth Strategy
As at 31 December 2021, the Group
had a portfolio of 3,829 residential
units across 35 properties in the
Dublin region and one property in
Cork. Despite the various public
health measures in place throughout
much of 2021 as a result of Covid-19,
includingrestrictions on travel and
movement, we continued to grow
our portfolio through investment
in new supply from developments
and acquisitions. We completed the
acquisition of 146 residential units at
The Phoenix Park Racecourse in Dublin
in January 2021. In January 2022, the
Company announced it had executed
on two contracts for the acquisition of
152 residential units located in Ashbrook,
Clontarf, Dublin 3 in two phases.
Chairman’s
Statement
_
€
79.7
m
Revenue
2020: €74.7m
99.
1%
Occupancy
2020: 98.4%
€37.0m
Adjusted EPRA Earnings
2020: €36.3m
2021
Performance
Highlights:
With an experienced team, strengthened by
internalisation and recent appointments, as
well as a strong balance sheet underpinned
by favourable market factors, the Group
is well placed to navigate changing market
circumstances and positioned to continue
executing on its growth strategy over the
coming years.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
13
We also have a further supply of 130
residential units expected to complete
in H1 2022 at Bakers Yard and Merrion
Road. We look forward to delivering
both schemes into what we expect will
be a rental market with strong demand
for good quality accommodation.
We believe the structural drivers of
demand for private rental residential
accommodation (including population
growth, strong inward investment,
and economic growth) will continue
to underpin the robust demand
in the market over the long term.
The Board believes that I-RES is
uniquely positioned to capitalise on
this demand, and we will continue
to evaluate growth opportunities
to further strengthen our position
as the leading provider of private
rented residential homes in Ireland,
whilemaintaining a disciplined
approach to capital allocation.
Financial Results
Against a challenging market
backdrop, the Group generated
continued strong performance in 2021
with revenue and NRI growth during
the year. Our continued investment in
new properties helped deliver rental
income growth for the year, whilealso
maintaining a consistently high
occupancy rate across our portfolio.
As of 31 December 2021, our adjusted
EPRA EPS (before non-recurring
costs) is 7.0 cents, consistent with
2020, while our IFRS Basic NAV per
share grew by 3.9% to 166.5 cents. As
a result of this strong performance,
wedeclared an additional dividend of
3.08 cents per share for the twelve
months ended 31 December 2021.
Internalisation of Management
and Termination of Investment
Management Agreement
On 1 April 2021, the Company
announced that it had received a
twelve-month notice of termination
of the Investment Management
Agreement (“IMA”) from our Investment
Manager, IRES Fund Management,
awholly owned subsidiary of CAPREIT
LP. Having carefully reviewed the
possible options and having also
taken appropriate independent advice,
theBoard determined in August 2021
that it was in the best interests of the
Company, and all of our shareholders,
to internalise its management at
this point in the Company’s journey.
TheCompany is pleased to announce
that on 29 January 2022, theCompany
and CAPREIT entered into binding
legal agreements pursuant to which
the Company exercised its right under
the IMA and purchased the issued
shares of the Investment Manager
on a liability free (otherthan liabilities
in the ordinary course of business)/
cash free basis for €1, effective from
31January2022 (“Completion”)
together with payment of €1.1m for
cash on the balancesheet.
The Board would like to thank the
senior management and staff of
CAPREIT, for their support during
the finalisation of internalisation
arrangements as well as their
continuing transition services
support to the Company. The Board
also recognises the contribution of
CAPREIT to the growth and success
ofthe Company.
Governance & Shareholder
Engagement
The Board remains committed
to maintaining high standards of
corporate governance. As one of
Ireland’s largest investors in providing
accommodation in the rental sector,
our Board collectively holds years
of global sector and operational
knowledge, and we have the
experience to leverage and initiate
appropriate practices to manage the
challenges and opportunities affecting
our business.
Continuing to develop strong
relationships with our shareholders is
a vital aspect of building a sustainable
business. As a Company, we benefit
from understanding their needs and
concerns. As part of our efforts to
further develop productive dialogue
with our shareholders, we carried
out shareholder engagement on
governance and sustainability in
2021. The Company appreciates the
significant response we received and
Charlestown,
Finglas
235
Residential Units
I-RES
14
will incorporate shareholder feedback
into our governance frameworks and
report key themes of the engagement
in the Sustainability Review. The Board
will continue to proactively engage
with shareholders on governance and
sustainability matters in carrying out
its function.
We continue to refresh the expertise
of the Board and on 16 June 2021,
we announced the appointment
of Stefanie Frensch to the Board
as an independent non-executive
director with effect from 1 July2021.
Ms. Frensch brings significant
experience and industry expertise in
the residential real-estate sector to
the Board. She has also joined the
Board’s Audit Committee and the
Board’s new Sustainability Committee.
MarkKenney, the Investment Manager’s
representative on the Board, resigned
as a director effective 2 July 2021.
Post completion of Internalisation of
the Manager on 31 January 2022,
theInvestment Manager no longer has
the right to nominate a representative
to the Board.
During 2021, we made two important
appointments to the Company’s
management team in light of the
forthcoming termination of the IMA
and to reflect the increased scale
of the Company. Brian Fagan was
appointed as the Company’s Finance
Director bringing significant financial
expertise, while Anna-Marie Curry
joined as Company Secretary and
General Counsel. This expertise is
vitally important as we internalise
the management of the business.
TheInternalisation also sees the heads
of Acquisitions and Development
and Operations join the I-RES
managementteam.
ESG
Environmental, social, and governance
(“ESG”) considerations continue to
take priority across our business,
positively influencing our operations
and investment decision making.
Our business goal extends beyond
owning buildings and, as one of
Ireland’s leading providers in the
mid-market residential sector, westrive
to increase availability in the market
and raise the living standard by
providing professionally operated and
high-quality rental accommodation.
We have taken this focus to planning
for new developments on our owned
sites, as well as in our interaction with
partners. We established a Board
Sustainability Committee in May 2021,
which will provide oversight of our
multi-year ESG strategy as well as
focusing on how the Company will
ensure it builds the necessary expertise
and capability to respond proactively
to Government and EU commitments
on climate change. We have appointed
a Director of Sustainability and we
are also committed to continuing to
enhance on our sustainability reporting,
ensuring that all our investors and key
stakeholders have the right information
to make informed decisions.
Outlook
In summary, the Board is extremely
pleased with the Group’s performance
for the year. With an experienced
team, strengthened by internalisation
and recent appointments, as well as a
strong balance sheet underpinned by
favourable market factors, the Group
is well placed to navigate changing
market circumstances and positioned
to continue executing on its growth
strategy over the coming years.
Amid the Covid-19 uncertainty, the
Irish economy has rebounded quickly
following the easing of Covid-19
restrictions, underpinned by a buoyant
Foreign Direct Investment market.
Covid-19 adjusted unemployment has
fallen sharply to 7.5% in December
2021 compared to 27.1% in January
2021. Despite the Irish Government’s
continued focus on increasing
housing supply, there remains a clear
and significant supply and demand
imbalance across all aspects of the
housing market in Ireland, further
exasperated by Covid-19 lockdowns.
It is welcome to see increasing supply
of new homes coming through in
2021 and forecast for 2022 as efforts
continue to meet the demand for
accommodation in Ireland. Continuing
population growth as well as economic
growth are driving the demand outlook
for rented residential accommodation.
Looking ahead, the ever-evolving
situation presented by the Covid-19
pandemic as well as the newer
environment of inflation and likely
interest rate rises in the future
could have an impact on the
Group's business which may not
be visible at this time. Despite this
uncertainty, webelieve that the Group
continues to be well-positioned
to take advantage of further
growth opportunities and deliver
attractive risk-adjusted returns to
itsshareholders.
Our priority will continue to be
the health and well-being of our
employees, residents, partners and
suppliers. I would like to thank my
fellow Board members, our CEO,
Margaret Sweeney, as well as the
management and staff of I-RES, IRES
Fund Management and CAPREIT LP for
their hard work, focus and dedication
during the year, which ensured that
the business continued to perform
strongly during these uncertain and
challenging times.
We recognise that many in our
communities and wider society have
been deeply impacted by Covid-19
and we pay tribute to our Government
and health services who have expertly
managed this severe pandemic over
the last two years and now look
forward to better days ahead.
To our residents, communities,
banking partners, development
partners and shareholders, the I-RES
Board wishes to thank you for your
trust and ongoing support as we
collectively continue to invest in
new housing supply and grow the
business sustainably to meet all
stakeholderneeds.
Declan Moylan
Chairman
Environmental,
Social and Governance
(“ESG”) considerations
continue to take priority
across our business,
positively influencing
our operations and
investment decision
making
.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
15
Overview
I-RES’ diverse portfolio, resilient
business model, and our teams’
commitment to fulfilling the
changing needs of our residents
and communities has enabled us
to deliver a robust performance for
the year, as well as continuing to
deliver on our growth plans and value
enhancing opportunities. Occupancy
has remained consistently strong at
99.1% and margins have been resilient
at 79.1%, supported by our mid-market
residential sector positioning where
there is strong demand for our unique
portfolio of high-quality homes in
attractive, well serviced locations
where people want to live and work.
We completed the internalisation of
the management of the Company on
31 January 2022 and are investing
in new technology to underpin
our strong operating platform and
enhanced service to residents.
Commitment to Long-term
Sustainability
Sustainability is a fundamental focus
in how we do business at I-RES.
Ourcommitment remains on building
a sustainable and responsible business
which is aligned with the long-term
approach we take to investing in new
supply, building and maintaining our
properties, supporting and servicing
our residents, employees, our vendor
partners and the wider community in
which we operate. We actively work
towards aligning our business strategy
and objectives with ESG measures
that are important to growing a
long-term sustainable business and
to meet the needs of our investors
andstakeholders.
Chief
Executive
Officer’s
Statement
_
I am pleased to report the Group has
delivered another year of strong performance
in 2021 and enters 2022 in a robust position
as we look to deliver future growth.
€63.0m
Net Rental Income
2020: €59.8m
79.1%
Net Rental Income Margin
2020: 80.0%
7.0c
Adjusted EPRA
Earnings per share
2020: 7.0c
2021
Performance
Highlights:
I-RES
16
Diversity and inclusion are a
fundamental underlying value of the
Board and management of I-RES and
in January 2022 we were pleased
to be recognised as 1 of only 2 Irish
companies to receive the highest
award recognition by European
Women on Boards for gender diversity.
We are investing in new sector leading
technology to enhance our operating
capability and service offering
to residents as well as minimising
our impact on the environment by
choosing cloud-based services where
possible. We will continue to train and
develop I-RES employees to support
and deliver to all stakeholders and
to ensure that we run our business
to minimise our carbon impact on
the planet as well as supporting the
development of desirable communities
to live and work in.
We submitted to the Global Real Estate
Sustainability Benchmark (“GRESB”),
an industry leading global assessor of
the ESG performance of real estate
assets and their managers during 2021
and this is providing a benchmark
to underpin our plans and strategies
going forward. During the year, I-RES
was also awarded Gold Level and
Most Improved EPRA Sustainability
Best Practices Recommendations
(“SBPR”) award, which aims to raise
the standards and consistency of
sustainability reporting for listed real
estate companies across Europe. We
continue to assess other appropriate
measurement indices for the Company
that will meet our shareholder needs.
This reflects our continued commitment
to further enhance our ESG practices
and reporting for the benefit of all
stakeholders.
2021 saw the establishment of a Board
Sustainability Committee which will
support the implementation of the
Company’s multi-year ESG strategy.
Importantly, we undertook and
completed a materiality assessment
which saw widespread stakeholder
engagement, and which will help
inform our ESG strategy going forward.
The outcome of the assessment can
be found on page 37 of this report.
We continue to focus on plans to
improve our carbon footprint. Weare
fortunate to have a portfolio of
modern assets, with an average age of
12 years and 94% with Building Energy
Ratings (“BER”) within A to C grades.
We are members of Green Building
Council Ireland and are engaging in
assessments across our assets to
continue to improve on our energy
utilisation. We have a comprehensive
programme in place including
communication with residents in
relation to waste minimisation and
recycling as well as a continuous
improvement programme.
This reflects our continued
commitment to further enhance
our ESG practices for the benefit of
our people, our residents and our
communities, as well as our ambition
to continuously be aware of our
impact on the planet in carrying out
our business.
Continuing to support our people
through the Covid-19 pandemic
From the beginning of 2021,
theCovid-19 pandemic continued
to have a negative impact on our
communities and Ireland was put
into a lockdown for most of the first
half of the year, when only essential
businesses could operate, and the
public was advised to ‘stay home’.
Against that backdrop, wepaused any
rental increases across our existing
tenancies during the period from
April 2020 to October 2021, and
agreed payment deferral plans with
a number of our commercial tenants.
We maintain an active dialogue with
all tenants and continue to support
those most impacted by the pandemic.
We continued to carry out essential
maintenance on our properties and
also prioritised the wellbeing of our
employees during a challenging time
for many. Thecountry has returned
to a near full reopening following a
recent period of restrictions from
7December 2021 to 22 January 2022.
We remain alert to prioritising the
safety and well-being of our residents,
tenants, employees, and other
stakeholders as we see how Covid-19
evolves during the coming months.
Growth Strategy and
PortfolioDevelopment
As of 31 December 2021, the portfolio
consisted of 3,829 (31 December
2020: 3,688) high-quality residential
rental homes, with associated
commercial space and development
sites, and had a total portfolio value
of €1,493.4 million. We continue to
see value increases in our assets with
a revaluation gain of €34.9 million
at 31 December 2021 reflecting the
underlying quality of our portfolio,
strong demand and continued
investment in the Irish PRS sector.
Our residential homes are modern
(average age of portfolio is c.12
years) and principally located in the
Merrion Road
Dublin 4
69
Residential Units
To be completed in 2022
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
17
Dublinarea, with one property in Cork.
Every location has excellent transport
connections, vibrant community
spaces and strong local employment
opportunities from indigenous and
international employers.
Sustainable growth of our residential
rental portfolio is an integral part
of our strategy and reflected in our
three-pronged strategy for growth:
↘
Investing in future supply through
development partnerships with
local developers and builders
↘
Acquisition of completed
assets in attractive and well
servicedlocations
↘
Development of new homes on
I-RES owned sites
Despite the many challenges posed
by Covid-19 and Government
restrictions, during 2021 we continued
to deliver on our strategy. We added
146 apartments at the Phoenix Park
Racecourse in Castleknock with an
investment of €60 million (including
VAT and excluding transaction costs).
The Company also agreed investment
on two contracts for the acquisition
of 152 residential units located in
Ashbrook, Clontarf, Dublin 3 in two
phases. The Company has completed
the handover of 86 units on 20
January 2022 and a further 22 units
will complete in H1 2022. A further 44
apartments are under development,
with delivery scheduled for H2, 2023.
We currently have 130 units under
construction across two exciting
schemes due for delivery in H1 2022.
At Bakers Yard, I-RES is developing
61 residential units which will be
Ireland’s first LEED-certified residential
development. At Merrion Road,
wehave a contract for the forward
purchase of 69 residential units with
delivery anticipated in H1, 2022.
Inaddition to the 108 units completing
in H1 for Ashbrook, this will bring the
expected total number of units in the
portfolio to 4,067 across 38properties.
During 2021, we also executed
two transactions which generated
value for both the business and
our shareholders. In May, we sold a
non-core commercial asset and the
food court in Tallaght Cross West for
net proceeds of €1.6 million resulting
in a gain of €870,000. In August,
I-REScompleted an agreement to
enter into an index linked social
housing lease for 25 years for 128
apartments located at Hampton Wood
with a HousingAssociation.
In addition, our development pipeline
includes 543 residential apartments
with planning permission on existing
sites, enabling us to grow our portfolio
and deliver attractive risk adjusted
returns for our shareholders, while
also adding high-quality, modern
and sustainable homes in line with
market demand. This provides overall
portfolio pipeline growth of c. 21% as
at 31December 2021.
Results
Below is a table summarising the
Group’s financial position as at
31 December 2021 and profit or
loss results for the year ended
31December 2021.
Statement of Financial Position:
As at
31 December
2021
As at
31 December
2020
% change
Investment Properties (€ millions) 1,493.4 1,380.4 8.2%
Net Asset Value (€ millions) 881.4 841.7 4.7%
IFRS Basic NAV per Share (cents) 166.5 160.3 3.9%
Bank Indebtedness and private placement debt (€ millions) 610.4 539.1
Group Total Gearing
40.7% 39.2%
Statement of Profit or Loss and Other Comprehensive Income: FY21
FY20
% change
Revenue from Investment Properties (€ millions) 79.7 74.7 6.7%
Net Rental Income (€ millions) 63.0 59.8 5.4%
Fair value gain on investment properties (€ millions) 34.9 19.1
EPRA Earnings (€ millions) 31.6 34.0 (7.1%)
Non-recurring costs (€ millions)
(1)
5.4 2.3
Adjusted EPRA Earnings (€ millions)
(2)
37.0 36.3 1.9%
Profit for the year 67.5 58.3
Basic EPS (cents) 12.8 11.2 14.3%
Diluted EPS (cents) 12.8 11.1 15.3%
EPRA EPS (cents) 6.0 6.5 (7.7%)
Adjusted EPRA EPS (cents) 7.0 7.0
(1) Refer to page 36 for further details on non-recurring costs.
(2) Refer to page 29 for further details on Adjusted EPRA Earnings adjusted for non-recurring costs.
I-RES
18
Property assets at 31 December
2021 increased by €113.0 million to
€1,493.4 million. The main driver of the
increase in value of our assets were
the acquisitions of the PhoenixPark
property and the revaluation gain
to market value. Based on the
recent valuations, the portfolio is
approximately 9.4% below market
rentindicating further opportunity
in the medium term. The Group’s
IFRS NAV increased by 4.7% in the
year ended 31 December 2021,
to€881.4 million from €841.7 million
at 31December 2020, or to 166.5
centsper share from 160.3 cents
pershare.
The Group’s Total Gearing as of
31December 2021 stood at 40.7%
(31 December 2020: 39.2%).
Theyear-on-year increase in total
debt can be largely attributed to
the acquisition of 146 units located
at the Phoenix Park Racecourse
for €60 million (including VAT and
excluding transaction costs) and
development costs for Bakers Yard.
The Group’s acquisition of the initial
phase of 86 units located at Ashbrook,
Clontarf for €34 million (including
VAT and excluding transaction costs),
whichwas completed in January 2022,
will increase the pro-forma Group Total
Gearing to 41.8%.
Average Monthly Rent (“AMR”) per
unit was €1,678 as at 31 December
2021 (31 December 2020: €1,624),
and the increase was principally as
a result of acquisitions during the
period and some rental increases in
line with legislation. Given the severe
lockdowns in Ireland due to the
pandemic, we temporarily paused any
rental increases on in place residents
from April 2020 to October 2021.
TheNRI margin declined from 80.0%
to 79.1% over the 12 months mainly due
to higher property operating costs,
principally repairs and maintenance.
The residential occupancy rate
has remained strong at 99.1% at
31December 2021 (31 December
2020: 98.4%), underpinned by
attractive market fundamentals in
the Irish residential rental sector
and strong property management.
There were only 820 homes to rent
in the Dublin market on November
1st, down 51% on the same date from
the previous year. This is the first
time the stock of rentals has been
below 1,000 units since the beginning
of the collection of this dataset in
2006(Daft.ie).
Adjusted EPRA EPS (before non-
recurring costs) remained stable at 7.0
cents. The decrease in EPRA EPS is
primarily due to higher non-recurring
costs as a result of Internalisation.
Regulation and Legislation
Housing regulation and policy remain
high on both the Government and
public agenda, due to serious supply
challenges in meeting the ever-
growing demand for new homes.
Thissignificant focus has resulted
in the regulatory environment
becoming increasingly challenging,
with several changes introduced in
2021. TheCompany continues to
engage with all key stakeholders and
factor any changes to the regulatory
landscape into its investment and
operating decision making.
In September 2021, the Government
published its ‘Housing For All’ policy,
which sets out its vision for the future
of housing in Ireland. One of the core
strategic objectives of the policy is to
increase supply by 300,000 units over
the next nine years (including 54,000
affordable homes for purchase or
rent and over 90,000 social homes).
Theplan will require both an increase
in the capacity of the Government,
and enhanced cooperation with the
private sector, to deliver this objective.
During 2021 the Irish Government
introduced two Acts impacting the
private residential rental sector.
In May, the Government increased
the rate of stamp duty on the multiple
purchase of 10 or more single
family houses from 2% to 10% with
immediate effect. It is important to
note that apartments, which represent
87% of our current portfolio, arefully
exempt from this higher stamp duty.
Nonetheless, this unexpected and
significant tax increase resulted
in a reduction in the value of the
Company’s property portfolio and
its NAV by €8.8 million or 1.67 cents
per share at the 31 December 2021,
andpartially offset against the fair
value increase on the portfolio.
On 9 July, the Irish Government signed
into law the reform and extension
of the Rent Pressure Zone (“RPZ”)
regulations which was due to end on
31 December 2021. The Residential
Tenancies (No.2) Act 2021 (RTA (2)
2021) provides that the current cap
of 4% on annual rent increases will
be replaced, and rents in RPZs will
increase in line with general inflation
as recorded in the Harmonised Index
of Consumer Prices (“HICP”), and this
commenced on 19 July 2021.
Given the sharp increase in HICP,
reaching 5.5% in December 2021,
compared to an average of 0.73%
per annum over the previous three
years, the Government amended the
aforementioned legislation with the
Residential Tenancies (Amendment)
Act 2021 (the 2021 Amendment Act)
on 11 December 2021. The amendment
provides that rent increases are
capped at 2% per annum, where
HICP inflation is higher, in all RPZs.
Thescheme will be in effect until
the end of 2024, however, the 2021
Amendment Act does make provision
for the operation of the new rules to
be reviewed within 12-15 months of
coming into effect.
Based on the recent portfolio
valuation, the Company’s rents are
approximately 9.4% below marketrents.
Outlook
Irish economic performance remained
strong throughout 2021, despite having
had some of the strictest restrictions
on movement and trade during the
first half of the year (source: Oxford
Coronavirus Response Stringency
Index). Since the phased easing of
restrictions in January 2022 economic
indicators for the Irish economy
arepositive.
It is forecast that Irish GDP grew
by 16.1% in 2021, underpinned
by strong inward FDI across key
sectors, particularly in ICT, Pharma
and Financial Services. The growth
is forecasted to continue, with
the Central Bank of Ireland (“CBI”)
forecasting that Irish GDP will grow
by 8.7% in 2022 and 5.0% in 2023.
Modified domestic demand, a more
appropriate gauge of the domestic
economy that strips out distortions
caused by the multinational sector,
is projected to grow by 7.1% in 2022
and 5.2% in 2023. There have been
significant improvements in the Irish
labour market, with the standard
measure of monthly unemployment
of 4.8% in January 2022, whilethe
Covid-19 adjusted measure of
unemployment was 7.8%, compared
to 27.1% in January 2021. Despite the
positive indicator we are cognisant
that the recovery will be gradual if
slightly uneven for those sectors most
severely impacted by the pandemic.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
19
There remains a clear and significant
supply and demand imbalance across
all aspects of the housing market
in Ireland, which has been further
exacerbated by the pandemic. The
CBI reported that there were c.21,000
new residential units completed in
2021, compared to a requirement of
34,000 houses per annum. The CBI
is forecasting housing completions
of c. 25,000 and 30,000 in 2022
and 2023 respectively. The CSO
(‘CentralStatistics Office’) has
reported that the number of units
built in Ireland during 2021 was
20,433 (5,107 apartments and 15,326
houses). Asa result, demand for well-
located and professionally managed
rental accommodation in Dublin has
remained strong, further supported by
continued population growth. I-RES will
continue to play a key role in delivering
housing solutions to the Irish market
on a sustainable basis, assisting the
Government reach its ambitious target
set out in its ‘Housing for All’ policy.
Against this positive backdrop,
thereare downside risks arising from
the current inflation environment
which will put pressure on costs,
as well as political and regulatory
risks due to the ongoing challenges
from lack of housing supply and
affordabilitychallenges.
As we progress with the full
internalisation of management of the
Company and transition of services,
I would like to thank the senior
management and staff of CAPREIT,
for their contribution to the business
for the last 8 years. Further details on
the Internalisation can be found in the
Business Review on page 23.
I would like to convey my gratitude
to our teams, in I-RES and CAPREIT,
as well as our business partners and
service providers, for their contribution
to the business throughout 2021.
Their ongoing support allowed our
business to continue to run smoothly
throughout the Covid-19 disruption
to the benefit of our residents,
stakeholders, and investors. I would
also like to thank our residents,
whocontinue to remain our
primaryfocus.
Margaret Sweeney
Chief Executive Officer
Phoenix Park Racecourse,
Dublin 15
146
Residential Units
Demand for
well-located and
professionally
managed rental
accommodation
in Dublin has
remained strong,
further supported
by continued
population growth.
I-RES
20
The consistently high
demand for quality
rental properties,
combined with a
growing appreciation
of the value of I-RES’
professional property
management approach,
is perfectly aligned
with the I-RES model of
longterm commitment
to Ireland’s residential
market.
On 31 March 2021, we provided 12
months’ notice of termination of the
IMA with I-RES, to become effective
31 March 2022. On 5 August 2021,
I-RES took the decision to internalise
its management under the terms
of the IMA, and served a notice to
terminate the IMA, and on 31 January
2022 it acquired the shares of the
Manager from CAPREIT, with the
acquisition to take effect on that
date. As the Manager serves as the
Company’s Alternative Investment Fund
Manager (“AIFM”) under the Alternative
Investment Fund Managers Regulations
2013 (“AIFMRegulations”), I-RES has
also received the necessary approvals
from the Central Bank of Ireland to
acquire the shares in the Investment
Manager, subject to a requirement
that all aspects of the Investment
Manager's business be transferred to
the Company and an application be
submitted to the CBI for the Company
to become authorised as an internally
managed AIF within five months of
completion of the acquisition of the
Investment Manager.
Following the acquisition and as a
wholly owned subsidiary of I-RES,
weboth entered into a transitional
services agreement with CAPREIT
pursuant to which CAPREIT will
continue to provide technological and
other support services for a period
of 3 months. I-RES is implementing
new technology infrastructure and
systems and together with CAPREIT, we
continue to work to assist the transition
of the Manager and I-RES’ information
and services to these new processes
and systems.
Our highly experienced and talented
operations team, which features a
member dedicated to each building
and offers extensive supports,
such as a 24-hour emergency line,
providesprofessional management
across all properties in the portfolio.
The team builds close relationships
with residents and ensures that our
reputation for quality homes is sustained
through proactive and attentive
maintenance. As the Covid-19 pandemic
restrictions have eased, we started
to provide more essential repairs and
maintenance to the buildings to ensure
that people continue to enjoy living
in our buildings, which leads to the
consistently high occupancy rates we
have delivered yearafter year.
Building on our platform, which features
open and regular communication with
residents, best practices in employee
development, and strategies for
attracting and retaining residents,
wecontinually improve our offerings to
residents with the objective to ensure
that the services we provide exceeds
residents’ expectations.
Ireland has remained one of the most
resilient economies in the European
Union during the pandemic, and
the consistently high demand for
quality rental properties, combined
with a growing appreciation of the
value of I-RES’ professional property
management approach, is perfectly
aligned with the I-RES model of long-
term commitment to a residential market.
Michael Boyce
Chairman of IRES Fund Management
Semple Woods,
Donabate
40
Residential Units
Manager’s
Statement
_
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
21
The business’
continued resilience
in 2021 resulted in
another year of strong
performance due to
an experienced team
and a strong operating
platform alongside
continued investment
in our portfolio of
properties for rent.
Tallaght Cross West
Dublin 24
460
Residential Units
Strategy for Growth
The I-RES long term strategy for future
growth is focused around:
↘
Investing in future supply of new
homes through partnerships with
developers of Private Rented
Sector (“PRS”) assets
↘
Acquisitions of completed assets
ataccretive yields
↘
Development of new supply on
I-RES owned sites
The Company continues to explore
value creation from existing assets
and in 2021 disposed of a number
of commercial assets as well as
leasing one of the properties under
a 25-year lease to an Approved
Housing Body for social housing
residents. During 2021 an additional
148 residential units were acquired
and we continued the development
of 130 residential units now due
for delivery in H1 2022 following
delays arising from government
restrictions on construction due
toCovid-19pandemic.
Acquisitions
Phoenix Park Racecourse,
Dublin15 (146 Residential Units)
I-RES completed the acquisition of 146
residential units located in The Phoenix
Park Racecourse, Castleknock, Dublin
15 in January 2021. The total purchase
price was €60 million (including VAT
but excluding other transaction costs).
The property is located in the West
Dublin suburb of Castleknock and
is adjacent to the Phoenix Park,
thelargest enclosed park of any
European capital city. The scheme
occupies an attractive position close
to Dublin City Centre (circa6kms),
witheasy access to the M50
motorway. Thereare excellent public
transport links to the City Centre,
with Ashtown train station and a
high frequency bus service close
by. Castleknock and Phoenix Park
is a much sought after and mature
residential location, providingsome
of Dublin's finest amenities,
includingschools, sporting facilities,
shopping and employment.
Richmond Gardens, Fairview
(OneResidential Unit)
In March 2021, the Company acquired
one two-bedroom apartment at
Richmond Garden together with
3 designated car parking spaces,
increasing its ownership to 99
apartments (100% ownership).
Richmond Garden is located in
Drumcondra in Dublin City, just north
of the City Centre. The location
benefits from ‘the best of both’
being close to the city centre but
also having easy access to more
suburbanamenities.
Bakers Yard, City Centre
(OneResidential Unit)
In March 2021, the Company acquired
No. 12 the Oat House at Bakers
Yard. This apartment development
was constructed in 2007/2008
and is within walking distance of
many large government and private
sector employers as well as local
and national public transportation
infrastructure. Through the acquisition,
the Company increased its ownership
to 87apartments.
Business
Review
_
I-RES
22
Disposals
Tallaght Cross West, West Dublin
(C4 and Food Court)
On 17 May 2021, the Company
disposed of unit C4 and the food
court at Tallaght Cross West.
Elm Park, South Dublin
(SevenResidential Units)
The Company disposed of 7
apartments in the Elm Park
development to Dalata Hotel Group
plc/Dublin City Council as part of
the Project Merrion transaction in
order to satisfy the Part V (social
& affordable) requirement on the
Merrion development. The disposal
facilitates the acquisition of all 69
residential units at the Merrion scheme
by the company on completion of the
development which is anticipated in
H12022.
Future Growth Pipeline
Forward Purchase Contract for 69
homes at Merrion Road, Dublin 4
I-RES entered into a contract on
16 November 2018 for the forward
purchase of 69 residential units at
Merrion Road at a cost of €47.6
million (including VAT but excluding
other transaction costs). Construction
commenced in 2019. It is anticipated
that the residential units will be
completed and handed over to I-RES
in H1 2022.
The property is located in a prime
waterfront position circa 7km from
Dublin City and is well serviced by
Dublin Bus and DART rail services.
The property is located close to
good amenities including schools,
universities and numerous hospitals
(St. Vincent’s University and Private
Hospitals, Blackrock Clinic) in the
immediate vicinity. The area also
benefits from a number of leisure
facilities with Elm Park Golf and Sports
Club, Railway Union Sports Club and
Blackrock Park on its doorstep.
Acquisition and Forward Purchase
Contract for 152 homes at
Ashbrook, Clontarf
On 5 January 2022, I-RES announced
the execution of two contracts for
the acquisition of 152 residential
units located in Ashbrook, Clontarf,
Dublin 3 in two phases. The Company
completed the handover of 86 units
on 20 January 2022 and a further
22 units will complete in H1 2022.
TheCompany has further committed
to acquire 44 new apartments
under a forward purchase contract,
with delivery anticipated in H2,
2023. Thetotal purchase price is
approximately €66 million (including
VAT but excluding other transaction
costs). The acquisition will be
funded from the Company's existing
creditfacilities.
Construction of 61 apartments
on own site at Bakers Yard,
PortlandStreet North, Dublin 1
In September 2018, planning
permission for the proposed 61
residential unit development was
granted. Demolition and clearance of
the site was completed in Q2 2019.
The Company entered into a contract
to commence construction of the
61 units in Q1 2020. Construction
work commenced in January and
was halted in March due to the
Covid-19 pandemic. Construction
work restarted in May 2020 but closed
again on 8 January 2021 due to further
government restrictions, reopening
again on the 12 April 2021. I-RES
expects that the 61 new apartments
will be completed in H1 2022.
Value creation from existing assets
During the first six months of 2021,
theCompany completed two
transactions to create value from
our current assets. In May 2021,
theCompany sold a commercial unit
and the food court in Tallaght Cross
West for net proceeds of €1.6 million.
In August 2021, I-RES entered into
an index linked social housing lease
agreement for 25 years for 128 units
located at HamptonWood.
Development and Intensification
of Existing Assets
During the past four years, I-RES
has made significant progress on
development and intensification of
its existing assets. I-RES has 61 units
under development at Baker’s Yard
as well as planning permissions to
develop new apartments on its own
sites at Priorsgate (Bruce House),
Beacon Square South (B4) and
Rockbrook. In January 2022,
a planning application for 51
residential units at Beacon South
Quarter (B3) was refused by
An Bord Pleanala (“ABP”).
Development and Intensification of Existing Assets
Location
No. of Residential Units
atCompletion
Status
Bakers Yard
61
Under Construction
Priorsgate (Bruce House) 31 Planning Permission Granted
Beacon Square South (B4) 84 Planning Permission Granted
Rockbrook
428
Planning Permission Granted604
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
23
Internalisation and
Termination of Investment
ManagementAgreement
In advance of the expiry of the
initialterm of the Investment
Management Agreement (“IMA”) on
1 November 2020, an independent
sub-committee of the Board was
appointed in November 2019
(the“Board Sub-Committee”) to
evaluate, inconjunction with advisers,
the relative strategic and financial
merits of the various options available
to the Company in relation to the
IMA and related Services Agreement
between CAPREIT LP, the Investment
Manager and I-RES. The Investment
Manager being a wholly owned
subsidiary of CAPREIT LP.
On 1 April 2021, I-RES announced
thatit had received twelve (12)
months' notice of termination of the
IMA from the Investment Manager.
The notice stated that termination of
the IMA will take effect on 31 March
2022. When announcing the receipt
of the notice, I-RES stated that,
whileithad not yet made any decision,
theCompany was increasingly likely
to pursue its option under the IMA
to internalise its management and
that it was considering (i) a plan for
possible Internalisation and (ii) terms
for the potential acquisition of the
Managerfrom CAPREIT LP. At that
time, CAPREIT LP confirmed that
both the Manager and CAPREIT LP
intended to work constructively and
co-operatively with I-RES prior to the
expiry of the Manager's termination
notice period.
As previously disclosed, the IMA
provided that if I-RES determines that
itis in its best interests to internalise the
management of the Company, thatthe
Company will purchase the issued
shares of the Investment Manager on a
liability free (other than liabilities in the
ordinary course of business)/cash free
basis for €1(“Internalisation”).
Having carefully reviewed the possible
options and having also taken
appropriate independent advice,
theBoard determined that it is in
the best interests of the Company
to internalise its management and
therefore the Company with the
approval of the Board served a notice
of termination on 6th August 2021 of
the IMA to internalise its management,
with the Internalisation and acquisition
of the shares in the Manager to take
effect on 31 January 2022.
On 29 January 2022, the Company
and CAPREIT entered into binding
legal agreements pursuant to which
the Company exercised its right under
the IMA and purchased the issued
shares of the Investment Manager
on a liability free (other than liabilities
in the ordinary course of business)/
cash free basis for €1, effective from
31January 2022 (“Completion”). Asthe
Investment Manager serves as the
Company’s alternative investment
fund manager (“AIFM”) under the
Alternative Investment Fund Managers
Regulations 2013 (“AIFM Regulations”),
the Company has also received
the necessary approvals from the
Central Bank of Ireland (CBI) to
acquire the shares in the Investment
Manager, subject to a requirement
that all aspects of the Investment
Manager's business be transferred
to the Company and an application
be submitted to the CBI for the
Company to become authorised as
an internally managed AIF within five
months after the date of Completion
of the acquisition of the Investment
Manager. The Investment Management
Agreement and Services Agreement
terminate therefore effective
31January 2022.
As previously outlined, the Company
believes that the Internalisation will
create greater long-term value for
shareholders, for reasons including:
↘
Earnings per share enhancing on
a stabilised full year basis post
Completion of the Internalisation
↘
Elimination of asset management
and property management fees
linked to net asset value and
gross rental income respectively,
and therefore the ability to realise
economies of scale with the
growth in the Company’s property
portfolio
↘
Elimination of reliance on an
external counterparty for asset
management, property management
and corporate functions
↘
A simplified organisational
structure and decision-making
process and improved corporate
governance, management
oversight/accountability with better
alignment of interests
↘
Access to a wider investor base
globally given relative preference
for internally managed REITs
Beechwood Court
Stillorgan, Dublin
101
Residential Units
I-RES
24
In anticipation of internalising its
management, the Company had
undertaken extensive feasibility and
planning exercises, upscaled the
resources of the Company and has
taken significant steps to establish
appropriate systems, technology and
services infrastructure to replace
the services currently provided to
the Company and the Investment
Manager by CAPREIT pursuant to
theServicesAgreement.
I-RES has selected the Yardi software
solution for investment and property
management as well as Microsoft
solutions. The Company believes
implementation of this integrated
technology platform will enable the
Company to streamline its operations
and efficiently scale the portfolio
while delivering excellent services to
ourresidents.
As previously noted by the Company,
there are additional one-off costs
associated with the Internalisation.
In total, once-off costs associated
with Internalisation are now estimated
to be in the order of approximately
€6m. These include costs associated
with the acquisition of the Investment
Manager, the transition of corporate
support functions and, in particular,
the complex and extensive process
of significant data transfers from
CAPREIT systems and implementing
company-wide IT systems. An amount
of €4.2m is included in non-recurring
costs above for 2021 associated with
Internalisation. As previously guided,
annual management costs incurred by
the Company on a stabilised full year
basis post completion of internalisation
are estimated to be approximately
€1.3m per annum lower than those
payable under the existing IMA and
Services Agreements.
The Company has agreed to enter
into a transitional services agreement
with CAPREIT (the “Transitional
Services Agreement”) with effect
from Completion, pursuant to which
CAPREIT will continue to provide
certain transitional assistance to
the Company for a period of three
months to facilitate the migration of
data and implementation of new IT
systems in the company. The charges
for the transitional services will be
calculated in the same manner as
such charges were calculated for the
equivalent services prior to the date
of the Transitional Services Agreement
(being 3.0% per annum equivalent of
the Company’s gross rental income
as property management fees and
0.5% per annum equivalent of its net
asset value, net of employee costs
relating to staff of the Investment
Manager who will transition with the
AIFM on completion of its acquisition).
The Company estimates that such
charges will equate to approximately
€360,000 per month for the duration
of the Transitional Services Agreement
and are separate to the once-off costs
incurred by the Company to date.
The Company has augmented its
internal resources including the
appointment of Brian Fagan as
Finance Director and Anna-Marie
Curry as Company Secretary along
with other expertise to transition
services previously provided by
CAPREIT. In addition, Stefanie Frensch
joined the Board of the Company as a
non-executive director on 1st July and
brings significant European experience
of residential real estate.
Rockbrook Grande Central
Sandyford
81
Residential Units
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
25
Operational and Financial Results
Net Rental Income and Profit for the Year Ended 31 December 2021
€’000
31 December 2020
€’000
Operating Revenue
(1)
79,744 74,744
Operating Expenses
(16,704) (14,969)
Net Rental Income (“NRI”)
63,040 59,775
NRI margin
79.1% 80.0%
Adjusted general and administrative expenses
(2)
(6,235) (5,062)
Asset management fee (4,814) (4,444)
Share-based compensation expense (276) (322)
Adjusted EBITDA
(3)
51,715 49,947
Non-recurring costs
(2)
(5,430) (2,334)
Depreciation of property, plant and equipment (519) (526)
Lease interest (232) (241)
Financing costs (13,886) (12,816)
EPRA Earnings
31,648 34,030
Gain on disposal of investment property
905
4,432Net movement in fair value of investment properties 34,934 19,092
Gain on derivative financial instruments 59
709
Profit for the Year
67,546 58,263
(1) Vacancy loss of €1.5 million (31 December 2020: €3.2 million) for the year ended 31 December 2021. The residential vacancy was 1.0%
(31December 2020: 2.5%) of the total gross rental revenue for the twelve months ended 31 December 2021.
(2) The non-recurring costs of €5.4 million and general and administrative expenses of €6.3 million incurred in 2021 totals the general and
administrative expense costs of €11.7 million reflected on the Consolidated Financial Statements for the year ended 31 December 2021.
(3) 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, gain or loss on derivative financial instruments and
non-recurring expenses to show the underlying operating performance of the Group.
I-RES
26
Operating Revenue
For the year ended 31 December
2021, total operating revenue
increased by 6.7% compared to
the year ended 31December 2020,
mainlydue to higher unit count driven
by the handover of 95 apartments
and duplexes on the Hansfield side
(PipersCourt) to I-RES in August
2020 and acquisition of 146 units at
Phoenix Park Racecourse in January
2021, offset by disposition of 151 units
in November 2020. Organic rental
growth and increased occupancy
levels also aided theincrease.
Net Rental Income
The NRI margin has been presented
as the Company believes this measure
is indicative of the Group’s operating
performance. For the year ended
31December 2021, NRI increased by
5.4% primarily due to investment in
new apartments and organic rental
growth across the portfolio. The NRI
margin for the current year decreased
to 79.1% compared to 80.0% for
last year because the Company
did not apply any rent increases on
existing resident leases for the period
from April 2020 to October 2021 in
recognition of the societal challenges
presented by the Covid-19 pandemic.
Further, the decrease was due to
higher repairs and maintenance costs.
Adjusted General and
Administrative (“G&A”) Expenses
G&A expenses include costs such
as director fees, executives’ and
employees’ salaries, professional fees
for audit, legal and advisory services,
depository fees, property valuation
fees, insurance costs and other
general and administrative expenses.
G&A expenses are higher than the
previous year due to the addition
of new employees during 2021 to
transition services and supports from
CAPREIT resulting from the termination
of the IMA and internalisation.
Asset and Property
ManagementFees
Pursuant to the Investment
Management Agreement between
I-RES, IRES Residential Properties
Limited and IRES Fund Management,
effective on 1 November 2015,
asamended and restated from time
to time, I-RES pays 3.0% per annum
of its gross rental income as property
management fees and included
under “property operating costs”
above; and 0.5% per annum of its
net asset value to the Manager as
an asset management fee. The asset
management fee for the year ended
31 December 2021 was €4.8million
compared to €4.4million for the
year ended 31 December 2020. Itis
higher due to an increase in net
asset value compared to the same
period last year. See note 22 of the
Consolidated Financial Statements
for further details of the Investment
Management Agreement. Property
management fees included in Property
Operating Expenses amounted to
€2.4 million (2020: €2.2 million).
In addition, thereis a recharge to
I-RES for the costs of site office
employees amounting to €2.5 million
(2020:€2.3million).
Non-recurring costs
The non-recurring G&A costs total
€5.4 million for 2021. These costs are
primarily legal, consulting and advisory
expenses that relate to the termination
of the Investment Management
Agreement, Internalisation and
other one off third party advisory
services. Of the costs incurred in
2021, €0.4million relate to an aborted
transaction due to Covid-19. Costsin
relation to legal, IT and business
feasibility studies associated with
the termination notice issued by
the Manager and the decision of
the Group to acquire the Manager
were €0.8 million. Costs of €4.2m
million associated with Internalisation
include costs associated with
the acquisition of the Investment
Manager, the transition of corporate
support functions and, inparticular,
the complex and extensive process
of significant data transfers and
implementing company-wide IT
systems. We have estimated the costs
associated with the Internalisation will
be €6 million, of which €4.2m million
have been incurred in 2021 and we
estimate a further €1.8 million in 2022.
Share-based
CompensationExpenses
Under the Company’s long term
incentive plan, in 2017 and 2019,
options were granted to the
Company’s CEO and in 2020,
restricted shares were awarded to
the CEO. In 2021 restricted shares
were awarded to the CEO and
a smallnumber of employees in
line with the Remuneration Policy.
Seenote 12 of the Consolidated
FinancialStatements.
Net movement in fair value
ofInvestment Properties
I-RES recognises its investment
properties at fair value at each
reporting period, with any unrealised
gain or loss on remeasurement
recognised in the consolidated
statement of profit or loss and other
comprehensive income. The fair value
gain on investment properties is mainly
due to yield compression offset by an
increase in transaction costs related
to stamp duty on houses, giving a
net increase in value of €34.9 million
forthe period.
Gain on disposal of
investmentproperty
In 2021, I-RES disposed of unit C4 and
the food court at Tallaght Cross West
and 7 units at Elm Park. As a result of
the disposal’s, I-RES recognised a gain
on disposal of investment property
of€0.9million.
Gain on Derivative
FinancialInstruments
On 12 February 2020, I-RES entered
into a cross-currency swap to (i)
hedge the US-based loan of USD $75
million into €68.8 million effective
11March 2020 and (ii) convert the
fixed interest rate on the US-based
loan to a fixed Euro interest rate,
maturing in 10 March 2027 and
10March 2030. Hedge accounting
has been applied for the cross-
currency swap. For the year ended
31 December 2021, there was a fair
value gain of circa €4.74million
and a cost of hedging of circa
€378,000 recorded in the cashflow
reserve in the statement of changes
of equity and a reclassification of
€5.39million gain to consolidated
statement of profit or loss and other
comprehensiveincome.
Financing Costs
Financing costs, which include the
amortisation of certain financing
expenses, interest and commitment
costs, increased for the year ended
31December 2021 to €13.9million
from €12.8million for the year ended
31 December 2020. The financing
costs have increased by €1.1 million
in 2021 compared to 2020 due to
a higher debt level, arising from
investment in new assets. Seenotes
10 and 11 of the Consolidated
FinancialStatements.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
27
Property Portfolio Overview
Property Capital Investments
The Group capitalises investments
related to the improvement of its
properties. For the year ended
31December 2021, the Group
made property capital investments
of €11.0million, an increase from
€10.0million for the year ended
31December 2020.
At Beacon South Quarter, in addition
to the capital expenditure work that
has already been completed, water
ingress and fire remediation works
were identified in 2016, andI-RES
is working with the Beacon South
Quarter owners’ management
company to resolve these matters.
In 2017, fire remedial levies were
approved by the members of the
Beacon South Quarter owners’
management company in relation to
these water ingress and fire remedial
works. I-RES’ portion of these fire
remedial levies as at 31 December
2021 is circa €0.5million. There is
also an active insurance claim with
respect to the water ingress and
relateddamage.
The following table provides the details of the Group’s property portfolio as at 31 December 2021.
Property Location
# of
Buildings
# of
Units
Owned
(1)
Commercial
Space
Owned
(sq.m.)
(1)
Average
Monthly
Rent Per
Unit
(1)(2)(3)
Rent
(persq. m.
permonth)
Occupancy
(1)(2)
Total South Dublin 11 1,055 6,851 €1,841 €23.6 99.3%
Total City Centre 6 €1,775 €23.5 96.9%
419
2,544Total West City 3 409 – €1,675 €22.0 98.5%
Total North Dublin 9 €1,549 €20.0 99.8%
897
–Total West Dublin 6 999 14,753 €1,599 €23.3 99.2%
Cork
1 €1,364 €17.1 100.0%
50
–Total Portfolio
36 €1,678
3,829
24,148(4)(5)
€ 22.4 99.1%
(4)
(1) As at 31 December 2021.
(2) Based on residential units.
(3) 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. Actual monthly residential rents, net of vacancies, as at 31 December 2021 was €6,425,062 divided by 3,829 units
(which is the total units available for lease as at 31 December 2021) resulting in AMR of €1,678.
(4) Refer to page 29 for further discussion on average monthly rent per apt. and occupancy.
(5) I-RES’s external valuers indicated that I-RES’s current rents (on a weighted average basis for the portfolio) as at 31 December 2021 are
estimated to be approximately below market by 9.4%.
Liquidity and Financial Condition
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.
The Group is in compliance with its
financial covenants contained in its
facility agreement with Barclays Bank
Ireland PLC, Ulster Bank Ireland DAC,
The Governor and Company of the
Bank of Ireland, Allied Irish Banks,
P.L.C and HSBC Bank PLC and its
Private Placement Notes.
Bakers Yard
Dublin City Centre
61
Residential Units
To be completed in 2022
I-RES
28
Group Total Gearing
At 31 December 2021, capital consists of equity and debt, with Group Total Gearing of 40.7%, which is below the 50%
maximum allowed by the Irish REIT Regime, and its debt financial leverage ratio. I-RES seeks to use gearing to enhance
shareholder returns over the long term.
I-RES’s RCF borrowing capacity is as follows:
As at
31 December 2021
(€’000)
31 December 2020
(€’000)
Committed Facility
600,000 600,000
Less: Drawdowns 420,020 354,020
Available Borrowing Capacity 179,980 245,980
Weighted Average Cost of RCF
(1)
2.42% 2.33%
(1) includes commitment fee of 0.7% per annum charged on the undrawn portion of the facility and deferred financing cost amortised per annum.
The Revolving Credit Facility of €600
million has an initial five-year term
with an effective date of 18 April 2019
and is secured by a floating charge
over assets of the Company and IRES
Residential Properties Limited, its
subsidiary, and a fixed charge over the
shares held by the Company in IRES
Residential Properties Limited on a
pari passu basis.
On 11 February 2022, the Company
exercised an option for an extension
with all five banks (Ulster Bank Ireland
DAC, Bank of Ireland, Allied Irish Bank,
Barclays Bank plc and HSBC Bank plc)
for the entire €600 million facility with
the new maturity date of 18 April 2026.
In 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”), together circa of €200
million (Euro equivalent), with a
weighted average fixed interest rate
of 1.92% inclusive of swap costs and
excluding transaction costs. The Notes
have a weighted average maturity of
7.9 years as at 31 December 2021,
laddered over circa six, nine and
eleven-year maturities, with the first
repayment due in March 2027. Thenet
proceeds of the Notes were used to
pay down the RCF. This issuance of
Notes strengthened I-RES’ balance
sheet by creating more liquidity and
flexibility, while keeping the interest
rates at attractive low levels, and
attracting high quality investors for
Camac Crescent,
Inchicore
90
Residential Units
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
29
this transaction. In addition, it also
enhanced I-RES’ funding alternatives.
The Group has a weighted average
debt maturity of 5.2 years and no
debt maturities before April 2026.
The weighted average cost of debt
is 2.30% for 2021 including deferred
financing costs (31 December 2020:
2.25%). I-RES also has undrawn
facilities of €115 million available for
investment (at 45% Loan To Value
ratio) and €10.3 million of cash
as at 31December 2021 before
the following future commitments:
Committed capex costs of circa €1.1
million and committed development
costs of €3.8 million for 2022 and the
closing of Merrion Road for net outlay
of €43.5 million expected in Q2 2022;
acquisition of 152 residential units at
Ashbrook, Clontarf for a purchase
price of €66 million (including VAT but
excluding other transaction costs).
The first contract is for an acquisition
of 108 completed apartments with
closing of all apartments in H1 2022.
There is no other current exposure.
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. Through active property
management strategies 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 itsoperations.
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. I-RES strives, through
a focused, hands-on approach to the
business, to achieve occupancies
that are in line with, or higher than,
marketconditions 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.
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
and investment properties under
development. 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.
Ithas been presented as the Company
believes this measure is indicative of
the rental income generating capacity
of the total portfolio.
European Public Real Estate
Association (“EPRA”) Net Initial
Yield and EPRA ‘topped up’
NetInitial Yield
EPRA Net Initial Yield (EPRA NIY) is
calculated as the annualised rental
income based on the cash rents
passing at the balance sheet date,
lessnon-recoverable property
operating expenses, divided by the
gross market value of the property.
Ithas been presented by the Company
to improve comparability of yield
measures across the European real
estate market.
EPRA “topped-up” Net Initial Yield
(EPRA “topped-up” NIY) is calculated
by making an adjustment to the EPRA
NIY in respect of the expiration of rent-
free periods or other unexpired lease
incentives such as discounted rent
periods and step rents. It has been
presented by the Company to improve
comparability of yield measures across
the European real estate market.
EPRA Earnings per Share
EPRA Earnings represents the earnings
from the core operational activities
(recurring items) for the Group. Itis
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,
includingany 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 itsoperations.
EPRA Net Asset Value
EPRA issued Best Practices
Recommendations most recently in
October 2019, which gives guidelines
for performance matters.
In October 2019, EPRA introduced
three EPRA NAV metrics to replace
the existing EPRA NAV calculation
that was previously being presented.
Thethree 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. 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 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.
I-RES
30
The Group’s AMR increased 3.3%
at 31 December 2021 to €1,678,
whileresidential occupancy remained
high at 99.1%, indicative of the strong
market fundamentals in the Irish
residential rental sector. For like for
like properties, the AMR increased
to €1,673 per residential unit as at
31December 2021, up 3.0% from
€1,624 at 31 December 2020.
Theincrease is due to the increase in
occupancy from 98.4% to 99.2% and
organic rental growth on renewals
and turnover, increasing AMR as the
Covid-19 situation in Ireland begins
to stabilise and improve in line with
the new legislation. For like for like
properties, AMR is used as a measure
for sustainable year over year
changes in revenue. For PhoenixPark,
the property acquired after
31December2020, its occupancy
was slightly lower. However, only 5
out of 146 units were vacant as at
31December 2021. It added value to
the portfolio by bringing higher AMR.
During the period, circa 20% of the
portfolio units were turned, with
majority of the units having rental
increases in line with the maximum
annual rent increase in line with the
legislation. I-RES continued to support
its tenants and did not serve rent
renewal notices to existing tenants
that would increase the residential
rents for the first nine months of 2021.
The Company issued rent increases
under the old rent legislation that
provided a cap of 4% on annual rent
increases from October 2021 forward.
Gross Yield at Fair Value
As at
31 December 2021
(€’000)
31 December 2020
(€’000)
Annualised Passing Rent
(1)
81,393 74,249
Aggregate fair market value as at reporting date 1,450,635 1,346,683
Gross Yield 5.6% 5.5%
(1) 31 December 2021 annualised Passing rent consist of residential annualised passing rent of €77.8million (31 December 2020: €71.6 million) and
commercial annualised passing rent of €3.6million (31 December 2020: €2.7 million).
The portfolio Gross Yield at fair value was 5.6% as at 31 December 2021 compared to 5.5% as at 31 December 2020,
excluding the fair value of development land and investment properties under development. The NRI margin was
approximately 79.1% for the year ended 31 December 2021 (80.0% for the year ended 31 December 2020).
EPRA Net Initial Yield
As at
31 December 2021
(€’000)
31 December 2020
(€’000)
Annualised passing rent 81,393 74,249
Less: Operating expenses
(1)
(property outgoings) (17,093) (14,850)
Annualised net rent 64,300 59,399
Notional rent expiration of rent-free periods
(2)
– 21
Topped-up net annualised rent 64,300 59,420
Completed investment properties 1,450,635 1,346,683
Add: Allowance for estimated purchaser’s cost 75,372 62,138
Gross up completed portfolio valuation 1,526,007 1,408,821
EPRA Net Initial Yield 4.2 4.2
EPRA topped-up Net Initial Yield 4.2 4.2
(1) Calculated based on the net rental income to operating revenue ratio of 79.1% for 2021 (80.0% for 2020).
(2) For the year ended 31 December 2020.
AMR and Occupancy
Total Portfolio
Properties owned prior to
31 December 2020
(Like for Like properties)
Properties
Acquired After
31December 2020
As at 31
December
2021 2020 2021 2020
AMR Occ.
%
AMR Occ.
%
AMR
change
%
AMR Occ.
%
AMR Occ.
%
AMR
change
%
AMR Occ.
%
Residential €1,678 99.1% €1,624 98.4% 3.3% €1,673 99.2% €1,624 98.4% 3.0% €1,808 96.6%
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
31
EPRA Earnings per Share
For the year ended 31 December 2021 31 December 2020
Profit for the year (€’000)
67,546 58,263
Adjustments to calculate EPRA Earnings exclude:
EPRA Earnings (€’000)
31,648 34,030
Non-recurring costs (€’000) 5,430 2,334
Adjusted EPRA Earnings for non-recurring costs (€’000)
37,078 36,364
Basic weighted average number of shares 527,412,302 522,069,110
Diluted weighted average number of shares 528,130,822 524,130,528
EPRA Earnings per share (cents)
6.0 6.5
Adjusted EPRA EPS for non-recurring costs per share (cents)
7.0 7.0
EPRA Diluted Earnings per share (cents)
6.0 6.5
A decrease in EPRA Earnings of
7.1% to €31.6million (31 December
2020: €34.0million) is as a result of
higher non-recurring costs related
to Internalisation and associated IT
implementation costs.
Adjusted EPRA Earnings for 2021
(adjusted by adding back the non-
recurring costs to EPRA Earnings)
of €37.0million is higher by 1.9%
compared to the previous year
(2020:€36.3million) due to increased
net rental income generated from units
added to the portfolio.
Adjusted EPRA EPS (before non-
recurring costs) for the period was 7.0
cents for the year ended 31 December
2021 and remained stable compared
to the same period last year (for year
ended 31 December 2020: 7.0 cents).
Priorsgate,
Tallaght
108
Residential Units
I-RES
32
EPRA NAV per Share
As at 31 December 2021 EPRA NRV EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€’000)
881,440 881,440 881,440
Adjustments to calculate EPRA net assets exclude:
(3)
75,372 – –
EPRA net assets (€’000)
956,812 881,440 871,432
Number of shares outstanding 529,453,946 529,453,946 529,453,946
Diluted number of shares outstanding 529,498,519 529,498,519 529,498,519
Basic Net Asset Value per share (cents) 166.5 166.5 166.5
EPRA Net Asset Value per share (cents) 180.7 166.5 164.6
As at 31 December 2020 EPRA NRV EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€’000)
841,695 841,695 841,695
Adjustments to calculate EPRA net assets exclude:
(3)
62,138 – –
EPRA net assets (€’000)
903,917 841,779 877,914
Number of shares outstanding 525,078,946 525,078,946 525,078,946
Diluted number of shares outstanding 526,289,910 526,289,910 526,289,910
Basic Net Asset Value per share (cents) 160.3 160.3 160.3
EPRA Net Asset Value per share (cents) 171.8 159.9 166.8
(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 Company
have assumed any such sales proceeds are reinvested 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 asset 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 2021 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.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
33
Irish Economic Outlook
Despite a severe lockdown in place
for the first half of 2021, Irish economic
performance has remained resilient,
with Modified Domestic Demand
growing by 5.5% in 2021 and projected
to grow by 7.1% in 2022
1
.
Much of this growth is due to the
strength of the Foreign Direct
Investment (‘FDI’) sector in Ireland,
concentrated in ICT, pharmaceuticals,
and medical technology. The Industrial
Development Agency (‘IDA’) Ireland
recently reported positive results,
with over 29,000 jobs created in
2021 – representing the largest
increase in FDI employment in a
single year. There are now over
275,000 people, or 11% of the total
workforce, employed in FDI-related
businesses. FDI companies continue
to contribute strongly to Ireland’s
strong tax revenues, which rose to
a record high of €68 billion in 2021.
Since 2019, the biggest contributor to
this growth is corporation tax (+41%)
reflecting the ongoing buoyancy of
large multinationals in the technology
and pharmaceutical sectors.
The impact of Covid-19 is still being
felt across many sectors of the
economy and, while Ireland has
had one of the most successful
vaccination roll-outs globally with
c.94.7% of the adult population
being vaccinated against Covid-19,
theemergence of the Omicron variant
in November caused a sharp increase
in cases, with related government
restrictions introduced. Asa result,
the Government reintroduced
certain public health restrictions,
largelyfocused on the hospitality
sector, to limit social interaction and
advised that where possible people
should return to working from home.
This led to the extension of income
supports for individuals and businesses
effected by the restrictions, with the
Pandemic Unemployment Payment
(‘PUP’), which had been closed for
new applicants in July 2021, reopening
in early December for individuals
who were affected by the new
restrictions. TheGovernment has
committed to making payments until
the end of March. The Government
eased the majority of restrictions from
22January 2022 and as a result the
Covid-19 adjusted unemployment was
just 7.5% in January 2022 compared
to 27.1% in January 2021.
1 Proxy for economic growth
excluding volatile components
of investment such as aircraft
relating to the leasing sector and
intellectual property assets.
Market
Update
_
Heywood Court,
Santry
39
Residential Units
I-RES
34
Ireland joined the OECD International
Tax agreement in October 2021.
Themajor reform of the international
tax system will ensure a global
minimum of 15% corporation tax rate
from 2023 onwards for Multinational
Enterprises with revenues in excess
of €750 million. Although the vast
majority of businesses in Ireland fall
out of this scope, the rate will apply
to 1,500 foreign owned multinationals
who employ approximately 400,000
people. Despite this increase, Ireland
remains an attractive destination
for multinationals due to its young,
highlyeducated workforce and status
as the only remaining predominantly
English-speaking economy of the EU.
Thus, it is believed that the new 15%
corporate tax rate will have a limited
impact on the Irish economic.
Housing
There remains a significant supply
shortage across all segments of
housing stock in Ireland and this has
been exacerbated by the pandemic
which has caused some disruption
to new construction projects.
InSeptember 2021, the Government
set out its ‘Housing for All’ strategy,
which indicated a need for 33,000
new homes to be provided each
year until 2030, to meet demand
from Ireland’s young and growing
population. In 2021 there was an
estimated 21,000 new housing
completions in the year, on par with
pre-pandemic levels of 21,200 in 2019.
The Central Bank of Ireland forecasts
housing supply will reach 25,000 and
30,000 in 2022 and 2023.
The supply and demand imbalance is
expected to put further pressure on
prices. The Irish Residential Property
Price Index (‘RPPI’) increased by 14.0%
nationally in the year to November
2021 (CSO). Overall, the national
index is now just 5.9% below 2007
levels (CSO). The average mortgage
approval rose to €269,000 in
November 2021, up 8% on 2020.
The average mover drawdown was
€284,000 in Q3 2021, rising above
Celtic Tiger levels for the first time.
Given the CBI rules, the higher
mortgage levels are being driven
by savings and income growth and
lack of supply in the market, rather
than leverage. Average pay growth
is now running at 5.4%, contributing
to house price inflation and stronger
demand for housing. (MyHome /Davy
Q4 Report) The Residential Tenancies
Board (‘RTB’) reported annual rent
inflation nationally of 8.3% in Q3 2021,
marking a return to pre-pandemic
levels of rental price inflation.
Theannual growth rate for Dublin was
6% in Q3 2021. Standardised average
monthly rents for Q3 2021 were
€1,397 nationally and €1,916 for
Dublin (Source:RTBQ3Report).
Daft.ie, an Irish property listing
platform, report stock of homes
available to rent remains at very low
levels. As of 1 February 2022, only 1,397
homes were available to rent nationally,
down 63% from the same date in 2021.
In Dublin, there were only 712 homes
available to rent, down 73% from the
same date in 2021 and the lowest level
since the beginning of the dataset in
2006. This lack of supply is leading to
upward pressure on rental prices as
demand continues to grow.
Investment
The total real estate investment spend
in 2021 reached €5.5 billion (CBRE).
Investment into the Private Residential
Sector (‘PRS’) accounted for €2.2
billion (40% of the total) in 2021.
PRS remains an attractive asset
class for investors, providing stable
and attractive yields, resilience, and
long-term value. International interest
rates and bond yields remain at
very low levels despite some recent
price moves. International buyers
are predominantly focused on prime
assets of sizeable scale in good
locations that are close to transport
links. Activity is picking up with the
economic reopening and international
travel restrictions being lifted, so we
expect an increase in transaction
activity during 2022.
InSeptember 2021,
the Government set
out its ‘Housing for
All’ strategy, which
indicated a need for
33,000 new homes
to be provided each
year until 2030, to
meet demand from
Ireland’s young and
growing population.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
35
Sustainability
Review
_
Our ESG Commitment
Creating
high-quality
homes
-
We are committed
to playing our part in
supporting the transition
to a low carbon economy,
while building communities
and delivering sustainable
homes.
Our People,
Residents
& Community
-
We place resident and
community engagement at
the centre of our operations.
Stakeholder engagement
is essential, and we are
focused on supporting our
employees, residents and
the communities in which
we operate.
Responsible
Governance
& Risk
Management
-
We continue to build
robust cross-departmental
frameworks, conduct active
engagement with key
stakeholders, set targets,
track progress and enhance
reporting with the aim of
developing competency,
oversight and disclosure at
every level of the business.
Climate risk and environmental, social
and governance (ESG) considerations
continue to take priority across our
business, influencing how we operate
and our investment decision making.
Our ambition is to build a sustainable
and responsible business that is
aligned with the long-term approach
we take to investing, building and
maintaining our properties. We are
also committed to supporting and
servicing our residents, employees,
our vendor partners and the wider
community in which we operate.
I-RES
36
Our multi-year ESG Strategy consists
of six clear guiding principles and
objectives which are fundamental
to our business and the needs of
our stakeholders and support us in
achieving our sustainability goals.
These six guiding principles and
objectives will help build a sustainable
and responsible business that is
aligned with the long-term approach
we take to investing, building, and
maintaining our properties; supporting
our residents; interacting with the
communities in which we operate;
and engaging with our employees
and wider stakeholders.
Guided by our multi-year ESG Strategy,
we actively work towards aligning
our business strategy and objectives
with sustainability measures that are
supported by the Board, the Company,
and key stakeholders and where we
can make the greatest impact. We
set out below key milestones in 2021
and our focus for the year ahead.
Commitments
2021 milestones
2022 Focus
1.
Integrating Oversight
Develop and monitor ESG cross
functional policies, objectives,
andaccountability among I-RES
↘
Established Board Sustainability
Committee
↘
Appointment of European market
expertise to Board
↘
Established Energy Performance
Management Committee
↘
Devolve our ESG strategy and
goals across the business
↘
Review & update our policy
in alignment with emerging
sustainability policy frameworks
& regulatory requirements
2.
Advancing Competency
Empower our key stakeholders
to be advocates and enablers
of ESG transparency and
performance through training
andactiveengagement
↘
Board training on sustainability
↘
Delivering cross-functional
competency with an average
of 22.5 training hours completed
by ouremployees
↘
Diversity and Inclusion Awards
↘
Continue to develop and provide
sustainability awareness and
sector-specific training and
development programme to
Board and employees.
3.
Engaging Stakeholders
Conduct ongoing engagement
with our key stakeholders
through frequent reporting,
activeconsultations,
andprograms
↘
Completion of the Company’s
first materiality assessment,
assisted in identifying key
priorities and refinement of ESG
strategy and roadmap for 11 areas
↘
Governance & Sustainability
Roadshow, led by the Chairman
↘
1,300+ residents took
part in annual resident
satisfactionsurvey
↘
Continue to engage with key
stakeholders on governance
and ESG related matters
andopportunities
↘
Establish, monitor and report
on key performance indicators
(and targets) for measuring
the performance of resident
management-related initiatives
4.
Deliver Transparency
Establish necessary frameworks,
platforms, and practices to build
investment-grade ESG data
↘
Independent third-party
assurance, which assesses the
quality of our disclosures and
reporting processes
↘
Complete climate scenario
analysis for our portfolio
to assess the impact on
physical climate-related risks
andopportunities
5.
Setting Targets and
MonitoringProgress
Identify and monitor the
progress of our United Nations
Sustainable Development
Goals (SDG)-alignedgoals
↘
Completion of a carbon baseline
assessment, the first step in
understanding the company’s
carbon emissions and will help
position the Company to set
meaningful targets
↘
Sustainability strategy
androadmap
↘
Develop a methodology to set
targets, quantify and measure
carbon emissions reduction for
the operation of our buildings
and our supply chain
6.
Reporting on
ourPerformance
Build standardised, transparent,
andcomprehensive ESG
disclosures
↘
Publication of ESG Annual Report
↘
EPRA sBPR Gold Star and Most
Improved Company
↘
GRESB one-star award
↘
Further enhance sustainability
reporting/disclosure and
explore opportunities for
listing on other sustainability/
ESG rating indicesto meet
investors’requirements
I-RES’ Multi-Year
ESG Strategy
_
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
37
We continued to have widespread
engagement with our stakeholders,
and this provided valuable input to our
first materiality assessment completed
this year. This assists in identifying
key priorities and refinement of our
sustainability strategy as well as
impact on our business success.
Building on the materiality matrix,
we have developed a sustainability
roadmap and prioritised actions with
set targets and milestones over a
short, medium and long-term time
horizon across 11 sustainability topics,
set out below. Many of the topics
identified as priorities within the
materiality assessment are already key
considerations for our business, as
you will see in the various sections of
our annual ESG Report, highlighting
progress to date, and providing
oversight of how these topics will be
core to informing our future strategy.
Commitments
2021 milestones
2022 Focus
1.
Integrating Oversight
Develop and monitor ESG cross
functional policies, objectives,
andaccountability among I-RES
↘
Established Board Sustainability
Committee
↘
Appointment of European market
expertise to Board
↘
Established Energy Performance
Management Committee
↘
Devolve our ESG strategy and
goals across the business
↘
Review & update our policy
in alignment with emerging
sustainability policy frameworks
& regulatory requirements
2.
Advancing Competency
Empower our key stakeholders
to be advocates and enablers
of ESG transparency and
performance through training
andactiveengagement
↘
Board training on sustainability
↘
Delivering cross-functional
competency with an average
of 22.5 training hours completed
by ouremployees
↘
Diversity and Inclusion Awards
↘
Continue to develop and provide
sustainability awareness and
sector-specific training and
development programme to
Board and employees.
3.
Engaging Stakeholders
Conduct ongoing engagement
with our key stakeholders
through frequent reporting,
activeconsultations,
andprograms
↘
Completion of the Company’s
first materiality assessment,
assisted in identifying key
priorities and refinement of ESG
strategy and roadmap for 11 areas
↘
Governance & Sustainability
Roadshow, led by the Chairman
↘
1,300+ residents took
part in annual resident
satisfactionsurvey
↘
Continue to engage with key
stakeholders on governance
and ESG related matters
andopportunities
↘
Establish, monitor and report
on key performance indicators
(and targets) for measuring
the performance of resident
management-related initiatives
4.
Deliver Transparency
Establish necessary frameworks,
platforms, and practices to build
investment-grade ESG data
↘
Independent third-party
assurance, which assesses the
quality of our disclosures and
reporting processes
↘
Complete climate scenario
analysis for our portfolio
to assess the impact on
physical climate-related risks
andopportunities
5.
Setting Targets and
MonitoringProgress
Identify and monitor the
progress of our United Nations
Sustainable Development
Goals (SDG)-alignedgoals
↘
Completion of a carbon baseline
assessment, the first step in
understanding the company’s
carbon emissions and will help
position the Company to set
meaningful targets
↘
Sustainability strategy
androadmap
↘
Develop a methodology to set
targets, quantify and measure
carbon emissions reduction for
the operation of our buildings
and our supply chain
6.
Reporting on
ourPerformance
Build standardised, transparent,
andcomprehensive ESG
disclosures
↘
Publication of ESG Annual Report
↘
EPRA sBPR Gold Star and Most
Improved Company
↘
GRESB one-star award
↘
Further enhance sustainability
reporting/disclosure and
explore opportunities for
listing on other sustainability/
ESG rating indicesto meet
investors’requirements
Materiality Matrix
1
1
3
2
4
8
9
10
11
5
6
7
Relative impact on/ importance to shareholders
1
2
3
4
5
6
7
8
9
10
11
Health, Safety & Wellbeing
Business Ethics & Compliance
Resident/Tenant Satisfaction
Environmental Management
Sustainability Governance & Strategy
Climate Change
Investment & Development
Asset Management
Data Privacy & Management
Employee Attraction, Diversity & Retention
Sustainable Supply Chain Practices
Sustainability focus areas:
Relative impact on/ importance to the business
1
Following consultation with key stakeholders
Materiality
Matrix
_
Carrington Park,
Santry
142
Residential Units
I-RES
38
We report under several ESG ratings
to provide an overview of our progress
and activities and to allow comparison
with our peers and other companies.
We have made significant progress
across several key ratings criteria,
receiving sBPR Gold award and Most
Improved award from EPRA, while
also receiving our inaugural GRESB
score. Our ambition is to continue
to improve these scores on a yearly
basis, ensuring that ESG performance
is tracked and assessed. It also
provides stakeholders with confidence
that we are turning our commitments
and targets into action and that we
are delivering on our ambition to be a
sustainability leader in our sector.
2021 2020
EPRA
Sustainability Reporting Awards
Not rated
GRESB
Global Real Estate Sustainability
Benchmark
One Star
Not rated
MSCI
BB BB
ISS E&SQualityScore*
*Highest E&S Disclosure =1
Environment
7
Social
9
Not Available
Sustainalytics ESGRisk Rating
22.4
Medium Risk
22.4
Medium Risk
ESG Reporting and Assurance
We understand that building robust
cross-departmental frameworks,
performance monitoring and reporting
on data that is comprehensive, relevant
and transparent is vital to enabling us
to manage ESG risks and opportunities.
We are proud to demonstrate our
commitment to transparency by
preparing a standalone, ESG Report
in alignment with EPRA Best Practices
Recommendations for Sustainability
Reporting (EPRA sBPR) and the United
Nations Sustainable Development Goals
(SDGs).
This Sustainability Review should be
read in conjunction with our 2021 ESG
Report. The ESG Report forms part
of I-RES’ 2021 annual disclosure and
details the progress we have made in
reducing the impact of our activities
during the year ended 31 December
2021. The ESG Report provides
an overview of our priorities and
highlights from 2021 on ESG matters
relevant to I-RES and the real estate
investment industry.
Our ESG and health and safety
performance measures are all subject
to ‘reasonable assurance’ verification
by Evora Global (Evora), as determined
by the AA1000AS Type 2 Moderate
level assurance. The assurance
statements are published in our latest
ESG Report, which is available to
download on our website.
Benchmark
& Ratings
_
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
39
Working group
Responsibility
ESG Steering Committee
Development of ESG strategy and integration into
business planning and reporting. Supports the Board
Sustainability Committee in fulfilling its oversight of the
Company’s ESG strategy.
Environmental Performance Management
(OperationalPerformance)
Monitoring and developing improvement plans for the
energy performance of the assets in the portfolio.
Social Performance – ‘GreenAmbassadors’
Aims to encourage teamworking and collaboration
within the organisation through social activities as well
as resident engagement and local community initiatives.
I-RES has a clear commitment
to sustainability, and we have in
place clear reporting frameworks
and programmes to communicate
our progress to the Board, senior
management and to all of our
stakeholders. This helps ensure that
our Multi-Year ESG Strategy remains
on track and continues to evolve.
ESG
Governance
Framework
_
The Board
Overall responsibility for ESG matters
Audit Committee
Monitors assurance
and internal financial
control arrangements.
Remuneration Committee
Ensures sustainability linked
remuneration framework.
Nomination Committee
Monitors capability and
appointments.
Sustainability Committee
Responsible for developing
and recommending to the
Board the Company’s ESG
strategy.
Management Committees and Employee ESG working groups
I-RES
40
Development
Description Highlights
Merrion
Road
Dublin 4
Size:
69 units
Expected
completion date:
H1 2022
BER:
A3
» Low U value and emissivity windows to minimize heat loss/gain
» Heat Recovery Ventilation
» Energy efficient LED lighting throughout
» Provision for electrical vehicle charging points
» Superb public transport links
» Low flush appliances installed
» Green Roof System
» By the sea, near Booterstown marsh and nature reserve
» Furbished apartments being equipped with ESG considerations
in mind – recycled plastics textiles, reclaimed materials, local
manufacture with sustainable sourcing – all furnishing designed for
longevity, repairs and waste reduction
A closer look:
_
Our
environmental
impact in 2021
Our Developments
As we continue to deliver on our
growth strategy, incorporating ESG
into our development process is a
critical aspect of its delivery. We have
two developments in progress and
completion is expected in 2022. Baker’s
Yard, which consists of 61 residential
units and Merrion Road, a forward
purchase contract for 69 residential
units. Bakers Yard will be delivered to
LEED Gold certification and serve as an
important blueprint for future schemes.
Upon completion, these assets will
drive down energy consumption,
improve efficiency, and create healthier
living places for our residents.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
41
Development
Description Highlights
Bakers
Yard
North Circular
Road, Dublin 1
Size:
61 units
Expected
completion date:
H1 2022
BER:
Minimum A3
» Walking distance to City Centre and local amenities
» Superb public transport links
» Utilising brownfield site location
» Open space within walking distance
» Large playground within walking distance
» Low flush and water usage appliances installed
» LED lighting throughout
» Furbished apartments being equipped with ESG considerations in mind
» Heat recovery ventilation
» Electric vehicle charging point installed with easy use App
» 3 acres of landscaped gardens
» 118 bicycle spaces
» Served by extensive public transport links
Climate Change
As a building owner, we are very
mindful of how our business impacts
on the environment but most
importantly, we need to ensure our
portfolio and development pipeline
incorporate the right resilience
measures to mitigate any potential
negative climate-related risks and
impacts. This is a material risk for
our business, and therefore we have
implemented a robust and effective
management and business strategy
that ensure that we accurately
capture the impact from our assets
and our operations.
The governance of climate change
risk and opportunities is ultimately the
responsibility of the Board. However,
day-to-day management is delegated
to the Board Sustainability Committee
and management.
In 2021, we completed a carbon
emissions baseline assessment of
our business, a critical first step to
understanding our carbon footprint.
This baseline will be used as the
foundation for a carbon roadmap
which can show what pathways are
available to practically meet the
carbon emission reduction targets
that we will set for the business.
We have engaged sustainability
advisors to assist us with this exercise,
helping us to ensure we are focusing
our management’s time and efforts in
the right areas to have an impact and
remain resilient.
Environmental Sustainability risks are
identified and included within our risk
register and monitored as part of our
wider risk management procedures
and are overseen by the Board,
please see page 62 of this Report
for further detail.
I-RES
42
A closer look:
_
Our Social
impact in 2021
Placing our people at the heart
Our diverse and talented team of
professionals are the drivers of the I-RES
culture. As a business we recognise
the importance of our employees in
maintaining our position as Ireland’s
leading provider of rental accommodation
and in the successful delivery of our
business strategy and strong results. We
continuously invest in our employees,
providing them with opportunities for
continuous personal and professional
development programmes at all levels in
the business. I-RES is pleased to report
another year of strong performance with
an overall engagement rating of 83%. I-RES
continues working to attract, inspire, and
engage a talented and diverse workforce.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
43
I-RES is dedicated to excellent
customer service for our residents.
We aim to provide quality homes and
communities for our residents to live
in. This is achieved through working
and engaging with our residents to
understand their needs, ensuring
we provide a thriving and diverse
work environment for our employees,
and being active participants in the
communities in which we operate. In
2022, we will rollout Yardi software
solution for investment and property
management. Yardi has a robust,
integrated cloud-based platform which
gives us the opportunity to streamline
operations and the tools we need to
scale the business while delivering
excellent service to our residents.
The solution will enable end to end
management of the resident lifecycle
and report on KPI’s as we grow as well
as improving on resident satisfaction
and retention.
Wellbeing
Employees’ Health and Wellness is
a key consideration for the business.
Our team of dedicated professionals
are at the heart of the business and
their health and wellbeing is a top
priority. I-RES implement several
initiatives to ensure our employees
feel connected, stay active and
manage stress.
Weekly zoom
yoga sessions
Regular creative and
wellbeing workshops
Staff Running Club
Biweekly coffee
mornings
Manage Stress. Stay Active. Feel Connected.
Key Employee Benefits
I-RES continues to review and
update the benefits available
to its employees on an annual
basis. In addition to regulated
and mandated benefits, their
employees are offered:
›
Private Healthcare Packages
›
Death in Service cover
›
Income Continuance
›
Pension
›
Compassionate Leave
›
Education and professional
membership reimbursement
›
Employee recognition
programmes
›
Referral bonuses
›
Summer working hours
In January 2021, employees were
given ‘blue Monday’ as a day off
to promote employee wellbeing
and thank staff for their continued
efforts to maintain and excellent
level of service during the
Covid-19 pandemic.
Mental health care
resources
Virtual summer party
Book club
Wellbeing apps
and websites
I-RES
44
Diversity & Inclusion
The Board and the Nomination
Committee recognise the importance
of, and are committed to supporting,
diversity and inclusion in the
boardroom where directors believe
that their views are heard, their
concerns are addressed and they
serve in an environment where no
bias, discrimination or harassment is
tolerated on any matter. The Board and
the Nomination Committee understand
that a diverse Board will offer different
perspectives in order to provide
effective oversight of the Company’s
business and guide the Company
towards its strategic aims. Diversity
also improves the quality of decision-
making by the Board by reducing the
risk of groupthink and supports the
development of a diverse pipeline of
candidates to serve on the Board.
I-RES are delighted to disclose our
recent Diversity and Inclusion Award
as a ‘Best Practice Leader in European
Women on Boards Gender Equality
Index’. As highlighted by Declan Moylan
(Chairman) and Margaret Sweeney
(CEO) on their receipt of this award ‘it
is recognition of the Board’s ongoing
commitment to ensuring appropriate
gender diversity across all levels of the
business, and we must all continue to
strive to ensure equality of opportunity
across the business community and
wider society’.
The Company’s Board Diversity
and Inclusion Policy requires the
Board to consider a broad range of
characteristics when considering
diversity including, but not limited
to age, gender, social and ethnic
background, educational/professional
background, cognitive skills, personal
strengths and ESG expertise.
Ongoing activities to advance
diversity include:
↘
Mandatory diversity & inclusion
training for all employees
↘
Mentoring programme
↘
Nurturing culture of inclusion
Lansdowne Gate
Drimnagh, Dublin 12
224
Residential Units
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
45
The I-RES staff that
I have dealt with are
great. Very professional,
organised and friendly.
I-RES Tenant
Received excellent
support from I-RES
for any house keeping
needs and also for any
maintenance requests
we have had in these
tough covid times.
I-RES Tenant
The Resident Experience
I-RES is dedicated to excellent
customer service for our residents.
We aim to provide quality homes and
communities for our residents to live
in. This is achieved through working
and engaging with our residents to
understand their needs, ensuring
we provide a thriving and diverse
work environment for our employees
and being active participants in the
communities in which we operate.
Our key service principles are:
↘
From initial enquiry through to final
handover, we are committed to
reliable, convenient, empathetic
service that builds collaboration,
partnership and trust over the
whole duration of our tenants’
time with us.
↘
We aim to deliver timely, efficient
services, online and onsite, that
minimise disruption and maximise
value to our residents – this means
bringing to life our promise of
“better living made simple”.
↘
Fairness, respect and inclusion are
at the heart of what we do. We
place a high value on clear and
open two-way communication so
that we understand our residents’
needs, and that they have a clear
understanding of their role. Our
resident portal, which is used by
86% of our residents, along with
our highly skilled onsite teams,
and documented processes assist
us in achieving this.
↘
Continual improvement – this year,
we rolled out further customer
service training and re-ran our
resident satisfaction survey.
Creating value in the community
Our Sustainability Strategy places a
large focus on supporting Community
initiatives and the local economy. I-RES
actively works with residents to help
build strong and engaged communities.
I-RES contribute to and support many
local initiatives such as the Cooperation
Ireland ‘Future Leaders Programme’
where I-RES representatives engage
with and mentor young children from
a variety of backgrounds. We are also
proud supporters of local GAA Club
Naomh Ólaf in Sandyford, Dublin a
community where we have over 600
residential units.
The Company and staff continue to
support many local charities through
fund raising events such as Aoibhneas,
Focus Ireland, Darkness into Light
for Pieta House, Let’s Run as One
with Dublin Neurological Institute and
Dragon’s at the Docks which saw a
phenomenal €100,000 raised for
Dublin Simon, Aware, Alone, ISPCC and
Women’s Aid. During the pandemic
I-RES have supported medical front
line staff through provision of free
accommodation and car parking
in locations across Dublin, to help
the fight against Covid-19. Over 55
apartments across three properties
and over 1,000 parking spaces at
four locations were made available to
frontline workers.
In 2021 I-RES partnered with local
Housing Body, ‘Cooperative Ireland’
to help create a Resident Committee
at our Dublin 8 development, allowing
residents to come together to
represent their shared views and
suggestions to help make their
community a better and more
sustainable place to live. Please refer
to page 27 of our ESG report for more
details and examples of how I-RES
create value in the community.
I-RES
46
Responsible Governance Practices
We are proud to say that ESG, and
responsible business objectives, are
embedded in every decision-making
process throughout the business, from
Board level to on-site maintenance
and operational teams. This is further
strengthened by our commitment,
focus and investment in the
professional development and training
of our Board and employees.
The oversight of all ESG matters is
critical to the business. Accordingly,
the Board of the Company has
established a sustainability committee
(the ‘Board Sustainability Committee’)
which, among other duties, is
responsible for developing and
recommending to the Board the
Company’s ESG strategy, policies,
risks, targets, and investment required
to achieve our ESG strategy. Further,
the committee is supported by the
Board, ESG Steering Committee
at Management Level, Energy
Performance Management Committee,
and the I-RES Green Ambassadors.
During 2021, we continued to identify
and implement ways to strengthen
our policies and procedures. These
included the following:
↘
The introduction of a Supplier
Code of Conduct;
↘
The introduction of a Right to
Disconnect Policy for all staff;
↘
The review and updating of the
Company’s privacy and GDPR
policies;
↘
The publication of the Company’s
Anti-corruption policy;
↘
The review and updating of the
Company’s Whistle-blower Policy.
Reporting on our performance
Underpinned by our multi-year ESG
strategy, we have achieved some key
milestones, including implementing
measures that align with the UN
Sustainable Development Goals
(‘SDG’), building robust cross-
departmental frameworks, conducting
active engagement with key
stakeholders, setting targets, tracking
progress and enhancing reporting.
This robust strategy will ensure
the development of a long-term
sustainable business which meets the
needs of all our stakeholders.
To facilitate a greater understanding of
the impact of ESG associated with our
activities, we report our performance
measures and metrics in line with the
EPRA Sustainability Best Practices
Recommendations (SBPR). As detailed
in the table on page 14 of our Annual
ESG Report, we achieved the gold
level award and Most Improved
Company award for compliance with
the SBPR in 2021. This is in addition
to receiving BPR silver award for the
fourth year in a row. Receipt of these
awards reflects both the continued
focus we place on integrating ESG
into our operations and the progress
we have made in implementing our
ESG strategies across our business.
We also continue to support and
recognise the UN SDG’s, which are
seen as a blueprint for a prosperous
and more sustainable future for all.
Additionally, our efforts have been
recognised by the Global Real Estate
Sustainability Benchmark (GRESB), an
industry-leading global assessor of the
ESG performance of real estate assets
and their managers, awarding us with
one-star with strong performance
noted in ‘Management’, ‘Policy &
Disclosure’, ‘Stakeholder Engagement’
and ‘Tenants and Community’. Our
first GRESB public submission results
are promising and provide a baseline
to build upon over the coming years.
Specifically, we are focused on
improving performance
on energy management, waste,
and biodiversity.
A closer look:
_
Our Governance
Approach
At a time of heightened
uncertainty globally,
sustainability of the
business remains a
primary focus and
we believe it is our
responsibility to prioritise
the health and well-
being of our employees,
residents, vendors,
and other personnel
supporting the business
while ensuring the
financial wellbeing
of the business. Our
commitment remains on
building a sustainable
and responsible
business. This is aligned
with the long-term
approach we take to
providing high quality
homes and communities
where we operate. We
actively work towards
aligning our strategy
and objectives with
ESG measures that will
deliver long-term value
to our investors and
stakeholders.
Margaret Sweeney
Chief Executive Officer
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
47
The I-RES business
model is based on a
long-term commitment
to the residential
market and is aligned
with Ireland’s growing
need for high-
quality residential
space. Tofulfil
this commitment,
I-RESwill continue to
pursue investment in
supply and strategic
pathways that add
long-term value.
Business
Objectives
and Strategy
_
Objectives
↘
Provide shareholders with
long-term, stable and
predictabledividends
↘
Grow income and net asset
valuethrough active management
of properties, accretive acquisitions
and developments, and strong
financial management
Business Strategy
The Irish residential rental market
continues to exhibit strong market
fundamentals: increasing growth of
the Irish economy; continued growth
of multinational companies in Ireland;
substantial demand for high-quality
rental accommodation from highly
trained international and local workers;
and a significant shortage of available
housing. These circumstances
supported the execution of I-RES’
strategy in 2021, and despite the
current challenges posed by Covid-19,
these strong market fundamentals we
believe will underpin I-RES’ growth
strategy going forward.
To meet its objectives, I-RES has
established the following strategies to
deliver growth:
↘
Acquisitions
↘
Development of Existing
I-RESProperties
↘
Local Development Partnerships
↘
Financial Management
Acquisitions
For developments and acquisitions,
I-RES is focused on opportunities
for growth in Dublin and its environs
as well as other main urban centres
in Ireland. Going forward, I-RES is
refiningits asset building to include
investing in developments and
acquisitions in commuter markets
outside of Central Dublin that meet
three key criteria: 1) strong local
employment; 2) good transportation
connections; 3) family-friendly
neighbourhoods with nearby schools.
Further to the acquisition of 146 units
at Phoenix Park in 2021, I-RES recently
announced the acquisition of 152
residential units in Ashbrook, Clontarf.
108 of these units will be delivered in
H1 2022 with the remaining 44 under
forward purchase contract to be
delivered in H2 2023.
Developing of Existing
I-RESProperties
While continuing to pursue accretive
acquisitions, I-RES is responding to
the increased competition for asset
purchase opportunities in the Irish
residential market by increasing
its focus on development and
intensification opportunities within its
existing portfolio, where potential has
been identified to add an estimated
543 apartments at currently owned
properties. These apartments can
be built at a cost that is lower than
current market values for comparable
properties, partly because there is
already infrastructure in place, such
as groundworks and parking. In 2021,
I-RES continued the construction of 61
units at Baker’s Yard as it continues to
pursue this strategy.
Local Development Partnerships
I-RES is pursuing mutually beneficial
partnerships with local builders and
developers. Leveraging its strong
balance sheet, I-RES can deploy
financing at attractive rates and secure
the option to acquire units in approved
developments, enabling I-RES to
deliver new homes at accretive yields.
Financial Management
I-RES takes a conservative approach
and strives to manage its exposure to
interest rate volatility by proactively
managing its credit facility to reduce
interest rates. In addition, I-RES strives
to maintain a conservative overall
liquidity position and achieve a
balance in its overall capital resource
requirements between debt and
equity. The Company’s strategy is
founded on maintaining prudent levels
of interest cover and gearing. As at
31 December 2021, the Company’s
Group Total Gearing was 40.7%
(39.2% as at 31December 2020),
well below the 50% maximum allowed
by the Irish REIT guidelines. We will
continue to use our RCF to fund
our development costs and further
acquisition opportunities that arise.
I-RES
48
Focus Activity
The Group’s aim is to assemble a
portfolio within its focus activity of
acquiring, holding, managing and
developing investments primarily
focused on residential rental
accommodations and ancillary and/
or strategically located commercial
property on the island of Ireland,
principally within the greater Dublin
area and other major urban centres
on the island of Ireland (the “Focus
Activity”). The vast majority of such
properties will form the Group’s
property investment portfolio for
third party rental. The Group may
also acquire indebtedness secured
by properties (including in respect of
buy-to-let properties) within its Focus
Activity where it intends to gain title
to and control over the underlying
property. There is no limit on the
proportion of the Group’s portfolio
that consists of indebtedness secured
by properties.
Consistent with the Focus Activity,
the Group may consider property
development, redevelopment
or intensification opportunities,
inparticular, the completion of building
out the Group’s current development
sites, where the directors of the
Company consider it appropriate
having regard to all relevant factors
(including building risk, lease up
risk, expected returns and time
tocomplete).
The Group may also acquire properties
and portfolios which include other
assets outside of the Focus Activity,
subject always to a maximum limit of
20% of the overall gross value of the
Group’s property assets, provided
there is a disposal plan in place in
connection with such assets which
have been deemed non-strategic and
do not meet the Group’s investment
objectives or which could otherwise
have an adverse effect on the
Group’s status as an Irish real estate
investmenttrust.
Gearing
The Group will seek to use gearing
to enhance shareholder returns over
the long term. The Group’s gearing,
represented by the Group’s aggregate
borrowings as a percentage of the
market value of the Group’s total assets,
will not exceed the 50% maximum
permitted under the Irish REIT Regime.
The board of the Company (the
“Board”) reviews the Group’s gearing
policy (including the level of gearing)
from time to time in light of then-
current economic conditions, relative
costs of debt and equity capital, fair
value of the Group’s assets, growth
and acquisition opportunities and
other factors the Board may deem
appropriate, with the result that the
Group’s level of gearing may be lower
than 50%. The Board may also from
time to time consider hedging or other
strategies to mitigate interest rate risk.
Investment Structures
The Group also has the ability to enter
into a variety of investment structures,
including joint ventures, acquisitions
of controlling interests, acquisitions
of minority interests or other
structures (whether by way of equity
or debt) including, but not limited to,
forrevenue producing purposes in
the ordinary course of business, within
the parameters stipulated in the Irish
REIT Regime. There is no limit imposed
on the proportion of the Group’s
portfolio that may be held through
suchstructures
The Group’s aim is to
assemble a portfolio
within its focus
activity of acquiring,
holding, managing and
developing investments
primarily focused
on residential rental
accommodations.
Investment
Policy
_
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
49
Warehousing/
Pipeline Agreements
If the Group is unable to participate
in sales processes for property
investments because it has insufficient
funds and/or debt financing available
to it, including where its gearing is at
or close to the maximum permitted
level under the Irish REIT Regime,
the Group is permitted to acquire
property investments that meet the
criteria specified in its Investment
Policy (including the acquisition of
shares in property holding companies)
from time to time in accordance with
the terms of warehousing or pipeline
arrangements entered into or to be
entered into by it with third parties,
in each case, without shareholder
approval and for a price calculated
on a basis that has been approved
in advance by the directors of
theCompany.
Restrictions
Pursuant to the Irish REIT Regime,
the Group is required, amongst other
things, to conduct a Property Rental
Business consisting of at least three
properties, with the market value of
any one property being no more than
40% of the total market value of the
properties in the Group’s Property
Rental Business. Further, at least 75%
of the Group’s annual Aggregate
Income will need to be derived from its
Property Rental Business and at least
75% of the market value of its assets,
including uninvested cash, will need to
relate to its Property Rental Business.
In addition to the foregoing, the Group
will not do anything that would cause
the Group to lose its status as a real
estate investment trust under the Irish
REIT Regime.
Changes to the Investment Policy
Material changes to the Group’s
Investment Policy set out above may
only be made by ordinary resolution
ofthe shareholders oftheCompany
in accordance with the Listing Rules
of Euronext Dublin and notified to
the market through a Regulatory
Information Service. If the Company
breaches its Investment Policy, the
Company is required to make a
notification via a Regulatory Information
Service of details of the breach and of
actions it may or may not have taken.
A material change in the published
Investment Policy would include the
consideration of investments outside
of the Focus Activity, other than as
permitted under this Investment Policy.
For as long as the Company's ordinary
shares remain listed on the Official
List of Euronext Dublin, any changes
to the Company’s Investment Policy
must be made in accordance with the
requirements of the Listing Rules of
Euronext Dublin.
I-RES has invested in accordance with
the investment policy. Please refer to
the property overview table on page
27 for further details.
Elmpark Green
Merrion Road
,
Dublin 4194
Residential Units
I-RES
50
1st
2nd
3rd
Risk
Report
_
The Board has reviewed
the effectiveness of
the risk management
and internal control
systems and no material
failings orweaknesses
wereidentified.
Board
Manager's
Board
Audit
Committee
Manager
Risk Management & Internal Control Systems
The Group employs a three lines of defence approach to risk management.
The Manager has a board of directors
that is comprised of independent and
non-independent directors and has
oversight of the Manager’s activities.
The Manager’s employees and
management team are responsible for
designing, implementing and operating a
system of internal controls to mitigate key
risks facing the Group and allow it to meet
its strategicobjectives.
The Board has overall responsibility for
maintaining and monitoring the Group’s
system of risk management and internal
control and assessing its effectiveness.
Such a system is designed to identify,
manage and mitigate financial, operational
and compliance risks inherent to the
Group and allow the Group to meet
its strategic objectives.
The Board relies on the Audit Committee
to assist with certain responsibilities
relating to internal controls, risk
management and reporting. Refer to the
Report of the Audit Committee on page
78 to 82 for the procedures established by
the Audit Committee to discharge these
responsibilities.
Management & Employees
Risk Management Function
Internal Audit
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
51
Entity Level Controls
Policies and Procedures
Process Controls
↘
Board oversight of the Manager
and financial, operational and
compliance matters
↘
Experienced personnel and
oversight established by the
Manager
↘
Tone at the top
↘
Defined structure and clear lines
of authority
↘
Communication and disclosure
controls such as management
meetings and compliance
certifications
↘
Corporate governance policies
↘
Code of Conduct and
EmployeeHandbook
↘
Signing Authority and Delegation
Policy governing day-to-day
transactions and larger
corporate initiatives
↘
Risk management processes, and
regulatory monitoring practices
↘
Investment decision policies,
including due diligence policies
and procedures
↘
Financial reporting and risk
management processes
↘
Asset valuation procedures
↘
Operations policies and practices
↘
Information technology and
security policies and procedures
↘
Preventive and detective
financial, compliance and
operational transaction
levelcontrols
↘
Information technology controls
surrounding key financial and
operational systems
↘
Establishing and monitoring
budgets and business plans,
including consideration of risk
↘
Monitoring of financial results
and key operational, financial
and compliance performance
indicators (net asset value,
netoperating income,
capitalisation rates, occupancy,
average monthly rents, gearing
and debt covenant compliance,
revenue collectability and REIT
status compliance)
In addition to the above, the Board
and the Manager engage third party
expertise, where needed, to assist in
carrying out processes and to provide
advisory services. The Board has
appointed two external third-party
valuation firms to provide valuations
of the property related investments of
the Group. TheManager reviews the
assumptions and inputs used by the
third-party valuation firms, as well as
the results of their valuation process.
Additionally, the Group has a rotation
policy for its third-party valuation firms.
The Manager has a risk management
function which is responsible for
carrying out risk assessments with
process owners. The risk management
function, upon meeting with process
owners, has established a risk
register consisting of key strategic,
operational, financial and compliance/
regulatory risks impacting the Group
along with associated mitigating
controls. Throughout the year, the
risk management function meets
with process owners to maintain
the risk register and incorporate any
changes to risks, including any new
or emerging risks and mitigating
factors or controls. This risk register
and related assessments include
content and discussion relating both
to principal risks as well as other key
business risks, including emerging
risks. While emerging risks may not
always become principal risks, they are
identified and monitored throughout
the year by process owners and the
risk management function, since they
may require actionable mitigation
activities. In addition to discussion with
process owners, the risk management
function may also seek guidance
from outside advisors in relation to
certain inherent, external, or emerging
risks. The risk management function
also carries out an assessment of
the likelihood of occurrence of
the risk and the impact associated
with each risk in the risk register.
The results of this risk assessment
process and a summary of the key
and emerging risksin the risk register
are presented to the Audit Committee
and the Board on a quarterly basis.
The risk assessment process and
risk register also assist the Board in
determining the Group’s principal risks
and uncertainties, which have been
included on pages 54 to 62.
I-RES
52
The Manager’s risk management
function is also responsible for
assessing the Group’s risks that require
insurance and ensuring that adequate
insurance is procured to protect the
Group from significant exposures.
From time to time, the Manager’s risk
management function engages third
party expertise to assist it in carrying
out risk assessments and to provide
risk advisory services, as well as in
procuring optimal insurance coverage
for the Group on the most cost-
effective basis.
The Board is satisfied that the
Manager’s risk management function
has the necessary authority,
resources, expertise and access to
relevant information to fulfil its role and
is operating effectively as at the date
of this Report.
The Group has not established an
internal audit function but instead
relies on the Manager’s internal audit
function in order to assist the Audit
Committee and Board assess the
effectiveness of the Group’s risk
management and internal control
systems. For further details regarding
the Audit Committee’s annual
assessment of the need for an internal
audit function, refer to the Report
of the Audit Committee on page 82.
The Manager’s internal audit function
consults with the Manager’s staff, the
Manager’s risk management function
and the Group’s Board of directors
to determine its mandate. In shaping
its mandate, the Manager’s internal
audit function also considers the
work performed by the Manager’s risk
management function. Thismandate
includes auditing the design and
operating effectiveness of key
operational, financial and compliance
related internal controls making up risk
mitigation activities. The Manager’s
internal audit function has adequate
authority and access to the personnel,
processes and records of the Manager
and the Group in order to perform
its work. The Manager’s internal audit
function meets with the Group’s
external auditor regularly throughout
the year to discuss internal control
and audit matters. Additionally, the
Group’s external auditor has access
to the internal audit function’s findings
and reports. The Manager’s internal
audit function presents quarterly to the
Audit Committee on its work related
to the internal controls of the Group,
including those internal controls
which are carried out by the Manager
in relation to the Group’s business
activities. The Audit Committee has
direct access to the Manager’s internal
audit function through quarterly
Audit Committee meetings, including
in-camera sessions as required.
Furthermore, the Audit Committee
plays a key role in assessing the
annual internal audit plan put forth by
the Manager’s internal audit function
and also in reviewing any significant
findings resulting from the audit work
carried out under this plan. In 2021,
the Audit Committee appointed the
professional services firm, EY Ireland,
to supplement the work performed by
the Manager’s internal audit function.
This arrangement, similar to an internal
audit co-sourcing model, will allow
for optimised geographical coverage
and provide added independence
to the internal audit mandate but is
not necessarily viewed as the Group
having its own internal audit function.
Taking into account the information
on principal risks and uncertainties
provided on pages 54 to 62, and the
ongoing work of the Audit Committee
in monitoring the risk management and
internal control systems on behalf of
the Board, the Board:
↘
is satisfied that it has carried out a
robust assessment of the principal
risks and emerging risks facing the
Group, including those that would
threaten its business model, future
performance, solvency or liquidity;
and
↘
has reviewed the effectiveness of
the risk management and internal
control systems, including all
material financial, operational and
compliance controls (including
those relating to the financial
reporting process), and no
material failings or weaknesses
wereidentified.
Going Concern Statement
The directors, after making enquiries,
reviewing assumptions and
considering options available, havea
reasonable expectation that the
Company, andthe Group as a whole,
have adequate resources to continue
operating for at least 12 months.
Forthis reason, the going concern
basis of accounting continues to be
adopted in preparing the financial
statements included in thisReport.
Assumptions are built in for the
statement of profit or loss and other
comprehensive income, statement of
financial position and statement of cash
flows, and these are rigorously tested
by management and the directors.
Sensitivity analysis has been applied to
reflect the potential impact of some of
the principal strategic and commercial
risks of the Group, as described
on pages 54 to 62. Theprincipal
strategic and commercial risks that
were factored in the analysis were the
Economy, Inflation and Regulations/
Legislation. Sensitivity analysis included
stress testing for decline in revenues to
ensure the Group has sufficient cash
resources to continue in operation
for at least the next 12 months given
the Covid-19 pandemic and ongoing
volatile geopolitical landscape and its
impact on the overalleconomy.
After reviewing assumptions about
future trading performance, valuation
projections, capital expenditure and
debtrequirements expected within
the next three years and the options
available to it, the directors have a
reasonable expectation that the Group
will have sufficient funds available to
meet liabilities as well as other planned
expenditures as they fall due in the
foreseeable future. TheDirectors
also considered potential business,
credit, market and liquidity risks,
including the availability and repayment
profile of bank facilities and other
debt obligations, as well as forecast
covenant compliance. Basedon the
above, the directors continue to
adopt the going concern basis of
accounting for the preparation of the
financial statements for the year ended
31December 2021.
Viability Statement
Assessment of prospects
The Group’s strategy is outlined on
page 47. Under this strategy, the
key factors underlining the Group’s
prospects are:
↘
Growth: The Group is targeting
organic net rental income growth
supplemented by increased income
from acquisitions and development
ofassets.
↘
The Board has considered the
changes in the risk profile of
the Group that this entails and
has determined that they are
acceptable in the context of the
risk profile of the Group as a whole.
The assessment period
The Group’s viability assessment
includes the budget for the next
financial year, together with a forecast
for the following two financial years.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
53
Achievement of the one-year budget
has a greater level of certainty and
is used to set near-term targets
across the Group. Achievement of the
three-year plan is less certain than
the budget but provides a longer-
term outlook against which strategic
decisions can be made.
The directors concluded that three
years was an appropriate period for
the assessment given that this is the
key period of focus within the Group’s
strategic planning process, and it fits
well with the Group’s development
cycle. The objectives of the strategic
planning process are to consider the
key strategic choices facing the Group
and to build a consolidated financial
model with various stress scenarios,
considering the principal risks and
uncertainties facing the Group.
The assessment and
keyassumptions
Detailed financial forecasts are
prepared and subjected to a rolling
forecast process throughout the year.
Subsequent years of the forecasts
are extrapolated from the first year,
based on the overall content of
the strategic plan. Progress against
financial budgets and key objectives is
reviewed in detail on a monthly basis
by the Group and shared with the
Board on a quarterly basis. Mitigating
actions are taken, whether identified
through actual trading performance or
the rolling forecast process.
The key assumptions within the
Group’s financial forecasts include:
organic revenue growth supplemented
by investment in acquisitions
and development, supported by
markettrends.
Assessment of viability
The viability assessment has
considered the Group’s profitability,
capital values, gearing, cash flows and
other key financial metrics over the
period. These metrics are subject to
moderate and severe stress scenarios,
inwhich a number of the main
underlying assumptions are changed
based on some of the principal risks
of the Group, as described on pages
54 to 62, to reflect a comprehensive
range of possibleoutcomes.
These scenarios are intended to
illustrate what the directors believe
are a range of plausible outcomes and
do not necessarily capture the worst
cases. The actual results may vary
significantly from these scenarios.
The Group considered the regulation/
legislation, economic and inflationary
risks (included in the Principal Risks
and Uncertainties section), negatively
impact on the cash flows and banking
covenants, and performed additional
stress testing on the Group's ability
to continue in operation. The key
assumptions for the severe stress but
plausible scenario include significant
increase in vacancy and bad debt
expenses from existing properties and
acquisitions and valuation decreases
on investment properties.
Under the stressed scenarios, the
directors believe that the Company has
mitigants for liquidity and cash flows by
seeking a consensual agreement with
the vendors for deferment of our future
commitments on forward purchases,
reduction in discretionary capital
expenditure and dispositions of non-
core residential units, as well as further
equity raise to deleverage if required.
Also, repair and maintenance expenses
and property management expenses
which are two significant components
of the operating expenses are, to a
certain extent, variable expenses that
can be managed to reduce costs.
TheGroup is not required to renew
any of its debt obligations by the end
of the periodconsidered.
The directors have assessed
the viability of the Group over a
three-year period to December 2024,
takingaccount of the Group’s current
position and the potential impact of
the principal risks. While the severe
stress tests are hypothetical, the
Group has control and mitigation
measures in place to withstand or
avoid potential unfavourable impacts
under the scenarios, such as reducing
non-essential expenditure, seeking a
consensual agreement with vendors
for deferment of acquisitionsand
development and disposition of
assets. Based on this assessment,
the directors have a reasonable
expectation that the Group will be able
to continue to sustain its operation
and meet its liabilities as they fall due
over the period to December2024,
and meet its financialcovenants.
TheGrouphas a strong balance sheet,
with no near-term debt maturities,
and currentlyhas sufficient headroom
onitsRCF.
In making this statement, the directors
have considered the resilience of
the Group, considering its current
position, the principal risks facing the
business in severe but reasonable
scenarios, and the effectiveness of
any mitigatingactions.
Xavier Court,
Sherrard Street Upper
41
Residential Units
I-RES
54
Risk
Prolonged Pandemic
A widespread and prolonged pandemic will have a negative effect on Ireland’s economy, and in turn have an
adverse impact on the performance of the Group.
Strategic
Impact
High
The global spread of Covid-19 has resulted in major disruptions to both businesses and personal lives. The
Group, its Manager, and its key vendors and service providers have experienced disruptions to day-to-day
operations. The Group’s growth strategy will be affected if government restrictions impacting construction
sites, in-suite works, and physical viewing of properties are re-imposed.
There is uncertainty as to what the overall economic impact will be and how long a recovery will take.
This could result in a negative impact to the Group’s cash flows due to increased unemployment, reduced
business activity, increased costs and further government measures related to the property rental industry
taken to ease the economic impact of the Covid-19 pandemic.
Mitigation
Strategy
The Group and its Manager actively monitor and manage the evolving risks and measures being implemented
by government in relation to the pandemic, and their effect on the business and macroeconomic
environment. TheGroup holds regular senior leadership meetings and provides regular updates to the Board.
The Group and Manager continue to adhere to guidance by the Health Services Executive. The Group is
taking steps to ensure the safety, health and well-being of all employees, residents in our properties, business
partners, shareholders, and other stakeholders to ensure the ongoing operation and performance of the
business, including increased sanitisation, communications programmes, increased use of technology,
ensuring adherence to public health guidelines and government regulations, as well as providing ongoing
support to tenants and employees.
Given the difficult environment for tenants, the Group continues to work with tenants, and housing
authorities to minimize the impact of the Covid-19 virus on tenants and their homes.
Risk
Trending
Since
31 December
2020
Stable
While governments around the world, and health authorities are taking measures to slow the spread of the
Covid-19 virus and roll out vaccines there has been an economic and health impact through 2021.
The Irish government is currently providing support measures for workers, and business affected by the
Covid-19pandemic.
It is anticipated that it will take a prolonged period of time for businesses to return to normal operations.
Risk
Economy and Inflation
A general weakening of the Irish economy and increasing inflation.
Strategic
Impact
Medium
Reduced economic activity could have a negative impact on business performance, asset values and net
rental income, which could affect cash flows going forward. In addition, growing cost and payroll inflation in
excess of rent inflation would put downward pressure on NRI and earnings.
Mitigation
Strategy
The Group’s business is primarily focused on Dublin, which has been more resilient economically than other
areas of Ireland in the past. On an ongoing basis, the CEO and the Manager monitors business performance,
economic and macro environment reviews and residential sector developments, and reports to the Board on
a regular basis. The Board regularly considers the impact of the wider economic and macro-outlook and its
impact on the Group’s strategy and budgetary processes.
Risk
Trending
Since
31 December
2020
Increasing
The Covid-19 pandemic had a significant impact on employment and economic activity in Ireland during
2021. The Irish government is currently providing support measures for workers, and business affected by
the Covid-19 pandemic as the majority of restrictions have been eased. The long-term economic impact of
Covid-19 is yet to be determined however Ireland’s economic resilience was also shown during 2021 when
the Government announced record tax receipts of €68.4 billion, driven by corporation tax receipts.
Principal risks and uncertainties
The Directors of the Company set
out below the principal risks and
uncertainties that the Group is
exposed to and that may impact
performance in the coming financial
year. The Group proactively identifies,
assesses, monitors and manages
these risks with the assistance of the
Manager, as well as the combined
expertise of its Board. The principal
risks and uncertainties, along with their
strategic impact on the business and
mitigating factors, have been outlined
below. The Group has also provided
its belief on how the risk has trended
(remained stable, isincreasing or is
decreasing) from the year ended
31December 2020.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
55
Risk
Regulation and Legislation
The government may introduce legislation, including tax and rent legislation that has an adverse impact on
the performance of the REIT.
Strategic
Impact
High
Since the new coalition Government was formed it has extended “rent pressure zones” and limited rent
increases to general inflation (linking rent increase limits to the cost of living through the Harmonised Index
of Consumer Prices “HICP”). The Government has limited deposits and rent payments that can be made
in advance and has increased protections for student renters. From 11 December 2021, the Residential
Tenancies (Amendment) Act2021 (“2021 Amendment Act”) has amended the rules around the setting of rent
for a tenancy in an RPZ which rules apply both to setting the rent at the start of the tenancy and during the
tenancy by way of rent review. Legislation now provides that the rent previously set, cannot increase by more
than 2% per year pro rata, where HICP inflation is higher.
Enhanced security of tenure protections for tenants have also been introduced with tenancies of unlimited
duration now legislated for under the 2021 Amendment Act. All new tenancies created (including tenancies
renewed after Part 4 tenancies expire) on or after 11 June 2022 will become tenancies of unlimited duration
once the tenancy has lasted more than six months and no notice of termination has been validly served on
the tenant. A landlord will still have a right to terminate a tenancy on specific grounds provided for in the
Residential Tenancies Act 2004.
By means of the Affordable Housing Act 2021, the State is introducing ‘Cost Rental’ homes where the rent will
be based on the cost of provision of the homes assessed over a 40-year period. The Minister for Housing,
LocalGovernment and Heritage has said that ‘Cost Rental’ homes are a top priority. ‘Cost Rental’ homes are
intended to be a rental option offering cost certainty and significant security of tenure to middle income
households (who have an income above social housing limits). The aim is for 10,000 Cost Rental Homes to
be delivered by 2026.
It is the Company’s understanding that the government plans a multi-pronged approach to resolving issues
in the housing market, including increasing the availability of affordable housing, as well as incentivising
home ownership which could have an impact on demand for private rented accommodation going forward.
InSeptember 2021, the Government introduced a new housing policy to 2030, ‘Housing for All – a New
Housing Plan for Ireland’, which is a multi-annual, multi-billion euro plan to “improve Ireland’s housing system
and deliver more homes of all types for people with different housing needs”. New or amended regulations
could have a negative impact on the Group’s revenues, earnings, and asset values.
As legislation changes, the Company and the Manager may have to incur incremental costs to comply, such as
staff training, modification of procedures and technology systems, and consultations with professional advisors.
Mitigation
Strategy
The Group takes account of the current regulations, rent legislation as well as the economic environment, in
considering the Group’s strategy, its investment decisions, expectations of financial performance and growth.
TheGroup and its Manager also monitor and manage costs keeping in mind any limitations on revenue
growth. This is assisted by the Internalisation of the Manager on 31 January 2022.
If any new legislation is enacted, relevant staff will receive training and education in order to ensure
compliance with regulations and legislation.
Risk
Trending
Since
31 December
2020
Increasing
There continues to be a significant supply constraint in the Irish housing market, coupled with increasing
demand due to population growth and other demographic factors. This has been further exacerbated due
to the pandemic with supply of new housing constrained as a result of restrictions on construction activity.
Housing as a result is a significant political issue and features as a key policy measure in the Programme
for Government as well as regulation changes during 2021. The Government has announced measures
to increase direct supply of social and affordable housing including in partnership with the private sector.
In September 2021, theGovernment introduced a new housing policy to 2030, ‘Housing for All – a New
Housing Plan for Ireland’, which is a multi-annual, multi-billion euro plan to “improve Ireland’s housing system
and deliver more homes of all types for people with different housing needs”.
I-RES
56
Risk
Investment Management Agreement Termination
On 31 March 2021, IRES Fund Management Limited (the “Manager”), served 12 months’ notice of termination
of the IMA. In August 2021 the Company served notice to the Manager terminating the IMA and internalising
management, and exercised its right to acquire the shares of the Manager with the internalisation taking
effect on 31 January 2022.
Strategic
Impact
Medium
On 31 January 2022, the Company and CAPREIT entered into binding legal agreements pursuant to which
the Company exercised its right under the IMA and purchased the issued shares of the Investment Manager
on a liability free (other than liabilities in the ordinary course of business)/cash free basis for €1, effective
from 31 January 2022 (“Completion”). As the Investment Manager serves as the Company’s alternative
investment fund manager (“AIFM”) under the Alternative Investment Fund Managers Regulations 2013 (“AIFM
Regulations”), the Company has also received the necessary approvals from the CBI to acquire the shares
in the Investment Manager, subject to a requirement that all aspects of the Investment Manager’s business
be transferred to the Company and an application be submitted to the CBI for the Company to become
authorised as an internally managed AIF within five months after the date of Completion of the acquisition
of the Investment Manager. TheInvestment Management Agreement and Services Agreement terminates
therefore effective 31January2022.
Mitigation
Strategy
A Board Committee (the “Related Party Committee”) is overseeing the transition from the existing external
management arrangements and is assisted by advice from Rothschild, Grant Thornton, Davy and legal
advisers (collectively, the “Transition Advisors”). The Company has contracted with Microsoft and Yardi to
provide systems support to the Company and the Manager to replace the IT systems provided by CAPREIT
on termination of the Transitional Services Agreement. The Company has recruited and expanded its
management team and personnel and is in the process of transitioning the corporate functions supported by
CAPREIT personnel in Canada.
Post completion of the acquisition of the Manager, the employees of the Manager have been successfully
transitioned to the I-RES REIT network.
The Company has entered into a transitional services agreement with CAPREIT (the “Transitional Services
Agreement”) with effect from 31 January 2022, pursuant to which CAPREIT will continue to provide certain
transitional assistance to the Company for a period of three months to facilitate the migration of data and
implementation of new IT systems in the company.
Risk
Trending
Since
31 December
2020
Stable
The Company has been working with CAPREIT and the Manager in planning and implementation of (i) a plan
for internalisation including transition of functions, and data migration of the Company’s data, books and
records and systems and (ii) execution of a share purchase agreement in relation to the acquisition of IRES
Fund Management Limited, including transition arrangements and data migration from the CAPREIT systems.
In order to augment management, the Company has made two key appointments to its own management
team. Mr. Brian Fagan has joined the Company as Finance Director with effect from 26 April 2021, and Ms.
Anna-Marie Curry has joined as Company Secretary and General Counsel with effect from 1 July 2021.
Additional personnel have been recruited to support the transition and future business of theCompany.
Risk
Access to Capital
The ability to access capital may become limited, which would impact the growth strategy of the Group.
Strategic
Impact
Medium
If the Group is unable to source debt financing at attractive rates or raise equity, it may not be able to
meet its growth objectives through acquisitions and development or preserve its existing assets through
maintenance or capital expenditures.
Mitigation
Strategy
The CEO and CFO have developed relationships with lenders, both in Ireland and internationally, which
provide ongoing financing possibilities for the Group.
The quality of the Group’s property portfolio and the gearing target of 45% on total assets (particularly
apartments) are attractive credit characteristics for potential lenders, which to date have facilitated the
raising of debt financing. The Group currently has a revolving and accordion credit facility of up to €600
million and Private Placement Notes of €200 million.
The Group invests in properties that generate a strong rate of return for its investors and, in turn, increases
the attractiveness of its shares and dividends. The Group actively manages its liquidity needs and monitors
capitalavailability.
Risk
Trending
Since
31 December
2020
Stable
At 31 December 2021 the Group had drawn on its credit facility in the amount of €420 million and Notes
Private Placement of €198.1 million. The Group continues to monitor liquidity needs to ensure that future
capital requirements are anticipated and met within the limits of its leverage thresholds.
Based on its financial position and performance, as well as its relationships with lenders and current and
potential investors, the Group believes that it has the ability to obtain debt financing and to raise equity at
the appropriatetime.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
57
Risk
Cost of Capital, Interest Rate Increases and Loan to Value Ratio
Interest rate increases, and/or property valuation decreases, resulting in higher debt service costs and
restrictiveness of future leveraging opportunities. Investors’ expected rate of return increases, resulting in
pressure to increase dividend yields.
Strategic
Impact
Medium
The Group is exposed to risks associated with movements in interest rates on its floating rate bank debt, as
well as movements in property valuations.
Significant Increases in interest rates, and the cost of equity, could affect the Group’s cash flow and its ability
to meet growth objectives or preserve the value of its existing assets.
Additionally, property valuations are inherently subjective but also driven by market forces. A contraction in
property values could make the Group too highly geared, which would result in higher interest costs and
covenant breaches.
Mitigation
Strategy
The Company’s revolving credit facility is €600 million with the interest margin fixed at 1.75%, plus the
one-month EURIBOR rate. On 11 February 2022, the Company exercised an option for an extension with all
five banks (UlsterBank Ireland DAC, Bank of Ireland, Allied Irish Bank, Barclays Bank plc and HSBC Bank plc)
for the entire €600 million facility with the new maturity date of 18 April 2026.
The Group completed a private placement of Notes of circa €200 million equivalent in March 2020, with a
weighted average fixed interest rate of 1.92% inclusive of swap costs. The Notes have a weighted average
maturity of 7.9 years, laddered over six, nine, and eleven year maturities, with the first repayment due in
2027. As of 31 December 2021, the Company has €10.3 million of cash and €180 million of committed
undrawn debt under its Revolving Credit Facility. The Group has €4.9 million in current committed capital and
development expenditure. The Group maintains an active programme of engagement with its debt and equity
providers, including an ongoing Investor Relations programme.
The Group’s loan to value ratio was 40.7% as at 31 December 2021, below the 50% maximum allowed under
theIrish REIT rules and the financial covenants under the Group’s debt agreements. The Company also
maintains significant headroom on its interest coverage ratio.
The Group has a proven track record of strong results. Strong results, combined with being in a residential
industry with strong real estate fundamentals, helps manage shareholders’ expectations and thus, the cost
ofequity.
The Group closely monitors property values by updating its property valuations twice annually through the
use oftwo property valuation firms.
Risk
Trending
Since
31 December
2020
Stable
Various Central Banks have commenced increasing interest rates and the position of the European Central
Bank to not increase interest rates over the short to medium term may change. The group has fixed margin
on its RCF facility with extended maturity to 2026 as well as fixing the cost of its Notes PP with hedging
strategy and maturity periods from 2027 to 2032. As such, the Group does not anticipate a material increase
in debt financing costs in the short term.
The valuation of the portfolio as at 31 December 2021, when compared to year end 2020 has increased.
This has positively impacted the loan to value ratio. The increase in valuation is due to continued demand for
residential assets by investors and transactions continue to close with competitive yields.
Risk
Opportunity to Acquire or Develop Assets
Investment opportunities may become limited.
Strategic
Impact
Medium
The Group may not grow its number of apartments relative to the past if there is a lack of development and
acquisition opportunities. Additionally, investment opportunities could be limited if they become overly costly
or there is excess competition. If growth opportunities are limited, it will impact the Group’s ability to generate
growing returns for its shareholders.
Mitigation
Strategy
The Group has become a sought-after investor for new investment opportunities that arise in the market.
The Company and its Manager have deep market knowledge and have established strong industry
relationships, which provide for new growth opportunities. Additionally, the Manager has dedicated staff
focused on identifying and evaluating a pipeline of acquisition and development opportunities.
The Group focuses on a three-pronged strategy for growth. This involves acquisitions, development
opportunities within existing assets, and partnering with developers in relation to new development
opportunities.
Risk
Trending
Since
31 December
2020
Stable
Completed assets are in limited supply, and new supply is coming online more slowly than expected. Prior
to the recent Covid-19 crisis, competition via new entrants and funds, though moderated, had continued to
increase, leading to continued cap-rate compression and reduced opportunity for accretive acquisitions.
Covid-19
The Covid-19 pandemic has led to restrictions that has slowed activity in the real estate sector, including
the buying and selling of assets, as well as construction. It is however, too early to establish the competitive
environment post Covid-19, however the Group continued to acquire and develop assets in 2021.
I-RES
58
Risk
Political
Material changes to the political environment in areas significantly impacting the Group’s operations.
Strategic
Impact
Medium
It is the Company’s understanding that the government plans a multi-pronged approach to resolving issues
in the housing market, including increasing the availability of affordable housing, as well as incentivising
homeownership.
In 2021 several changes were made to tax and rent regulations impacting residential housing.
Mitigation
Strategy
The Company engages a public affairs firm to advise in relation to these matters as well as actively
participating in industry groups to ensure ongoing consultation and engagement with relevant authorities,
regulators and government departments on significant policy and regulatory matters likely to impact on the
Company’s affairs.
Risk
Trending
Since
31 December
2020
Increasing
It is the Company’s understanding that the coalition government in Ireland is focused on housing policy as
well as increasing housing supply, however engagement with the industry on significant regulations and
policy matters continues to be challenging.
Risk
Construction
Increasing construction costs, cost overruns or delays in completion of development projects or defects in
construction or non-compliance with building standards.
Strategic
Impact
Medium
The Group may not meet its performance targets if there are material cost overruns in excess of budget
estimates for development or maintenance works, unanticipated delays in securing planning permissions or
delays in timelines for construction works associated with new development or maintenance projects.
Increasing costs of construction could also impact returns or the Group’s ability to take on construction
projects.
Furthermore, post construction, structural deficiencies or non-compliance with building code may be
discovered which could also impact returns.
Mitigation
Strategy
In sourcing/reviewing potential development opportunities, in line with the Company’s strategy, the Manager
undertakes a detailed investment and viability analysis. This analysis is presented to the CEO and Board.
TheBoard must approve material development opportunities prior to commencement.
As part of this approval process, the Manager on behalf of the Company will complete an open tender
process, including qualitative and quantitative analysis, thereby ensuring the chosen main contractor has
the proven ability and capacity to complete the construction project. The Company retains legal advisers
specializing in real estate in order to ensure all contracts for development are market standard. The Manager
performs adequate due diligence in conjunction with 3rd party consultants on main contractors before
recommending their engagement to the CEO or the Board.
These consultants typically provide advice on the form of contract, additional warranties to be provided,
historicperformance on projects of a similar size and scale, insurance requirements and performance bonds,
where necessary and applicable.
A technical team, engaged by the Company is retained throughout the course of the project and this is
actively managed by the Manager reviewing delivery of the project on specific items such as quality, health
and safety and project timelines. The Company also engages an independent cost manager to ensure the
contractor billings are in line with the actual work completed. The Group uses lump sum fixed price contracts
to minimize cost inflation risk during the construction phase.
To protect against structural defects and non-compliances with building standards, the Manager ensures
that completion certificates and Opinions of Compliance (in respect of planning permissions and building
regulations) and obtained from the main contractor. Where necessary, third party professionals are engaged by
the Company to inspect the building during and upon completion of construction. This has been supplemented
in the last number of years by the statutory requirements to engage an Assigned Certifier who manages and
reviews the design team and contractor during the project for compliance with the building standards.
The Company receives a suite of contracts and collateral warranties from the design team, main contractor,
andspecialized sub-contractors. Additionally, a defects liability period (typically 12 months) is part of the
building contract, during which time a financial holdback will be retained as collateral for any defects that
may have arisen 12 months post practical completion of the works. High value and high-risk works’ consultant
and contractor contracts are for a 12 year period and these can be called upon if design or build defects
arise within this period.
Risk Trending
Since
31 December
2020
Stable
The Group will monitor for and adapt to impacts on the supply of construction labour and materials.
Covid-19
While many construction firms have been expanding their teams to accommodate increasing activity in the
housing sector there remains pressure on the availability of construction labour and consultants. Additionally,
there continues to be upward pressure on costs, coupled with global supply constraints and rising inflation levels.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
59
Risk
Material Decline in Manager Performance
A material decline in the Manager’s performance, or if it is unable to carry out its duties under the Investment
Management Agreement.
Strategic
Impact
Medium
The Manager, through its asset management and property management functions, plays an integral part in
the day-to-day operations and management of the Group’s assets. As a result, a significant decline in its
performance or an inability to carry out its mandate could lead to a decline in the Group’s financial and
operating performance, and significant disruption to the Group’s operations. The Company acquired the
Manager on 31January 2022.
The Manager must comply with certain regulations including the Property Services (Regulation) Act and the
Alternative Investment Fund Management Directive (AIFMD) of the European Union. Failure to do so, could
result in it losing its ability to provide property management and/or asset management services under the
Investment Management Agreement to the Group.
Mitigation
Strategy
The Manager is made up of a well-regarded multi-disciplinary team of qualified property and finance
professionals experienced in the selection, financing and management of property investments.
On 31 January, the Company acquired the shares in the Manager as part of the Internalisation. This allows
the Company to manage the operations and performance of the Manager directly. The Board oversees and
evaluates the work of the Manager including monitoring key performance indicators such as occupancy,
rental revenues, net rental income, collectability of rents and net asset values. Additionally, the Board
periodically reviews actual revenues and expenditures against budgets.
The Manager’s compliance and financial professionals spend a considerable amount of time ensuring
compliance with the AIFMD requirements, as well as monitoring AIFMD regulations for any changes that
impact compliance processes. The Manager’s policies and procedures are reviewed regularly to incorporate
any changes in legislation or procedure.
Additionally, the Manager has engaged third party advisors and firms to assist it in complying with AIFMD and
carrying out associated functions, as well as, making required filings to the Central Bank.
Risk Trending
Since
31 December
2020
Stable
On 31 March 2021, IRES Fund Management Limited (the “Manager”), served 12 months’ notice of termination
of the IMA. In August 2021 the Company served notice to the Manager terminating the IMA and internalizing
management, and exercised its right to acquire the shares of the Manager with the internalisation taking
effect on 31 January 2022 (See risk titled “Investment Management Agreement Termination”).
The Manager has continued to have strong performance as evidenced by the returns being generated on
the Group’s assets and ability to manage day-to-day operational matters. The Group does not anticipate any
material changes in the Manager’s ability to continue this performance or its ability to comply with AIFMD
regulations for the remainder of its term.
Covid-19
The Manager activated its business continuity plan and continues to adhere to guidance by the Health
ServicesExecutive.
The Coast
Baldoyle
52
Residential Units
I-RES
60
Risk
Cybersecurity and Data Protection
Failure to comply with data protection legislation by the Company, its Manager and service providers could
result in the Company’s data being subject to a cybersecurity attack.
Strategic
Impact
Medium
Failing to comply with data protection legislation and practices could lead to unauthorized access and
fraudulent activities surrounding confidential/non-public business information or personal data, particularly
that belonging to the Group’s residents. This could result in direct losses to stakeholders, penalties to the
Group and/or the Manager for non-compliance, potential liability to third parties and reputational damage to
the Group. Inadequate security on systems by IT providers could result in cybersecurity breaches.
Mitigation
Strategy
The Group is responsible for data privacy and protection as a data processor on behalf of itself and the
Group and remains adaptable either itself or through its sub processors to constant technological and
legislative change. Employees of the Company receive regular awareness training on cybersecurity, privacy
and dataprotection.
Access to personal data is controlled through physical measures (e.g. locked offices and storage locations,
alarmmonitoring, cameras), administrative measures (e.g. data minimization, data retention policies, data
destruction practices, and audits) and IT security measures (e.g. password protection, firewalls, antivirus,
intrusion detection and encryption). Cyber security personnel and third-party consultants/advisors are
engaged by the Company, the Manager and CAPREIT where required, to assist with assessing the IT
environment and cyber risks.
The Company maintains cybersecurity insurance coverage on behalf of itself and the Group and continues
to monitor and assess risks surrounding collection, processing, storage, disclosure, transfer, protection,
andretention/destruction practices for personal data.
Risk
Trending
Since
31 December
2020
Increasing
As technological change has occurred at a rapid pace, the inherent risks surrounding cybersecurity and
data protection have also evolved and continue to evolve at an equally rapid pace. European Union Data
Protection legislation (e.g. General Data Protection Regulation and ePrivacy) is increasing in prescriptiveness,
obligation and administration. Additionally, issues such as cross border data transfers and vendor risk
complexities, pose increasing compliance challenges due to recent legal developments and particularly
the Schrems II case, and phishing and social engineering attempts continue at an accelerating pace due
to criminal online “business models” focusing on high volume/quick hit ransomware deployment and basic
financial fraud via wire transfer.
Covid-19
With Covid-19 and the requirement for companies to implement work from home measures, the business
world has experienced a sizeable increase in cybersecurity attacks and threats, including phishing
attempts. The Manager and its sub processors continue to employ the protective measures referenced in
the mitigation strategy section of this risk. Additionally, they have increased the awareness and training to
employees around cybersecurity risks and have also stepped up the monitoring of potential threats to the
information technologylandscape.
Risk
Environmental Sustainability
Failure to respond appropriately, and sufficiently to environmental sustainability risks or failure to benefit from
the potential opportunities could lead to adverse impact on reputation, property values, and shareholder
returns.
Strategic
Impact
Medium
There is an increasing exposure to environment and climate-related risks across the portfolio.
The environmental risks/opportunities include, but are not limited to, management of resource use (energy,
water), waste disposal, material sourcing and use, greenhouse gas emissions and other impacts from
operating, maintaining, and renovating our properties.
The climate-related risks/opportunities include, but are not limited to, more extreme and volatile weather
events, changes in regulations or government policies, reputation management, market demand shifts,
developing technology, and investor pressure and expectations.
Mitigation
Strategy
The Board of the Company has established a sustainability committee (the “Board Sustainability Committee”)
which among other duties is responsible for developing and recommending to the Board the Company’s ESG
strategy, policies, risks, targets and investment required to achieve the Company’s ESG strategy.
Additional working groups have been established to drive management, and asset level ESG strategy and
monitor environmental and sustainability metrics. There is active engagement between the working groups
and the Board.
The Company produces an ESG Report annually with key data and performance points which are externally
assured and has recently completed a materiality assessment, a key tool to deliver on its multi-year ESG strategy.
Risk
Trending
Since
31 December
2020
Stable
The Company and the Board continue to monitor the Company’s environmental sustainability performance
and mitigating actions, and will continue to monitor for changes to legislation, regulation, and policy
impacting environmental and sustainability issues.
Additionally, the Company benchmarks its environmental, social and governance (ESG) reporting against
industrybenchmarks.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
61
Risk
Concentration Risk
The Dublin market experiences material circumstances that results in lower occupancy or demand for
rentalproperties.
Strategic
Impact
Medium
A lack of geographical or asset diversification could lead to a material financial impact to the Group in the
event of a decrease in occupancy or lower rents in the Dublin market.
Mitigation
Strategy
Dublin has continued to be an economically resilient market. While the bulk of the existing portfolio is
diversified across various districts within Dublin, the Company now owns property in Cork and continues to
explore opportunities in other areas of Ireland with strong economic fundamentals.
The CEO continuously reviews and updates the Board on economic, demographic, social, legal and policy
changes or trends that could impact the Group’s strategy and business performance.
The Investment Manager monitors supply and demand for rental apartments in operating areas where the
Group’s investment properties are located.
Additionally, the Investment Manager monitors and reports on certain key metrics around investment
performance and risk, as well as compliance with the Group’s stated investment policy, on a quarterly basis
tothe Board.
Risk
Trending
Since
31 December
2020
Stable
Residential Real estate and economic fundamentals in key urban areas in Ireland continue to remain strong
including continued population growth notwithstanding the impact of Covid-19.
The level of concentration in Dublin market is within the Group’s risk appetite given the diversity of locations
across the city, and county as well as the ongoing growth in investment, population and economic activity
in the Greater Dublin Area. Accretive opportunities still presented by being focused on the Dublin market
although the remote working environment that has resulted from Covid-19 has opened opportunities for the
Group to expand into other urban areas across Ireland.
Risk
Staff recruitment and retention
Failure to attract, retain, and develop an inclusive and diverse workforce to ensure we have the right skills
in the right place at the right time to deliver our strategy, heightened by an ever-increasing competitive
jobmarketplace.
Strategic
Impact
Medium
With the acquisition of the Manager and their employees along with the hiring of additional resources
to replace the functions which was previously provided by CAPREIT the Group is now exposed to risks
associated with attracting and retaining staff.
If the Group is not able to attract and retain a high calibre of staff, then they could consequently struggle to
achieve the Groups business objectives.
Mitigation
Strategy
The Group has been successful in attracting new talent and skills during 2021 despite a competitive market
situation. The Company will invest in ongoing development and training of employees as well as advancing
good HR practices to ensure retention of key skills and resources.
Mr. Brian Fagan has joined the Company as Finance Director with effect from 26 April 2021, and Ms. Anna-
Marie Curry has joined as Company Secretary and General Counsel with effect from 1 July 2021. Additional
resources have been added to support these appointments as well as a Director of Sustainability, and
Marketing and Communications expertise.
Finally, the Company has a Nominations Committee which regularly meets to consider the needs of the
Group and update the Inclusion and Diversity policy.
Risk
Trending
Since
31 December
2020
New risk
The employment market in Ireland has tightened over the course of 2021 as restrictions eased and
employees returned to work. Competition within Ireland for staff has heightened due to demand for highly
skilled staff.
However, as seen above the Group has already made key appointments throughout 2021 and has strong
procedures and controls in place around HR to assist in managing and retaining staff.
I-RES
62
Risk
Acquisition Risk
Investment decisions may be made without consideration of all risks and conditions.
Strategic
Impact
Medium
Investment assets may decrease in value or result in material unanticipated expenditures subsequent
to acquisition as a result of unknown risks and conditions at the time of purchase, including structural
deficiencies or non-compliances with building code.
Mitigation
Strategy
The Group engages consultants in carrying out financial, legal, operational, technical and environmental due
diligence on every investment opportunity (both acquisitions and development projects) to determine its fit
with the Group’s stated investment policy. This includes all standard investigations, to evaluate the building
structure and condition, compliance with planning and building regulations, and the likely magnitude of
capital expenditures over a 3 to 5 year period. The Company has in place framework agreements with third-
party experts to work with the Manager in carrying out technical and engineering studies and investigations
on potential acquisitions, developments, or forward purchase contracts as well as engaging specialist
property lawyers to carry out legal due diligence and to advise on purchase and development contracts.
Additionally, a full review is completed in respect of the anticipated current and future income expectations
and operational costs associated with managing the asset.
The CEO and Board reviews and approves investment proposals for over €1m including consideration of risks
identified by the Manager during the due diligence process. All material contracts are executed by the Board.
Risk
Trending
Since
31 December
2020
Stable
The Group’s due diligence practices have not changed substantially since last year as they continue to be
consistent with industry norms and align with the Group’s risk appetite.
Covid-19
Additional Covid-19 compliance measures have led to modification of due diligence practices leading to
incremental delay and expense.
Risk
Tax Compliance Risk
Failure to comply with tax legislation including REIT rules, VAT, and stamp duty.
Strategic
Impact
Low
If the Group fails to comply with REIT rules or there are changes to tax policies it could result in the loss of
REIT status and/or change the tax treatment of the Group’s income and thus, decrease the attractiveness of
the Company as an investment to current or potential shareholders.
Mitigation
Strategy
The Investment Manager proactively monitors and tests the Group’s compliance with the rules and
regulations affecting REIT status and regularly reviews and considers how the Group’s planned operations
may impact compliance with these rules. The results of these compliance reviews are reported to the Board
on a quarterly basis, at a minimum.
The Company and Manager also engage independent tax and legal advisors in relation to compliance
monitoring, where needed. There is regular reporting to the Company’s Audit Committee of compliance
with REIT Rules, tax legislation and regulations as well as other relevant laws and regulations and likely
future changes including impacts on the Group. The Manager has dedicated risk and compliance personnel
are alert and vigilant regarding these matters and any impending or emerging changes in REIT rules and
regulations or tax policies.
Risk
Trending
Since
31 December
2020
Stable
The Group does not believe the risk of non-compliance has changed from last year and the Audit Committee
and Manager continue their review and monitoring as well as taking expert advice when necessary.
Risk
Planning
Delays in obtaining planning permissions in respect of the Group’s development sites leading to delays in
commencement and delivery of residential units, and failure to develop on sites with planning permissions
may result in levies.
Strategic
Impact
Low
Planning permission is required from the relevant planning authority prior to the development of the Group’s
development sites. Delay in achieving planning permission may result in a slower level of portfolio growth and
income generation from the development assets.
Mitigation
Strategy
The Investment Manager appoints competent professional teams in respect of each development
opportunity (including architectural and planning consultants) to advise on the preparation of planning
applications. Additionally, the Investment Manager has dedicated resources to actively manage the
development process on behalf of the Group. The appointed project management team continuously reviews
project specific risks matrices for each project stage.
Risk Trending
Since
31 December
2020
Stable
While the Strategic Housing Development planning application process is currently in place for residential
developments of over 100 units, the Irish government has indicated that it intends to terminate the process
and plans to replace it with a process that restores decision making to local authorities. The Group will
monitor for developments relating to the new process.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
63
2021 Annual Report
63
Governance
_
In this Section:
I-RES Board of Directors
64
Corporate Governance Statement
67
Report of the Audit Committee
78
Report of the Remuneration Committee
83
Report of the Nomination Committee 101
Report of the Sustainability Committee
105
Report of the Related Party Committee
109
Report of the Directors
111
Statement of Directors’ Responsibilities
119
2021 Annual Report
63
I-RES
64
Board of
Directors
_
Declan Moylan
Independent Non-Executive Chairman and
Chair of the Nomination Committee
Appointed:
31 March 2014
Nationality:
Irish
Committee membership:
Remuneration Committee:
Appointed 31 March 2014
Nomination Committee:
Appointed 31 March 2014
Declan Moylan is a former Managing
Partner and Chairman of Irish law firm
Mason Hayes & Curran. During his legal
career his practice focused on advising
international corporates establishing
businesses in Ireland.
Mr. Moylan has extensive board experience
in commercial and not-for-profit
organisations. He is currently a director of
Nitro Software EMEA Limited, the Europe,
Middle East and Africa division of Nitro
Software Limited, which listed on the
Australian Securities Exchange in 2019,
and Monster Energy Limited, subsidiary of
Monster Beverage Corporation of Corona,
California listed on NASDAQ.
Mr. Moylan is Chairman of Butler Corum
European Hospitality Fund, an investment
fund focused on hotel properties across
the Eurozone. He is a member of the Audit
Committee of the Office of Director of Public
Prosecutions which supervises Irish State
prosecutions in criminal matters, election and
referendum petitions.
Mr. Moylan is a former member of Dublin City
University Governing Authority. He is a former
director of the Irish Museum of Modern Art
in Dublin and of the Crawford Art Gallery in
Cork, both on appointment by the Minister
for Arts, Regional, Rural and Gaeltacht Affairs
in Ireland. He is also a former Chairman of
WEEE Ireland Limited, the country’s largest
compliance scheme for the disposal of
Waste Electric and Electronic Equipment
(WEEE) in compliance with European Union
Directive 2012/19/EU.
Phillip Burns
Non-Independent Non-Executive Director
Appointed:
23 March 2016
Nationality:
American and British
Committee membership:
Nomination Committee:
Appointed 23 March 2016
Phillip Burns is the Chief Executive Officer
and a trustee of European Residential Real
Estate Investment Trust (ERES) (TSX:ERE.UN),
an unincorporated, open-ended real estate
investment trust, a position Mr. Burns holds
as a senior employee of CAPREIT LP, which
is the majority unitholder of ERES. ERES is
Canada’s only European-focused residential
REIT and currently owns a portfolio of
approximately 6,500 residential units in the
Netherlands. Mr. Burns is also the Founder
and a Principal of Maple Knoll Capital.
During his career, he has been involved as
a principal or advisor in transactions with
an aggregate value of over €20.0 billion,
with more than 70% centred around real
estate across multiple geographies. Mr.
Burns has also been involved with raising in
excess of €11.0 billion of equity for principal
investment, including over €2.5 billion
dedicated to real estate.
Previously, Mr. Burns was Chief Executive
Officer of Corestate Capital, an investment
manager focused on distressed real estate
transactions in Europe. Prior to this, he
was a Managing Director at Terra Firma
Capital Partners, where he specialised in
infrastructure, real estate and credit. Mr.
Burns also worked for Goldman Sachs,
where he focused on mortgage finance,
real estate and general corporate finance,
and Skadden Arps, where he worked as a
corporate attorney.
Mr. Burns holds a Bachelor of Science in
Aerospace Engineering from the University
of Michigan and a Juris Doctor, summa cum
laude, from Syracuse University.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
65
Tom Kava na gh
Independent Non-Executive Director and
Chair of the Sustainability Committee
Appointed:
1 June 2018
Nationality:
Irish
Committee membership:
Audit Committee:
Appointed 1 June 2018
Remuneration Committee:
Appointed 1 June 2018
Sustainability Committee:
Appointed 11 May 2021
Joan Garahy
Independent Non-Executive Director and
Chair of the Audit Committee
Appointed:
18 April 2017
Nationality:
Irish
Committee membership:
Audit Committee:
Appointed 18 April 2017
Nomination Committee:
Appointed 1 November 2017
Tom Kavanagh is a former partner at
Deloitte Ireland and left the firm in
December 2018. Mr. Kavanagh has
wide-ranging experience in professional
practice as a business adviser, corporate
restructuring expert and insolvency
practitioner. This included advising on
the restructuring of large portfolios of
distressed Irish property assets.
Mr Kavanagh is chairman of the
Sustainability Committee in IRES REIT Plc.
Mr Kavanagh recently became Chairman
of Chapter Zero Ireland, a community of
non-executive directors that lead Irish
boardroom discussions on the impacts
of climate change.
In addition he was appointed to the
Professional Game Board in Leinster Rugby
in September 2021. Mr. Kavanagh has
served as a director on the boards of a
number of private companies and was a
member of the board of the Credit Union
Restructuring Board, REBO, from 2012 to
2014. Mr. Kavanagh holds a Bachelor of
Commerce from University College Dublin.
He is a fellow of Chartered Accountants
Ireland (FCA), having qualified in 1982. Mr
Kavanagh’s executive education includes
Value Creation through Effective Boards
in Harvard Business School/IESE in 2019
and Sustainability Leadership in Cambridge
University in 2020.
Joan Garahy is a member of the board
of directors of ICON plc (NASDAQ:ICLR)
appointed in November 2017 and is Chair
of the Compensation & Organisation
Committee and a member of the
Nominations committee. In August 2020, she
was appointed to the Board of ipb Insurance
clg and in August 2021 she was named Chair
of the Audit Committee. She also serves as
a director of a number of private companies
and is a non- executive director of the Irish
Chamber Orchestra (charity).
Ms Garahy is a former member of the
board of directors of Kerry Group plc
(ISE:KRZ) where she held the positions of
Senior Independent Director, Chair of the
Remuneration Committee and a member of
the Audit Committee.
Formerly Ms. Garahy was founder and
CEO of ClearView Investments & Pensions
Limited, an independent financial advisory
company, which was acquired in July
2020. Ms. Garahy has more than 30 years
of experience advising on and managing
investment funds. She was a founder
and former Managing Director of HBCL
Investments & Pensions and former Director
of Investments at HC Financial Services.
Prior to that, Ms. Garahy worked with the
National Treasury Management Agency
as Head of Research at the National
Pension Reserve Fund and was also Head
of Research with Hibernian Investment
Managers (now Aviva Investors). In her early
career, she spent 10 years as a stockbroker
with both Goodbody Stockbrokers and NCB
in Dublin.
Ms. Garahy is a Qualified Financial Advisor
and a registered stockbroker. She has an
Honours Bachelor of Science and is a
Master of Science graduate. She holds a
C.Dip in Accounting & Finance (ACCA).
Aidan O’Hogan
Independent Non-Executive Director,
Senior Independent Director and Chair of
the Remuneration Committee
Appointed:
31 March 2014
Nationality:
Irish
Committee membership:
Audit Committee:
Appointed 31 March 2014
Remuneration Committee:
Appointed 31 March 2014
Nomination Committee:
Appointed 31 March 2014 to 23 March 2016
and re-appointed 31 March 2017
Aidan O’Hogan is a Fellow of the Royal
Institution of Chartered Surveyors and of
The Society of Chartered Surveyors in
Ireland and a past President of the Irish
Auctioneers and Valuers Institute. He is
Managing Director of IConsult Real Estate
Ltd, a property and asset management
consultancy business. In 2009 he retired
as Chairman of Savills Ireland (previously
Hamilton Osborne King) after 40 years
as a real estate professional, and was
previously Managing Director and Chairman
of Hamilton Osborne King with almost 30
years’ experience there prior to which he
spent 9 years at Lisney. He is a Council
Member of Property Industry Ireland,
having been its Chair from 2012 to 2015.
He is Chairman of the Investment
Committee at Pearl Property Managers
Limited for the Pearl Residential Equity
Fund which provides equity to house
builders and a member of the Investment
Committee of Aviva/Friends First, Property
Advisory Committee. He is also a former
non-executive director of Cairn Homes plc
and the Cluid Housing Association.
I-RES
66
Stefanie Frensch
Independent Non-Executive Director
Appointed:
1 July 2021
Nationality:
German
Committee membership:
Audit Committee:
Appointed 1 July 2021
Sustainability Committee:
Appointed 1 July 2021
Stefanie Frensch is a member of the
Management Board of Becker & Kries
Holding, a German family office with
significant real estate investments including
6,000 residential units and approx. 350k
sqm of commercial space. Prior to May
2021, she had been a member of the
Supervisory Board of Alstria Office REIT for
5 years, an investment trust listed in MDAX.
She also serves as a Director of a number
of associations, including ZIA (the leading
professional association of the German real
estate sector), ICG (Institut für Corporate
Governance) and is a Non-Executive
Director of Förderverein Berlinische Galerie,
the sponsoring association of a Museum of
Modern Art, Photography and Architecture
in Berlin (voluntary work). She is member
of the supervisory board of the Berlin Zoo
(Zoologischer Garten) (voluntary work).
Ms Frensch was formerly a member
of the Management Board of
HOWOGEWohnungsbaugesellschaft
mbH, one of the largest German publicly
owned residential companies with more
than 63,000 apartments and relevant
development and transaction activities
(2011 - 2019). She was a partner of EY Real
Estate (2007-2011) and has expertise in
project management and development,
asset management and transaction
advisory services. Ms. Frensch is an
Engineer and an Architect.
Margaret Sweeney
Non-Independent Executive Director
and Chief Executive Officer
Appointed:
23 March 2016
Nationality:
Irish
Committee membership:
Sustainability Committee:
Appointed 11 May 2021
Margaret Sweeney is the Chief Executive
Officer of the Company since 1 November
2017. Ms. Sweeney has held a number of
senior positions including Chief Executive
Officer of DAA plc (Dublin Airport
Authority), Chief Executive Officer and
board director of Postbank Ireland Limited,
and Director in Audit and Advisory Services
at KPMG, a firm she worked with for 15
years. Ms. Sweeney is currently a non-
executive director on the board of Dalata
Hotel Group plc and Chair of the board
of Irish Institutional Property, real estate
association. She has in the past served
as a non- executive director on a number
of boards in Ireland and internationally,
including Aer Rianta International plc,
Flughafen Düsseldorf GmbH, Birmingham
International Airport and Hamburg Airport,
including managing significant investments
in these companies. She is a member of
the Council of Chartered Accountants
Ireland, a Fellow of Chartered Accountants
Ireland and a Chartered Director of the
Institute of Directors. She also served
as President of the Dublin Chamber of
Commerce from 2008 to 2009. Ms.
Sweeney is Chair of the Advisory Board
for Dublin City University (DCU) Business
School and was previously a member of the
Governing Body of DCU.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
67
Governance Framework
The Company’s corporate governance
practices for the financial year ended
31 December 2021 were governed
by the relevant requirements and
procedures prescribed by the UK
Corporate Governance Code (the
“UK Code”) which applies to financial
years beginning 1 January 2019
(found at https://www.frc.org.uk/
getattachment/88bd8c45-50ea-
4841-95b0-d2f4f48069a2/2018-
UK-Corporate- Governance-Code-
FINAL.pdf) and the Irish Corporate
Governance Annex to the UK
Corporate Governance Code (“Irish
Annex”) (found at https://www.ise.ie/
Products-Services/Sponsors-and-
Advisors/Irish-Corporate-Governance-
Annex), together the “Codes”. This
Corporate Governance Statement
outlines how the Company has applied
the principles set out in the Codes.
Effective and Experienced
Leadership
As at the date of this Report, there are
seven (7) directors on the Board. The
CEO, Margaret Sweeney, is an executive
director. Declan Moylan (the Chairman),
Phillip Burns, Joan Garahy, Tom
Kavanagh, Stefanie Frensch (appointed
1 July 2021) and Aidan O’Hogan (Senior
Independent Director) are non-
executive directors. The biographies of
all the directors appear in this Report
on pages 64 to 66.
Strategy
The Board is collectively responsible
for the long-term sustainable success
of the Company and delivery of value
for its shareholders and other principal
stakeholders, including employees,
tenants, lenders and suppliers. The
Board leads the development of the
culture, purpose, values and strategy
of the Company and its subsidiaries,
IRES Residential Properties Limited
and IRES Fund Management Limited
(acquired on 31 January 2022) (the
“Group”), and aims to ensure that
these are aligned.
The key role of the Board is to provide
leadership of the Group, set the
strategic objectives for the Group,
monitor the achievement of these and
determine the nature and extent of
the principal risks it is willing to take in
achieving these strategic objectives.
Performance and monitoring
The Board is responsible for
the Company’s dividend policy,
corporate governance, approval of
financial statements and shareholder
documents and formulating,
monitoring and reviewing the
effectiveness of the Company’s risk
management and internal control
systems. The Board also seeks to
ensure that its obligations towards its
shareholders and other stakeholders
are understood and met.
The Board is responsible for ensuring
the accuracy of financial and business
information provided to shareholders
and for ensuring that such information
presents a fair, balanced and
understandable assessment of the
Company’s position and prospects.
Manager and Board
Reserved Matters
The Company appointed IRES Fund
Management Limited (the “Manager”)
as its alternative investment fund
manager as of 1 November 2015,
pursuant to the terms of the
Investment Management Agreement
(the “IMA”), to provide the Company
with portfolio management, risk
management, property management
and other services in relation to
assets or properties which may be
acquired, held or disposed of by the
Group, and to act with day-to-day
authority, power and responsibility
for such assets and properties.
During 2021 the Board oversaw the
performance of the Manager and the
Company’s activities and reviewed
the performance and contractual
arrangements with the Manager.
Under the terms of the IMA, the
Manager had discretionary authority
to enter into transactions for and on
behalf of the Company, except for
certain matters that were reserved to,
and required the consent of the Board.
Unless required to be performed by
the Manager as a matter of law or
in order to respond to a bona fide
emergency, the Company’s prior
written approval was required for
certain matters, including:
a)
any a
cquisition/disposal of a
property investment or entry into
any agreement to acquire/dispose
of a property investment;
b)
any new financing or refinancing,
including associated hedging
arrangements, entered into in
respect of a property investment;
c)
any capital expenditure on a
property investment in excess of an
approved budget;
d)
any proposed lease event where the
rent referable to the relevant lease is
greater than 7.5% of the aggregate
rental income of the Company;
Corporate
Governance
Statement
_
I-RES
68
e) any acquisition or entry into any
agreement to acquire any property
investment through a joint venture
or co- investment structure;
f) any hedging or use of derivatives,
including those related to debt
facilities, interest or property
investments, which may only
be used to the extent (if any)
permitted by any regulatory
requirements applicable to the
Company and/or the Manager;
g) the entry by the Company into
any transactions for the purchase
of assets from, or provision of
services of a material nature by,
any affiliate of the Manager, or for
the sale of assets or provision of
services of a material nature to any
affiliate of the Manager;
h) any disposal of any right, title or
interest in any of the Company’s
properties at less than its
acquisition cost; and
i) in relation to the valuation of the
Company’s properties, any variation
from the RICS Red Book.
The Board had the right to offer ideas
to the Manager relating to the structure
of a transaction so as to provide the
Company the greatest value.
Following the receipt from the
Manager, on 31 March 2021, of a 12
month notice of termination of the
IMA, the Related Party Committee
progressed the review of the
Company’s strategic options including
internalisation of the management
of the Company. On 6 August 2021,
the Company announced that it had
decided to internalise management,
exercised its right to acquire the
shares of the Manager and served a
notice of termination of the IMA, with
the Internalisation to take effect on
31 January 2022, subject to Central
Bank of Ireland (“CBI”) approval. The
Company received the required
CBI approval and completed the
acquisition of the Manager on 31
January 2022. Subsequent to the
completion of the acquisition a new
Investment Management agreement
was put in place between the
Company and the Manager on similar
terms to those of the IMA including
in respect of matters reserved to the
Board of the Company. It is proposed
that, the Company and the Manager
will be integrated, in accordance with
the terms of the CBI approval, with
an application to be made to the CBI
for the Company to be an internally
managed Alternative Investment Fund
by 30 June 2022. Further details on
the internalisation of management can
be found at page 23.
Skills and Experience
The Board collectively has strong
experience of acquiring and managing
real estate assets providing the
Company with a good knowledge base.
As highlighted in the biographies of the
directors on pages 64 to 66, each of
the directors brings a different set of
skills and experience to the Board. The
directors’ diverse skill sets facilitate the
consideration of issues at meetings of
the Board from a range of perspectives
and these diverse skills are relied upon
in addressing major challenges facing
the Company. Please refer to the
Report of the Nomination Committee
on page 104 for information on the
Board Skills Matrix. The division of
responsibilities between the Chairman,
the CEO and the senior independent
non-executive director (the “Senior
Independent Director”) has been clearly
established, set out in writing and
agreed to by the Board and are publicly
available on our website.
For information on the Company’s
Board Diversity and Inclusion Policy,
please refer to the Report of the
Nomination Committee on page 103.
Key Activities of the Board in 2021
In addition to the key operational
and financial reports presented and
considered by the Board at each of its
meetings, the following were considered
by the Board during the year:
Strategy
↘
The acquisition of 146 residential
units at Phoenix Park Racecourse
which was completed in January
2021.
↘
The establishment of a Board
Sustainability Committee in May
2021.
↘
The sale of Tallaght Cross West
Food Court in May 2021.
↘
The leasing of 128 Units located
at the Square, Hampton Wood, St
Margarets for a term of 25 years.
↘
The decision, on 5 August 2021,
that it is in the best interests
of the Company to internalise
management and exercise the
Company’s option to acquire the
Manager on 31 January 2022.
↘
The disposal of 7 units in Elmpark to
Dublin City Council in September
2021.
↘
The execution of contracts for
the acquisition of 152 residential
units located in Ashbrook,
Clontarf, Dublin 3 in 2 phases for
approximately €66 million.
Financing
↘
The Board negotiated the extension
of the Company’s Credit Facilities
to April 2026. The extension was
finalised in February 2022 with
Barclays Bank Ireland plc, HSBC
Continental Europe, Bank of Ireland
and Ulster Bank Ireland.
Covid 19 & Crisis Management
↘
Received updates from the CEO
on the impacts of the Covid-19
pandemic on the operations and
performance of the Company.
Governance
↘
Enhanced the Group’s governance
framework and procedures through
the review and update
(as relevant) of the Group’s
policies and procedures including
those regarding European Market
Infrastructure Regulation (EMIR),
data protection, code of ethics,
diversity, signing authority and
delegation and treasury.
↘
Carried out a thorough review
of the share dealing code in
November 2021, in particular
in light of the Central Bank of
Ireland’s (CBI) Dear CEO letter to
companies admitted to trading
on the Euronext Dublin, which set
out the key findings of the CBI’s
thematic review of compliance
with Market Abuse Regulation
(MAR) and the CBI’s expectations
following the CBI MAR Review.
As required, the Board carried
out a critical assessment of the
Company’s activities, frameworks,
organisational arrangements and
controls against the findings and
expectations in the letter.
↘
Revie
wed the effectiveness of
the Company’s risk management
systems and internal controls.
↘
Continued the operation of a
committee of the Board to consider
related party matters concerning
the Company’s relationship with
CAPREIT LP and/ or the Manager,
in particular the review of the
Investment Management Agreement
with the Manager.
↘
Following the receipt, on 31 March
2021, of the 12 month notice of
termination of the IMA, the Related
Party Committee progressed the
review of the Company’s strategic
options including internalisation of
the management of the Company.
The Company gave notice of the
decision to internalise management
and exercise its option to acquire
the Manager on 5 August 2021
effective 31 January 2022.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
69
↘
Received updates and monitored
developments relating to the
migration of Irish participating
securities from CREST to Euroclear
Bank (the Central Securities
Depositary migration).
↘
Engaged EY in February 2021 to
provide co-sourced internal audit
services in respect of reviews of
cyber risks and business continuity
planning.
Sustainability
↘
Undertook a detailed ESG
Materiality Assessment.
↘
Established the Board Sustainability
Committee in May 2021.
↘
Discussed the results of Company’s
inaugural public Global ESG
benchmark for financial markets
(GRESB) submission.
↘
Received a presentation on the
Company’s independent investor
perception study.
Leadership and people
↘
Undertook an internal board
evaluation to evaluate the Board,
its main committees, the Chairman
and the individual directors.
↘
Appointed a new Finance Director
(in April) and Company Secretary
(in July) employed directly by the
Company and based in Dublin.
Key Services
↘
Reviewed the Company’s
arrangements with its Manager
including annual evaluation of the
performance of the Manager and
CAPREIT LP under the IMA and
Services Agreement.
↘
Reviewed quarterly reports from
the Manager.
↘
Reviewed quarterly Risk
Management reports.
Key Priorities for 2022
↘
Completion of the acquisition of
the Manager and implementation of
the transition plan for internalising
management and the services
previously provided by CAPREIT,
including the required application
to the Central Bank.
↘
Implementation of new IT operating
system and integration of I-RES’ and
the Manager’s businesses.
↘
Continued critical oversight of the
Group’s strategy.
↘
Continue to enhance the Board’s
information and education on
issues around sustainability and
environmental awareness in the
context of the Group’s business
and activities.
↘
Continued investment to build
resilience of the business and
enable the Group to grow in a
measured fashion.
↘
Enhanced reporting of risk and
controls including critical oversight
of Business Continuity and
Technology Risks.
Committees of the Board
As recommended by the Codes,
the Board has established the
following four (4) committees: the
Audit Committee, the Remuneration
Committee, the Sustainability
Committee and the Nomination
Committee. The duties and
responsibilities of each of these
committees are set out clearly in
written terms of reference which are
approved by the Board and published
on the Company’s website. The terms
of reference for each committee
were reviewed in November 2021
based on the model terms of
reference published by The Chartered
Governance Institute in January 2020
with no changes required. A report
from each of these committees is set
out below.
Other committees have been and
may be established from time to time
in accordance with the Company’s
Constitution, including in connection
with the negotiation and administration
of the Company’s credit facilities, equity
raises or acquisition, development
or commercial leasing transactions.
In 2019 the Board established the
Related Party Committee to deal with
related party matters including the
review of the IMA. Although not a
permanent Committee of the Board,
given the importance of its role during
2021, a report from the Related Party
Committee is also set out in this report.
Board Meetings
Directors are expected to participate
in all scheduled board meetings as
well as each annual general meeting.
A schedule of board meetings is
circulated to the Board in advance
of the financial year end for the
following year.
At each quarterly meeting of the
Board, there are certain standing
agenda items (for example, strategy
discussion, update on investment
and development plans, review
of risk, operations and financial
reports, update on ESG progress
and update on investor relations).
This seeks to ensure that the Board
has the opportunity to have in-depth
discussions on key issues across all
aspects of the Group’s activities. The
Chairman and the Company Secretary
ensure that the directors receive
clear, timely information on all relevant
matters necessary to assist them in
the performance of their duties. Each
committee also approves a committee
work plan for the following year.
The Board meets a minimum of four
(4) times each calendar year and
otherwise as required. Prior to such
meetings taking place, an agenda
and board papers are circulated
electronically via a secure board portal
to the directors to ensure that there
is adequate time for them to be read
and to facilitate robust and informed
discussion. The portal is also used to
distribute reference documents and
other useful resources. The Company
Secretary is responsible for the
administrative and procedural aspects
of the board meetings.
The Board held eleven (11) meetings
during 2021. In accordance with
Provision 12 of the UK Code and
led by Aidan O’Hogan as Senior
Independent Director, the non-
executive directors met without the
Chairman present to discuss the
results of the internal evaluation of
the Chairman’s Performance and to
appraise the Chairman’s performance.
In accordance with Provision 13 of the
UK Code, the Chairman met during the
year with the non-executive directors
without the presence of the CEO.
Meetings and Attendance
Directors’ attendance records at
Board and committee meetings of the
Company from 1 January 2021 until
31 December 2021 are set out in the
table across. For Board and committee
meetings, attendance is expressed as
the number of meetings attended out
of the number that each director was
eligible to attend.
I-RES
70
Details of the directors’ and the
Company’s Secretary’s interests in the
share capital of the Company are set
out in the Interests of Directors and
Secretary in share capital on page 113.
The Chairman does not have any other
significant commitments.
Information, Support and
Independent Advice
Directors have direct access to
the Company Secretary. The Board
has also approved a procedure for
directors, where appropriate, to seek
independent professional advice at the
expense of the Company if necessary.
Remuneration
Details of the remuneration of directors
are set out in the Report of the
Remuneration Committee on page 90.
Induction
The Chairman, with the support of the
Company Secretary, is responsible
for preparing and co-ordinating a
comprehensive induction programme
for newly appointed directors. This is
intended to give a broad introduction
to the Group’s business, its areas of
significant risk and to enable new
directors to understand the Company’s
core purpose and values so that
they can be effective directors from
the outset. As part of this induction
programme, new directors receive
an information pack which includes a
Group structure overview, key policies,
historical financial reports, schedule
of board meetings and information on
how to access the Company’s board
portal. A number of governance
matters are also outlined, including
directors’ duties, conflicts of interest
and Market Abuse Regulation. The
Company Secretary is available to
advise each board member on queries
or concerns.
Other key elements of the induction
programme include a tour of part of
the Group’s property portfolio with
the CEO or a senior representative
of the Manager in order to familiarise
the new director with the Group’s
operations, property management,
a segment of the property portfolio
and key stakeholders. This meeting
also provides new directors with an
opportunity to ask any questions
they may have on the nature and
operations of the business, and on
the implementation of the Group’s
business strategy. The new director
is also invited to meet with other
key people at the Company and
the Manager responsible for risk,
insurance, internal audit, acquisitions
and development, operations and
financial reporting.
Development of Directors
The Nomination Committee, on behalf
of the Board, assesses the training
needs of the directors on at least an
annual basis. A combination of tailored
Board and committee agenda items
and other Board activities, including
briefing sessions, further assist the
directors in continually updating
their skills, and their knowledge of
and familiarity with the Company, as
required to fulfil their roles. The Board
also arranges for presentations from
the Manager and the Group’s other
advisors on matters relevant to the
Group’s business.
In the last twelve months, the Board
received presentations by external
experts on the Irish Economic and
Residential Real Estate Market in
2021, the Market Abuse Regulations,
including the Central Bank of
Ireland Thematic Review in this area,
Sustainability and its wider context and
the Health and Safety obligations of
Board Directors.
Risk Management and Internal
Control
The Board has overall responsibility for
the effectiveness of the Company’s
system of risk management and internal
control. The Board has delegated
responsibility for monitoring the
effectiveness of this system to the Audit
Committee. The work done by the Audit
Committee in this area is set out in the
Report of the Audit Committee on page
81. The Board and the Audit Committee
have ensured that the Manager has
maintained a robust system of risk
management and internal control.
The Board and the Audit Committee
periodically review and consider if the
risk management and internal control
systems are operating effectively.
During 2021 they were assisted in this
assessment by the risk management
and internal audit functions of the
Manager and certain specific internal
audits carried out by EY.
During 2021 the Board and the Audit
Committee received periodic reports
from the Manager’s internal audit
function and risk management function
surrounding the risk management
and internal control systems and their
operating effectiveness. For further
details on these systems, please see
the Risk Management and Internal
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Sustainability
(1)
Committee
Related Party
Committee
Declan Moylan 11 of 11 6 of 6
N/A
9 of 9N/A
15/15Philip Burns 11 of 11
N/A N /A
6 of 6N/A N/A
Mark Kenney
7 of 7
(2)
N/A N /A N/A N/A N/A
Joan Garahy
11 of 11 6 of 6 9 of 9 6 of 6
N/A
14/15Tom Kavanagh 11 of 11 6 of 6 9 of 9 15/15
N/A
3 of 3Aidan O'Hogan
(3)
10 of 11 5 of 6 8 of 9 5 of 6
N/A
15/15Margaret Sweeney 9 of 11
(4)
N/A N /A N/A
3 of 3 15/15
Stefanie Frensch
(5)
4 of 4 2 of 2 6/7
N/A N/A
2 of 2(1) The newly formed Sustainability Committee held its first meeting on 11 May 2021
(2) Mark Kenney resigned from the Board on 2 July 2021
(3) Aidan O’Hogan was unable to attend the Board, Audit, Remuneration and Nomination Committee meetings in November 2021.
(4) Margaret Sweeney decided, due to a conflict of interest, not to attend a Board Meeting on 23 April 2021 and was unable to attend a meeting on
20 December 2021.
(5) Stefanie Frensch was appointed to the Board, Audit Committee and Sustainability Committee on 1 July 2021 and the Related Party Committee on
5 August 2021.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
71
Control Systems section of the Risk
Report on pages 50 to 52.
EY have been appointed with effect
from 1 February 2022 to provide an
outsourced internal audit service for
the Group.
The Board confirms that there is
an ongoing process for identifying,
measuring and managing the
significant risks, including any principal
risks, and emerging risks, faced by
the Group in achieving its strategic
objectives, that this process has
been in place for the year ended 31
December 2021 and up to the date
of approval of this Report, and that
this process is regularly reviewed by
the Board. For further details on the
principal risks being faced by the
Group, please see the Principal Risks
and Uncertainties section of the Risk
Report on pages 54 to 62.
The process adopted complies with
the guidance contained in Guidance
on Risk Management, Internal Control
and Related Financial and Business
Reporting (2014) as published by the
Financial Reporting Council.
Board Evaluation and Effectiveness
The Board recognises the need
to continually strengthen Board
processes, including:
↘
Reflecting on past performance
and implementation of previous
recommendations or actions;
↘
Consideration of future training,
skills and diversity requirements;
↘
Identification and implementation of
new recommendations or actions
to improve performance; and
↘
Ensuring the Board understands
the needs of stakeholders,
including considering any conflicts.
As the Company is a smaller company
for the purposes of the Irish Annex,
the Company is not required to
engage an external facilitator to
conduct the annual performance
evaluation process; however, it does
so on a voluntary basis periodically,
most recently for the board
effectiveness review process in 2020
which was facilitated by Independent
Audit Limited, which has no other
connection with the Company.
The Board, with the assistance of
the Company Secretary, conducted
an internal evaluation of the Board’s
effectiveness in 2021, reviewing
the Board’s and its Committee’s
composition, dynamics, operations and
structure to ensure they are effective
for the Company and its business.
The Board has reviewed the feedback
from the 2021 evaluation and
produced the following action plan
and 2022 priorities:
Strategy More proactive monitoring and review of Company Strategy post internalisation
with a focus on opportunity identification and innovation.
Purpose, Values and Culture Post internalisation, reassessment and, where required, repositioning of,
purpose, values and culture of the Company
Reporting More focused and more succinct management reporting on financial and non-
financial metrics.
Risk and Internal Controls Detailed review of the Company’s risk management, internal control and
business continuity management systems post internalisation to ensure that
they are robust and that they meet the demands of the business’s operating
environment and any new emerging risks.
Succession Work with the CEO to develop a management succession plan now that the
senior management team are all internal employees.
ESG Engage with management and stakeholders on identifying appropriate ESG
goals and metrics for the Company.
Board Diversity Having successfully implemented the Board’s Diversity and Inclusion Policy in
respect of gender diversity, develop a plan to include ethnic diversity in the
Board succession planning process.
The directors were also asked to
complete a skills matrix, the results
of which are used by the Nomination
Committee to identify any skills gaps
and are considered in assessing
candidates during the director
nomination process. Please refer
to the Report of the Nomination
Committee on page 104 for more
information on the Board Skills Matrix.
The effectiveness of Declan Moylan
as Chairman was considered as part
of this year’s board evaluation. The
results of the review were positive
and confirmed that the Board are
satisfied that Declan is fulfilling his role
effectively as Chairman.
Progress on the 2021 evaluation actions
will be considered as part of the next
performance evaluation and reported
on in next year’s Annual Report.
I-RES
72
2020 Board and Committee Evaluation: Actions and Progress
The actions from the 2020 external board and committee evaluation and progress against these in 2021 are summarised
below:
2020 Evaluation Action
Progress
Deepen the Board’s view
on technology, including
as a strategic opportunity
↘
The Related Party Committee received detailed presentations from Grant Thornton on
the selection of new IT systems.
↘
The Related Party Committee selected industry leading cloud-based Property
Management solution Yardi as part of the preparation for internalisation of management.
↘
The Audit Committee engaged EY to carry out a review of the new IT infrastructure
being implemented by the Company
↘
The Audit Committee also engaged EY to carry out an internal audit on cybersecurity
and a review of business continuity planning for the Company.
Align on how to integrate
ESG into company
objectives and strategy
↘
The Company published its first ESG Report in March 2021 and made a formal
submission to GRESB.
↘
In May 2021 the Board agreed to form a Sustainability Committee of the Board to
support the implementation of the Company’s multi-year ESG strategy.
↘
The Company achieved EPRA Gold rating for most improved ESG reporting in 2021.
↘
The Company achieved recognition from the European Women on Boards Gender
Equality Index report for diversity and inclusion on the Board and in executive
management. The Company ranked 2nd in Ireland among listed companies and 20th
overall among 668 listed companies across 19 European countries.
↘
In November 2021 the Chairman led a Governance and Sustainability engagement with
key shareholders.
↘
The Company undertook a detailed materiality assessment which included widespread
stakeholder engagement, and which informed our 3 year ESG strategy roadmap.
↘
Recruited a Director of Sustainability and Corporate Development who will support and
report to the Board Sustainability Committee.
Improve the picture of
principal risks at board
level (including cyber)
↘
The Audit Committee engaged EY to carry out an internal audit on cybersecurity and a
review of business continuity planning for the Company.
↘
The Covid-19 pandemic represented a significant potential risk to the Company. The
Group navigated this challenging period successfully, in no small part, due to the
ongoing work of the crisis management team led by the CEO and through regular
reporting from the CEO to the Board on the potential impact of Covid-19 on the
Company.
↘
The termination of the IMA notified by the Manager on 31 March 2021 and the
subsequent plans for internalisation were complex and multifaceted with many potential
attendant risks. The plans, processes and negotiations were developed to manage risk
and ensure regular reporting to the Related Party Committee.
↘
The Related Party Committee met on a monthly basis with all advisers including
Grant Thornton (specifically on IT Infrastructure and Data Migration elements of the
internalisation) Rothschild & Co, Davy and William Fry LLP. These meetings included
risk assessment and progress reporting across 12 workstreams. The Related Party
Committee reported to the Board on progress on the internalisation process across all
12 different workstreams.
↘
The Audit Committee also engaged EY to carry out a review of the new IT infrastructure
being implemented by the Company.
Review the Board’s role in
crisis management (impact
on tenants)
↘
The Audit Committee engaged EY to carry out an internal audit on the Business Continuity
management plans and Crisis management plans in place in the Manager.
↘
The Covid-19 pandemic represented a significant potential risk to the Company. The Group
navigated this challenging period successfully, in no small part, due to the ongoing work of
the crisis management team led by the CEO and through regular reporting from the CEO
to the Board on the potential impact of Covid-19 on the Company.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
73
2020 Evaluation Action
Progress
Ensure the Board gives
due consideration to all
stakeholders
↘
Rothschild & Co completed the Company’s first Investor Perception Study to gain
independent insights into investors’ sentiment towards I-RES and the sector in which it
operates.
↘
In November 2021 the Chairman carried out a series of engagements with shareholders in
respect of Governance and Sustainability.
↘
The Company undertook a detailed materiality assessment which included widespread
stakeholder engagement, and which helped inform our ESG strategy.
↘
We conducted our annual resident survey once again in 2021. We received a significant
amount of feedback as 1,350+ residents completed the survey. The annual resident survey
provides us with valuable insight from our residents in several areas such as satisfaction
with property amenities, staff, resident portal, and our maintenance service. This year
we included questions pertaining to ESG, which will provide invaluable input from a key
stakeholder into the further development of our ESG strategy.
Review the Board’s
oversight of the
outsourcing arrangements
with the Manager
↘
In November 2019 a committee of the Board was appointed (the “Related Party
Committee”) to conduct a scheduled review of the Investment Management Agreement
and the Services Agreement along with an evaluation of the strategic options available
to I-RES in relation to these agreements. This Board committee did not include either
Mark Kenney (up to his resignation) or Phillip Burns given their respective relationships to
CAPREIT (as set out in the Corporate Governance Statement). In August 2020 the remit
of this committee was extended by the Board to include any other matter concerning
the Company’s relationship with CAPREIT and/or the Manager and this committee
was authorised by the Board to make any such decisions on behalf of the Company in
connection with such remit as it deemed appropriate.
↘
During 2021 the Related Party Committee met at least once per month with management
and advisors including Grant Thornton (specifically on IT Infrastructure and Data Migration
elements of the internalisation) Rothschild & Co, Davy and William Fry LLP. These meetings
included risk assessment and progress reporting across 12 different workstreams. The
Related Party Committee reported to the Board on progress on the internalisation process
across all 12 workstreams.
↘
The termination of the IMA, notified by the Manager on 31 March 2021, and the subsequent
plans for internalisation were complex and multifaceted with many potential attendant risks.
The plans, processes and negotiations were developed to manage risk and ensure regular
reporting to the Board Related Party Committee.
↘
In August the Board decided that it was in the best interests of the Company to internalise
management and so issued a termination notice in respect of the IMA to take effect on
31 January 2022 and notified CAPREIT of its decision to exercise its option to acquire the
Manager.
↘
On 29 January 2022 the Related Party Committee approved the transaction
documentation to complete the acquisition of the Manager with effect from 31 January
2022.
Revisit CEO Development
and Succession Plan
↘
As part of the decision to internalise management senior executives have been hired
directly by the Company. In addition, external consultants are assisting the CEO to carry
out a review of the organisational design of the expanded Group including in respect of
succession planning.
Build a view on skills and
experience required for
the future Non-Executive
Directors
↘
The skills matrix completed as part of the External Board Evaluation carried out in 2020
was used to develop a profile for the new Independent Non-Executive Director that
resulted in Stefanie Frensch’s appointment to the Board in July 2022.
↘
The skills matrix is updated each year and will be used for each new Non-Executive
Director appointment.
Agree on whether a local
company secretarial
resource is needed
↘
The Board agreed to hire a Company Secretary directly based in Dublin. Anna-Marie Curry,
the new Company Secretary and General Counsel, took up that position on 1 July 2021.
I-RES
74
Independence
Declan Moylan (Chairman), Aidan
O’Hogan (Senior Independent
Director), Joan Garahy, Stefanie
Frensch and Tom Kavanagh are each
considered independent for the
purposes of the Listing Rules.
Margaret Sweeney is not considered
to be independent as she is the CEO
of the Company.
At the time of his appointment as a
director, Phillip Burns was regarded
as an independent non-executive
director.
Following a decision of the Board on
29 March 2017, Phillip Burns was no
longer considered to be independent,
having regard to certain cross-
directorships at the time with another
(now former) director concerning the
Company and European Residential
Real Estate Investment Trust (formerly,
European Commercial Real Estate
Investment Trust) (“ERES”), a Canadian
company that has its shares listed for
trading on the Toronto Stock Exchange
(“TSX”) and in respect of which Phillip
Burns is the Chief Executive Officer,
a director and a shareholder. While
such cross-directorships no longer
exist, Phillip Burns is still considered
to be non-independent having regard
to Euronext Dublin Listing Rule 2.10.11
and the provisions of the UK Code,
given that, (i) in connection with a
transaction entered into between
ERES and CAPREIT, pursuant to which
CAPREIT indirectly acquired control of
ERES, Phillip Burns was appointed as
a senior employee of CAPREIT, which
had a material business relationship
with the Company as its subsidiary
CAPREIT LP was the parent company
of the Manager until 31 January 2022
and was also a party to the Services
Agreement and (ii) notwithstanding
the termination of the IMA (and
thus the Services Agreement) on 31
January 2022, in accordance with
the provisions of the UK Corporate
Governance Code, Mr Burns lack
of independence by virtue of such
material business relationship would
continue for a period of three years
following the termination of the IMA
and Services Agreement.
Senior Independent Director
The role of the Senior Independent
Director is mainly to:
↘
Provide a sounding board for
the Chairman and to serve as an
intermediary for the other directors
when necessary;
↘
Be available and respond to
shareholders where contact
through the normal channels of
the Chairman or the Manager has
failed to resolve any concerns,
or for which such contact is
inappropriate;
↘
Hold a meeting with non-executive
directors at least annually (and
on such other occasions as are
deemed appropriate) to appraise
the Chairman’s performance,
taking into account the view of the
executive directors (if any); and
↘
Obtain updates from the CEO and
the Manager on the views of major
shareholders and when called
upon, seek to meet a sufficient
range of major shareholders
personally, in each case to help
develop a balanced understanding
of the issues and concerns of
major shareholders.
Share Dealing Code
In order to comply with the provisions
of EU Market Abuse Regulation
(596/2014) (“MAR”), the Company
adopted a share dealing code for
its persons discharging managerial
responsibilities (“PDMRs”), the
Company Secretary, the CFO and
applicable employees of the Group for
the purpose of ensuring compliance
by such persons with the provisions
of MAR relating to dealings in the
Company’s securities and, in particular,
requiring such persons to obtain
prior clearance before dealing in
the Company’s securities. The share
dealing code also sets out the periods
in which share dealings are prohibited.
The directors carried out a thorough
review of the share dealing code in
November 2021, in particular in light of
the Central Bank of Ireland’s (CBI) Dear
CEO letter to companies admitted
to trading on the Euronext Dublin,
which set out the key findings of the
CBI’s thematic review of compliance
with MAR and the CBI’s expectations
following the CBI MAR Review. As
required, the Board carried out a
critical assessment of the Company’s
activities, frameworks, organisational
arrangements and controls against
the findings and expectations in
the letter. Having carried out that
assessment and made some minor
amendments to procedures the Board
considers that this share dealing
code is appropriate for a company
whose shares are admitted to trading
on Euronext Dublin. The Company
continues to take appropriate steps to
ensure compliance by the PDMR’s, and
applicable employees with the terms
of the share dealing code and the
relevant provisions of MAR.
Details of each director’s interests in
the Company’s shares are set out in the
Report of the Directors on page 113.
Communications with
Shareholders
The Board believes that the Company
acts fairly between shareholders and
recognises the importance of this
together with the need to clearly
communicate with shareholders and
to engage in appropriate dialogue to
obtain the views of shareholders as a
whole. Presentations are made to both
existing and prospective institutional
shareholders, after the release of the
interim and annual results, as part of
investor days organised by brokerage
firms, EPRA, Analysts, Investment
banks, amongst others, and following
significant announcements. Major
acquisitions are also announced to
the market and the Company’s website
(https://iresreit.ie) provides the full text
of all announcements. The website
also contains annual and interim
reports and investor presentations. The
Board is kept informed of the views of
shareholders by the CEO and receives
analysts’ reports on the Company.
Furthermore, relevant feedback from
investor meetings is provided to the
Board on a regular basis. The Chairman
and the other directors also have the
opportunity to address shareholders’
and analysts’ questions at the
Company’s annual general meeting.
Engagement with Shareholders
Due to the Covid-19 pandemic, a
significant amount of engagement
in 2021 was carried out by virtual
meetings or by conference calls. In
2021, the CEO attended approximately
144 separate meetings and conference
calls. In addition, the CEO attended
2 in person investor conferences
which included prospective investors,
investment banks and analysts.
The CEO undertook thorough
roadshows following the Preliminary
results announcement for 2020 in
February 2021 and the Interim results
in August 2021, meeting virtually a
range of investors in Ireland, the UK,
Europe, North America and Canada.
In addition, the CEO and the Company
participated in various conferences
and took ad-hoc meetings and calls
on an ongoing basis as well as site
visits in Q4 2021. The Chairman
and Senior Independent Director
are also available to meet with
shareholders should they have any
issues or concerns that cannot be
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
75
resolved through the usual investor
relations channels. With the return
of international travel and the
easing of public health restrictions,
the Company expects a return to
facilitating more property tours with
existing and prospective shareholders
and analysts in 2022.
Developing a strong relationship
with our shareholders will help
build consensus and ensure that
the Company benefits from each
shareholder’s valuable inputs and
recommendations on matters of
shareholder concern. As part of our
efforts to further develop productive
dialogue with our shareholders
on governance and sustainability
matters, we held a Governance
and Sustainability engagement with
shareholders in late 2021, led by
the Chairman, Declan Moylan. The
Company appreciates the significant
response received and will incorporate
shareholder feedback into our
governance frameworks and reporting.
If shareholders wish to communicate
directly with the Board, they should
contact Margaret Sweeney, CEO, or
Anna-Marie Curry, Company Secretary,
contact details for whom are provided
in the Shareholder Information section
on page 193 of this Report.
General Meetings of Shareholders
For a description of the operation
of general meetings, the key powers
of such meetings, shareholders’
rights and the exercise of such rights
at general meetings, see General
Meetings in the Report of the Directors
on page 118.
Section 172 of the U.K. Companies
Act 2006 (“section 172’)
The UK Code provides that, outside
of shareholders, the Board should
understand the views of the
Company’s other key stakeholders and
describe how their interests and the
matters set out in section 172 have
been considered in Board discussions
and decision making. While section 172
is a provision of UK company law, and
there is no direct comparator in the
Irish Companies Act 2014, the Board
acknowledges that, as an issuer on
the primary listing segment of Euronext
Dublin, it is important to address the
spirit intended by such provisions.
Each stakeholder group requires a
tailored engagement approach to
foster effective and mutually beneficial
relationships. By understanding
stakeholders, the Board can factor the
potential impact of its decisions on
each stakeholder group and consider
their needs and concerns, having
regard to section 172. Details of the
Group’s engagements with residents,
employees, investors and communities
during 2021 are set out below.
During 2021, we continued to have
widespread engagement with our
stakeholders, and this provided
valuable input to our first materiality
assessment completed in 2021. The
materiality assessment assists the
Company in identifying key priorities
and refining our sustainability strategy
as well as the potential impact on our
business success. Building on the
materiality matrix, we have developed
a sustainability roadmap and prioritised
actions with set targets and milestones
over a short, medium and long-term
time horizon across 11 sustainability
topics. For more information on our
Sustainability roadmap see page 37
of the Sustainability Review.
We conducted our annual resident
survey once again in 2021. We
received significant feedback as
1,350+ residents completed the survey.
The annual resident survey provides us
with valuable insight from our residents
in several areas such as satisfaction
with property amenities, staff, resident
portal, and our maintenance service.
This year we included questions
pertaining to ESG, which will provide
invaluable input from a key stakeholder
into the further development of our
ESG strategy.
In addition, I-RES conducts an annual
third-party employee engagement
survey. Focusing on a range of key
engagement dimensions designed
to explore and evaluate employee
experience, I-RES is pleased to report
another year of strong performance
with an overall engagement rating
of 83%. Maintaining a Top Quartile
rank, the employee engagement
response and open end feedback
are incorporated into ongoing
improvement strategies implemented
across the I-RES business and
designed to improve overall employee
engagement and performance.
Our ambition is to build a sustainable
and responsible business that is
aligned with the long-term approach
we take to investing, building, and
maintaining our properties, supporting,
and servicing our residents,
employees, our vendor partners and
the wider community in which we
operate. We will continue working with
key stakeholders to further develop a
responsible business.
The Board also recognises that by
engaging further with all stakeholders,
the Company can continue to deliver
on its culture and purpose.
Assessing and Monitoring Our
Company Culture
In developing a collaborative and
partner-focused organisation that
clearly defines how it intends to lead,
the Board and CEO actively engage
with all staff of the Company and
the Manager to support a company
culture that promotes integrity,
openness, diversity and active
responsiveness with our shareholders
and wider stakeholders. Elected by
our shareholders to oversee the
management of the Company, I-RES’s
Board ensures that the long-term
interests of shareholders are advanced
responsibly, while balancing the
interests of our other stakeholders,
including our residents and our
communities.
Our diverse and talented team of
professionals are the drivers of the
I-RES culture. As a business we
recognise the importance of our
employees in maintaining our position
as Irelands leading provider of rental
accommodation and in the successful
delivery of our business strategy and
strong results. We continuously invest
in our employees, providing them with
opportunities for continuous personal
and professional development
programmes at all levels in the
business. Now that the acquisition of
the Manager has been completed, the
Board and the CEO are focused on
ensuring that the open, collaborative
culture that is already in place is
maintained and deepened even
further through an improved and more
integrated organisation design.
The Board has the opportunity to
assess and monitor I-RES’s corporate
culture through ongoing and organic
interactions between the Board, the
CEO and senior management of the
Company and the Manager to ensure
policies, practices and behaviours are
aligned with the Company’s purpose,
values and strategy. The Board’s annual
board evaluation process also includes
questions relating to company culture.
I-RES
76
Listed below are examples of
engagement measures taken in 2021:
↘
Ad-hoc department-level
presentations delivered to the
Board by the Manager
↘
Annual community stakeholder
engagement initiatives and events
↘
Regular Crisis management team
meetings chaired by the CEO, with
members of the Manager’s team
to ensure the safety and wellbeing
of employees, residents and other
personnel supporting the ongoing
business during the pandemic.
Stakeholder Engagement
Pursuant to the Code of Business
Ethics and Conduct, we aim to deliver
on our commitment of accountability
to our stakeholders. The Board agenda
includes regular reports to ensure
the protection and promotion of
our stakeholders’ interests continue
to remain top of mind. By advising
on the right corporate strategy
and applying effective governance
measures and oversight, the Board
helps identify principal risks associated
with I-RES’s business and ensures
the implementation of appropriate
systems to manage these risks, while
identifying suitable opportunities for
growth and the creation of continued
long-term value.
Listed below are examples of
stakeholder engagement in 2021:
Board-level engagement
↘
Presentation from ESG consultant
on EPRA benchmark & Assurance
Statement
↘
Presentation from external
consultant on the Sustainability
Plan & Materiality Assessment
↘
Presentation from external expert
on the Irish Economy and the
Residential Real Estate Market in
2021
↘
Regular engagement with the
Real Estate sector and Regulation
through the public affairs
programme
Employee, resident, investor and
community-level engagement
↘
Investor meetings and conferences
↘
Chairman’s Governance and
Sustainability engagement with
Investors
↘
Employee intranet (I-RES and IRES
Fund Management)
↘
Resident satisfaction survey
↘
Employee engagement survey
Supporting Employee engagement
with environmental and social
initiatives
↘
Official supporter of All-Ireland
Pollinator Plan
↘
Took part in the annual Tallaght
community festival and sponsorship
of prizes
↘
Employees awareness regarding
our Environmental impact via Earth
Day celebration
↘
World Bee Day 2021 – guest
speaker
↘
Reduce Waste paper from
unnecessary printing in our offices
Supporting employee wellbeing
initiatives
↘
International Women’s Day – guest
speaker for coffee morning
↘
Darkness Into Light 2021 –
employee participation
↘
Movember - various guest speakers
and a mustache sponsorship
↘
Women leadership programme
in DCU
Supporting key Community
Partner initiatives
↘
Introduction of Electronic Waste
collections – at managed buildings
↘
Halloween Spooktacular – Resident
art competition
↘
Employee Recycling awareness
↘
Waste Improvement – at managed
buildings
↘
Worked with charities to collect
used clothing – at managed
buildings
↘
Newsletter & Block
communications for Residents
Please also see above under
“Engagement with Shareholders” for
a description of how the Company
further engages with its shareholders.
Workforce Engagement
As at 31 December the Company had
only 11 employees (one of whom sits
on the Board) and the majority of
whom were appointed in the latter
half of 2021. Therefore, during 2021
there was only a very small workforce
and three of those people attend
Board meetings, which allowed the
Board to engage with them regularly.
During 2021 the Company did not
have any ability or rights in respect
of the workforce of the Manager
or of its remuneration policies. As
a consequence, those portions of
provisions 2, 5, 33, 38, 40 and 41
of the UK Code and s.172, to the
extent that they relate to workforce,
engagement did not apply to the
Company during 2021.
However, the number of employees in
the Company is growing in preparation
for internalisation and on 31 January
2022 the Company completed the
acquisition of the Manager increasing
the Group workforce to 90. In March
2022 the Board appointed Tom
Kavanagh as the Director responsible
for workforce engagement. The
Company will report on Board
engagements with the workforce in
next year’s Annual Report.
Review of the Manager
The Board has reviewed the
performance of the Manager and is
satisfied with the overall performance
of the Manager for the year ended
31 December 2021. For a detailed
review of the business performance
indicators, see pages 26 to
32 in the Business Performance
Measures section.
Following the receipt from the
Manager, on 31 March 2021, of a 12
month notice of termination of the
IMA, the Related Party Committee
progressed the review of the
Company’s strategic options including
internalisation of the management of
the Company.
On 6 August 2021, the Company
announced that it had exercised
its right to acquire the shares of
the Manager and served a notice
of termination of the IMA, with the
Internalisation to take effect on 31
January 2022, subject to Central
Bank of Ireland (“CBI”) approval. The
Company received the required
CBI approval and completed the
acquisition of the Manager on 31
January 2022. Further details on the
internalisation of management can be
found at page 23 to 24.
Remuneration Policy of the
Manager
For 2021 the Remuneration policy
of the Manager was the relevant
remuneration policy for its staff.
The Manager had an established
remuneration policy that it applied
in accordance with AIFMD and the
guidelines on sound remuneration
policies under AIFMD as issued by
the European Securities and Markets
Authority from time to time. As part of
this process the Manager ensured that
its remuneration policy was reviewed
internally at least annually.
In the implementation of its
remuneration policy, the Manager
aimed to ensure good corporate
governance and promote sound and
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
77
effective risk management. It did
not encourage any risk taking which
would be considered inconsistent
with the risk profile of the Group. The
Manager ensured that any decisions
were consistent with the overall
business strategy, objectives, values
and interests of the Group and tried
to avoid any conflicts of interest which
may arise.
The total remuneration paid in the
period to the staff of the Manager, all
of whom are engaged in managing
the Group’s activities, was €4.3 million,
of which €3.9 million comprised fixed
remuneration and €0.4 comprised
variable remuneration. The number of
staff employed by the Manager as at
31 December 2021 was 77 (65 as at
31 December 2020), of which 45 site
employees (41 site employees as at
31 December 2020) were charged to
the Company. There were no senior
managers or members of staff of
the Manager whose actions had a
material impact on the risk profile
of the Company.
The Remuneration Committee plan to
carry out a full review of the Company’s
Remuneration Policy during 2022
following internalisation and integration
of the whole management of the
Group. The Remuneration Committee
are preparing a Remuneration Policy
that will ensure that the Company
can continue to attract and retain
appropriate talent to drive the
Company’s growth strategy and
protect the interests and value of the
Company, its shareholders and other
principal stakeholders. For further
details see page 86 in the report of the
Remuneration Committee.
Compliance with Relevant Codes
The directors are committed to
maintaining high standards of
corporate governance and this
Corporate Governance Statement
describes how the Company has
applied the Codes in 2021. The Board
considers that the Company has
complied with the provisions set out
in the Codes throughout the last
financial year under review with two
minor exceptions:
↘
During 2021 the Company did not
have any ability or rights in respect
of the workforce of the Manager
or of its remuneration policies. As
a consequence, those portions of
provisions 2, 5, 33, 38, 40 and 41
of the UK Code and s.172 to the
extent that they relate to workforce
engagement did not apply to the
Company during 2021. Following
internationalisation which took
place on 31 January 2022 the
Company will report on Board
engagements with the workforce in
next year’s Annual Report.
↘
As disclosed in prior years, option
awards granted as part of the
remuneration of the executive
director under the long-term
incentive plan (“LTIP”) prior to the
2020 financial year do not comply
in full with Provision 36 of the UK
Code, as there is no minimum
holding period under the LTIP for
shares acquired upon exercise of
such options and, options vest
over three years from the date of
grant on the basis of one third per
completed year the recipient of
the option completes in respect
of the relevant service which has
qualified her for the option grant.
Although the Company is not
fully compliant in this respect in
relation to such options previously
granted, any Restricted Shares
(as defined under the rules of the
LTIP) awarded to the executive
director under the LTIP as and
from 2020 are subject to the
Company’s 2020 Remuneration
Policy and arrangements
described in the Report of the
Remuneration Committee (the
remuneration policy was approved
by shareholders at the 2020 annual
general meeting), and comply with
Provision 36 as any new LTIP share
awards issued to the executive
director thereunder are subject
to a total vesting and holding
period of five years (three-year
performance period and two-year
holding period thereafter).
I-RES
78
Dear Shareholder,
On behalf of the Audit Committee, it
is my pleasure to present the Report
of the Audit Committee for the year
ended 31 December 2021.
The report demonstrates how
the Audit Committee fulfilled its
responsibilities during the year under
the appropriate regulatory frameworks.
As in previous years, a key focus
of the Audit Committee was to
ensure that the semi-annual and
2021 year end investment property
valuation processes were conducted
appropriately. For both valuations,
the investment property portfolio
was split for purposes of valuation
and valued by two external valuers.
The Audit Committee objectively
assessed the valuations prepared
by the independent valuers and was
satisfied that the assumptions and
methodologies being used were
appropriate and reasonable.
The Audit Committee continues
to monitor the independence and
objectivity of KPMG. The Audit
Committee reviews with KPMG the
findings of their work and noted that
no major issues arose during the audit.
As part of its assessment of KPMG’s
independence, the Audit Committee
assessed the amount and value of
non-audit services provided and
noted that it has not impaired their
independence.
The Audit Committee also meets with
the Company’s tax advisors to ensure
that it keeps informed of anticipated
changes to tax laws and regulations
that may impact the Company. The
Audit Committee continues to assess
the effectiveness of internal controls,
meeting with the Company’s Manager
while also considering the impact of
the Internalisation, as outlined in the
Business Review.
The Audit Committee assisted the
Board in determining that the Annual
Report and Consolidated Financial
Statements, when taken as a whole,
are fair, balanced, and understandable
and provides the information
necessary for shareholders to assess
the Company’s position, performance,
business model and strategy.
Looking ahead
Looking ahead to the 2022 financial
year, the Audit Committee will remain
focused on the audit and assurance
processes within the business, and
maintain its oversight of financial,
valuation, taxation and evolving
regulatory requirements. A key focus
of the Audit Committee will be the
transition to the new IT platform, the
data migration from the legacy system
and where necessary the redesign
of internal processes and controls.
The Audit Committee will continue
to assess the design and operational
effectiveness of the internal controls
throughout 2022.
I trust that you will find this report
to be useful in understanding the
operations and activities of the Audit
Committee during the year.
Joan Garahy
Chair of the Audit Committee
Members: Joan Garahy (Chair), Tom
Kavanagh, Stefanie Frensch and Aidan
O’Hogan.
The Audit Committee is chaired by
Joan Garahy, an independent non-
executive director. All members of the
Audit Committee were independent
non-executive directors when
appointed by the Board and continue
to be independent. Accordingly,
the Audit Committee is constituted
in compliance with the Codes and
Articles of Association regarding the
composition of the Audit Committee.
All members are appointed for an initial
term of up to three (3) years, which
may be extended by the Board.
The term of appointment for Tom
Kavanagh expired on 31 May 2021.
Accordingly, the Board agreed that
the appointment of Tom Kavanagh
shall be extended for an additional
term of approximately three years
commencing on 1 June 2021 and
expiring at the end of the 2024 AGM
(subject to him continuing to meet the
criteria for membership of the Audit
Committee). Stefanie Frensch joined
the Audit Committee on 1 July 2021.
The Board is satisfied that the Audit
Committee members are appropriately
qualified and experienced to fulfil
their roles and have a broad mix of
skills and experience arising from
senior roles they hold or have held
with other organisations, and that
the Audit Committee as a whole has
competence relevant to the sector
in which the Company operates. In
accordance with the Codes, Ms.
Garahy, in particular, is considered by
the Board to have recent, significant
and relevant financial experience.
Report of
the Audit
Committee
_
Introductory
Statement
from the Audit
Committee Chair
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
79
Meetings of the Audit Committee
The Audit Committee meets at least
four (4) times per year and otherwise
as required. The Audit Committee
met six (6) times during the period
from 1 January 2021 to 31 December
2021 and the external auditor was in
attendance at all six (6) meetings. The
Audit Committee members’ attendance
at each meeting is set out on page 70.
The CEO, CFO, Finance Director and
certain representatives of the Manager
attend the Audit Committee meetings,
as required. The external valuer
attends the Audit Committee meetings
when the year-end and interim
valuations of the Group’s properties
are being considered. The Company’s
tax advisors also meet with the Audit
Committee at least bi-annually to
address any tax developments and as
otherwise required.
Terms of Reference and Principal
Duties
The terms of reference established
for the Audit Committee were
initially approved and adopted by
the Board on 31 March 2014 and
are reviewed annually and updated
for best practice and compliance
with the Codes. The Board reviewed
the terms of reference for the Audit
Committee on 17 November 2021
using the model terms of reference
for audit committees published by
the Corporate Governance Institute
in January 2020, which are designed
to comply with the UK Code. No
changes were required following this
review. The roles and responsibilities
delegated to the Audit Committee
under the terms of reference can be
accessed electronically at https://
www.iresreit.ie/company-and-strategy/
corporate-governance
The Audit Committee reviews its terms
of reference on an annual basis and, if
necessary, proposes for formal Board
adoption amendments to the Audit
Committee’s terms of reference. The
Audit Committee evaluates its own
performance relative to its terms of
reference. Following the 2021 annual
review, it was concluded that the Audit
Committee was operating effectively.
The Audit Committee’s principal duties
include:
Reporting and External Audit
↘
to monitor and keep under review
the scope and effectiveness of the
Group’s financial reporting;
↘
to monitor the integrity of the
financial statements of the Group,
including its annual and semi-annual
financial reports and any other
formal announcement relating to its
financial performance;
↘
to review and report to the Board on
summary financial statements and
any financial information contained
in certain other documents, such as
announcements of a price-sensitive
nature;
↘
to keep under review the adequacy
and effectiveness of the Group’s
internal financial controls, risk
management and internal control
systems;
↘
to oversee the relations with the
external auditor and to consider
and make recommendations on the
appointment, reappointment and
removal of the external auditor;
↘
to ensure the independence and
objectivity of the external auditor
annually;
↘
to ensure that the provision of non-
audit services by the external auditor
does not impair the external auditor’s
independence or objectivity; and
↘
to review with the external auditor
the findings of their work, including
any major issues that arose during
the course of the audit and have
subsequently been resolved.
Valuations
↘
to monitor and review the valuation
process;
↘
to review the valuation reports,
assumptions and methodology; and
↘
to assess independent valuers’
competence and effectiveness.
Risk and Internal Control
↘
to monitor and keep under review
the scope and effectiveness of
the Group’s risk management and
internal control systems; and
↘
to assess and review regular
reports on such matters from the
Manager, EY (internal auditor),
finance team and management.
Other
↘
to review the Audit Committee’s
terms of reference and monitor its
execution; and
↘
to consider compliance with legal
and other regulatory requirements,
accounting standards and the
Euronext Dublin Listing Rules.
How the Audit Committee
Discharged its Responsibilities
in 2021
The Audit Committee’s agenda is set
based on the Group’s financial calendar
and the Audit Committee’s work plan,
which allows the Audit Committee to
fulfil its role in an efficient manner. In
the year under review, the principal
activities of the Audit Committee were
as follows:
↘
reviewed the appropriateness
of Group accounting principles,
practices and policies, and
monitored changes to and
compliance with accounting
standards on an ongoing basis;
↘
reviewed the Group’s 2020 Annual
Report, including the financial
statements therein, and considered
the key areas of judgement and
the Group’s Interim report before
recommending them to the Board
for approval;
↘
reviewed the Group’s preliminary
announcement of financial results;
↘
reviewed and approved the annual
audit plan presented by the external
auditor and approved the audit fees;
↘
reviewed and discussed the reports
received from the external auditor
following the audit process;
↘
recommended to the Board a policy
on the hiring of former employees
of the Group’s external auditor;
↘
reviewed and considered the
Group’s key risks, internal control
policies and procedures and
risk management systems, with
particular reference to the
operations of the Manager;
↘
reviewed and considered the
approach adopted by the
independent valuers, including
assumptions, procedures and
methodologies applied in valuing
the Group’s property portfolio;
↘
considered the necessity for
an internal audit function on an
ongoing basis and approved the
appointment of EY to carry out
internal audit services on a co-
sourced basis during 2021 and post
termination of the IMA on 31 January
2021 approved the appointment
of EY to carry out all internal audit
services for 2022;
↘
reviewed the annual internal audit
plan put forth by the Manager’s
internal audit function for 2021;
↘
reviewed reports throughout
the year from the Manager’s risk
management and internal audit
functions with regards to work
performed around the Group’s
system of risk management and
internal controls;
I-RES
80
↘
commissioned and reviewed
internal audit reports from EY on
cybersecurity and a review of
business continuity planning;
↘
reviewed and approved non-audit
services to be provided by KPMG;
↘
reviewed the ongoing transition
plans for the Finance Function in
preparation for the termination of
the IMA and Services Agreement
on 31 January 2022;
↘
reviewed the Manager’s and the
external auditor’s fraud detection
procedures;
↘
reviewed and recommended
amendments, as required, to the
Company’s dividend policy, non-
audit services policy, treasury
policy, valuation policy, code of
ethics, directors’ compliance policy
statement (and arrangements
and structures in place to ensure
compliance), signing authority and
delegation policy, whistleblower
policy, anti-corruption policy, and
policies and procedures relation to
the market abuse regime;
↘
reviewed and approved bank
account mandate changes;
↘
monitored the levels of non-audit
fees in relation to the total fees
paid to the external auditors;
↘
reviewed the related party
schedules for appropriate financial
statement disclosures;
↘
assessed the viability model for
long-term sustainability;
↘
reviewed the current loan to value
analysis and impact resulting from
changes in fair value of investment
properties;
↘
reviewed compliance with debt
covenants;
↘
reviewed the REIT compliance test;
and
↘
reviewed the proposed dividends
and recommended them to the
Board.
Financial Reporting and Significant
Financial Judgements
With respect to this Report and the
financial statements included herein,
the Audit Committee assessed
whether suitable accounting policies
had been adopted and whether
management had made appropriate
judgements. The Audit Committee paid
particular attention to matters which
it considered could have a material
impact on the Group’s results and
those matters which involve a higher
level of complexity, judgement or
estimation by management. The most
significant matters considered by the
Audit Committee in relation to this
Report and the financial statements
contained herein for the year were
as follows:
Investment Property Valuations
The Group had investment property
with a fair value of €1,492.8 million
as at 31 December 2021, as set out
in Note 5 to the Group financial
statements. As the portfolio of the
Group’s asset has grown significantly,
the Group has appointed two valuers,
CBRE Unlimited Company (“CBRE”)
and Savills Advisory Services (Ireland)
Ltd. (“Savills”). The Audit Committee
considered the investment property
valuation process carried out by
management in order to satisfy
itself that the balances were stated
appropriately. These reviews involved
the understanding of management’s
analytical procedures, management’s
discussions with CBRE and Savills,
the Group’s independent valuers,
and assessment of the market inputs
utilised on each property prior to
recording the valuations obtained.
The Audit Committee assessed the
performance and independence of
the two valuers and is satisfied with
their performance, and that both
valuers are independent. The CFO
and Manager have confirmed to
the Audit Committee that they are
satisfied that the valuers conducted
their work in accordance with
the Royal Institution of Chartered
Surveyors’ Valuation Standards. In
addition, the Audit Committee met
with the two independent valuers and
discussed the year-end valuations,
valuation methodology and significant
assumptions used. The Audit
Committee also discussed the market
dynamics with both valuers, including
the impact of Covid-19 and its impact
on the interim and year-end valuations.
As both valuers rely as part of their
assumptions on comparable evidence
from recent market transactions
to benchmark and support their
valuations of the Group’s properties,
the Audit Committee assessed the
relevance and appropriateness of
these transactions, in conjunction
with management. Following a review
of the detailed valuation analysis
provided by management and detailed
discussions with management and
the independent valuers, the Audit
Committee was satisfied that the
significant inputs used for valuation,
any provisions recorded against
valuation of the investment properties,
and valuation of the investment
properties were appropriate. The Audit
Committee discussed the valuation
process with management and each
valuer and confirmed from each of
them that they are satisfied with the
quality and accuracy of the property
information provided to them. The
external auditor also reviews the two
valuers’ reports, performs test work
on the information provided by the
Company to both valuers, meets with
the two valuers as part of their audit
procedures, and communicates to the
Audit Committee any comments or
observations they may have.
Transactions with CAPREIT
Due to the close nature of the
relationship between CAPREIT (or
its affiliates) and I-RES, CAPREIT’s
shareholding in I-RES at 31 December
2021, and the provision of services
provided by the Manager, a subsidiary
of CAPREIT, to I- RES during the
financial year, the Audit Committee
and the external auditor discussed
the risk of undisclosed related party
transactions with CAPREIT or its
affiliates for the 2021 consolidated
financial statements. The Audit
Committee discussed the level of fees
incurred in respect of management
services received from the Manager
and its affiliates and discussed these
with relevant management. The Audit
Committee also considered the
disclosures in the notes to the financial
statements. The Audit Committee
was satisfied as a result of these
discussions that appropriate disclosure
has been made in the annual report in
relation to each of these matters.
Other Matters
Other matters considered by the Audit
Committee included the disclosure
of non-IFRS measures (“Alternative
Performance Measures”), tax
compliance, and regulatory obligations
and accounting disclosures.
Going Concern
The Audit Committee has reviewed
and is satisfied with a presentation
from the FD in support of the Board’s
Statement on Going Concern as set
out on page 52.
Viability Statement
The Audit Committee has reviewed
a report from the Finance Director
and is satisfied that this assessment
adequately addresses the principal
risks disclosed in the Risk Report on
pages 54 to 62 and that a three-year
time horizon for the viability model is
appropriate to the Company’s business.
Furthermore, the Audit Committee
has reviewed the assessment of the
Group’s viability by management, as
stated on pages 52 to 53.
The review included:
• Key assumptions used;
• Assessment of prospects; and
• Assessment of viability.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
81
REIT Status
The Audit Committee reviewed a report
from the Manager setting out the
Company’s compliance with the REIT
requirements as at 31 December 2021.
The Audit Committee has confirmed
to the Board that the Company is
compliant with the REIT rules.
Fair, Balanced and Understandable
The UK Code requires that the Board
should present a fair, balanced and
understandable assessment of the
Company’s position and prospects,
and specifically that they consider
that the annual report and financial
statements included therein, taken
as a whole, are fair, balanced and
understandable, and provide the
information necessary for shareholders
to assess the Company’s position and
performance, business model and
strategy.
At the request of the Board, the
Audit Committee considered
whether this Report and financial
statements included herein met these
requirements.
The Audit Committee considered the
process put in place by management
for the preparation of the annual
report and financial statements
included herein, and in particular the
timetable, co-ordination and review
activities. The Audit Committee
discussed these arrangements with
management. Key considerations of
the Audit Committee when reflecting
on these requirements included:
↘
the information and reporting the
Audit Committee had received
during the course of the financial
year;
↘
the balance of information included
in the annual report against the
Audit Committee’s understanding of
the operations and performance of
the Group;
↘
the compliance of the financial
statements with all applicable
financial reporting standards and
any other required regulations; and
↘
the language used in the
annual report ensuring it was
understandable to a wide variety of
shareholders.
Arising from the Audit Committee’s
work in this regard, the Audit
Committee and the Board concluded
that this Report and financial
statements included herein, taken
as a whole, are fair, balanced and
understandable, and that they
provide the necessary information for
shareholders to assess the Company’s
position and performance, business
model and strategy. The Board
statement to this effect is on page 120.
Risk Management and Internal
Controls
The Board has delegated responsibility
to the Audit Committee to monitor the
Group’s risk management and internal
control systems. In order to discharge
this responsibility for the period from
1 January 2021 to 31 December 2021,
the Audit Committee:
i. conducted an annual review of the
effectiveness of the Group’s risk
management and internal control
systems and reported to the Board
on its findings;
ii. received presentations from
the Manager’s risk management
function and internal audit function;
iii. reviewed the Group’s principal risks
and uncertainties, including any
emerging risks, quarterly;
iv. reviewed quarterly reports
from the Manager relating to
investment management, fund
risk management, regulatory
compliance, operational risk
management, capital and financial
management and distribution;
v. received quarterly updates on any
internal control compliance issues
or material legal matters; and
vi. reviewed quarterly reports relating
to the internal controls of the
Manager and CAPREIT LP.
In addition, the Board receives
quarterly reporting on key risks,
including any principal and emerging
risks, from the Manager’s risk
management function. Additionally,
they also review quarterly reports from
the Manager relating to operational
updates and key performance
indicators.
External Audit
One of the key roles of the Audit
Committee is to monitor the
performance, objectivity and
independence of the external
auditor. Open, direct and honest
communication between the Audit
Committee, the external auditor,
management and the Manager is
essential in ensuring both an effective
audit and auditor independence.
In November 2021, the Audit
Committee met with the external
auditor to agree the FY 2021 audit
plan. To ensure a quality audit, the
external auditor needs to be aware of
the business risks; therefore, the Audit
Committee discussed and agreed
upon the key business, financial
statements and audit risks, and the
materiality being used for the audit to
ensure that the audit was appropriately
focused. In advance of the
commencement of the annual audit,
the Audit Committee reviewed the
external auditor’s letter of engagement,
together with a presentation from
the external auditor confirming their
independence within the meaning
of the regulations and professional
standards.
In February 2022 in advance of the
finalisation of the Group’s financial
statements for the year ended 31
December 2021, the Audit Committee
received a report from the external
auditor on their key audit findings,
including the key areas of risk and
significant judgements, and discussed
the issues with them in order for the
Audit Committee to form a judgement
on the financial statements.
In order to assist the Audit Committee
in evaluating the external audit
process and to ensure continuous
improvement, following the completion
of the audit, the Audit Committee
members discussed with management
and the Manager the effectiveness of
the external auditor and the external
audit process in general.
At least annually, the Audit Committee
meets with the external auditor
without the presence of management
to discuss any matters the external
auditor may wish to raise. The Audit
Committee continues to be satisfied
with the performance of the external
auditor, who remains effective,
objective and independent.
Statutory Auditor
On completion of a tender process
in 2017 and having considered the
requirements of the Statutory Audit
Directive of 15 June 2016 (Statutory
Instrument SI 312 of 2016), the Board
approved the appointment of KPMG
as statutory auditor with effect for the
financial year ended 31 December
2018. This appointment was approved
by the shareholders at the 2019 annual
general meeting. KPMG remains the
statutory auditor for the financial year
ended 31 December 2021. The audit
partner in charge within KPMG is Sean
O’Keefe. The Audit Committee will keep
the tenure of the external auditor under
review in light of best practice and
recent legislation. The Audit Committee
currently has no plans for re- tendering
of the statutory audit.
I-RES
82
Independence and Non-Audit
Services
The Company has a policy which
requires the pre-approval by the Audit
Committee of all non-audit services
to be provided by the external auditor.
The level of non-audit services
provided by the external auditor is
reviewed at least on a quarterly basis
and, in conjunction with the external
auditor, the impact on independence
and objectivity is assessed.
The independence and objectivity
of the auditors was addressed by
the Audit Committee in conjunction
with the level of fees for non-
audit services in the reporting
period. KPMG completes the audit
of the financial statements and
PricewaterhouseCoopers completes
the tax related workings, ensuring
that both parties remain independent.
Following discussion with the external
auditors, the Audit Committee
determined that the fees for non-audit
services were lower than the audit
fees for the year ended 31 December
2021 and that the independence and
objectivity of the external auditor have
not been compromised.
Details of the amounts paid to the
external auditor during the year for
audit and non-audit services are set
out in note 27 to the Group financial
statements.
Whistleblower policy
The Company is committed to the
highest standards of openness, probity,
and accountability, as well as the
highest possible ethical standards in
all of its practices. To achieve this,
the Company encourages use of
internal and external mechanisms
for reporting any malpractice or
illegal acts or omissions through the
Group’s whistleblower policy, which
was reviewed. The policy applies
to all employees and contractors
of the Group and all employees of
the Manager, among others. The
policy provides information on the
process to follow if any employee
feels it appropriate to raise a concern
confidentially in respect of a relevant
wrongdoing which includes, for
example, non-compliance with a
legal obligation, health and safety
threats, damage to the environment,
theft, misappropriation of assets or
unacceptable behaviour towards
colleagues or the public. All concerns
raised are considered by the Chair of
the Audit Committee or a nominated
third party.
The Audit Committee is satisfied that
the process is effective, confidential
and ensures the protection of
employees from harassment or other
detrimental treatment as a result of
raising a concern. No incidences of
concern were uncovered in 2021.
Internal Audit
In accordance with the UK Code, the
Audit Committee has considered the
need for an internal audit function
given the Group’s scale, complexity
and range of operations, including its
recent internalisation of management
in early 2022. Based on the foregoing
considerations, the Audit Committee
has recommended to the Board that
it does not believe it is necessary to
establish an internal audit function.
Rather, the Audit Committee has
assessed and approved the proposal
by EY to solely provide internal audit
services to the Group, taking effect
from 1 February 2022. Up until this
date, the Manager’s internal audit
function continued to assist the
Audit Committee and the Board in
discharging their responsibilities with
regards to assessing the effectiveness
of the Group’s risk management and
internal control systems. The Audit
Committee had direct access to the
Manager’s internal audit function until
the date of internalisation and now
has direct access to EY’s internal audit
team. The Audit Committee assessed
the annual internal audit plan put
forth by the Manager’s internal audit
function and received periodic reports
of work performed during 2021. A
similar process will be followed by the
EY internal audit team going forward.
EY were engaged by the Group to
supplement efforts by the Manager’s
internal audit function in 2021 and have
sufficient experience and expertise
to take over the internal audit
services for the Group. The Board
concurs with the Audit Committee’s
recommendation not to establish an
internal audit function for the Group.
The Audit Committee will continue to
review this position annually and make
appropriate recommendations to the
Board.
The Chair of the Audit Committee
reports to the Board at each meeting
on the Audit Committee’s activities
with regard to the Group’s risk
management and internal control
systems.
Key Priorities of the Audit
Committee for 2022
Looking ahead to the 2022 financial
year, the Audit Committee will remain
focused on the audit and assurance
processes within the business and
maintain its oversight of financial and
evolving regulatory requirements. The
action plan for the 2022 financial year
will include:
• reviewing and making
recommendations in relation to the
statutory, preliminary and interim
financial results;
• reviewing the adequacy of the
Group’s internal controls system
following internalisation and
transition to the new IT platform;
• reviewing the adequacy of the
internal audit services provided by
EY and considering the necessity
for an internal audit function;
• reviewing the impact on financial
results due to regulatory and
legislative changes;
• reviewing the impact on financial
results due to the Covid-19
pandemic;
• ensuring the independence and
objectivity of the external auditor;
and
• monitoring and reviewing the
valuation process.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
83
Introductory Statement from the
Remuneration Committee Chair
Dear Shareholder,
I am pleased to say that 2021 was
another strong year for the business,
despite a challenging backdrop and
we made significant progress on the
internalisation of our management
structure. In 2021, our Board and
executive management team
continued to deliver across all key
metrics, with a specific focus on
progressing our ESG strategy and
related targets.
On 1 April 2021, the Company
announced that it had received a
twelve-month notice of termination
of the Investment Management
Agreement (‘IMA’) from the Manager, a
wholly owned subsidiary of CAPREIT LP.
As a Board, after considering a range
of options, we made the decision to
internalise the management structure,
as the Board believed that this was in
the best interests of the Company and
all stakeholders.
The termination of the agreement
with the Manager and the subsequent
internalisation on 31 January 2022
was a significant strategic decision
and resulted in a fundamental shift
in the scope and responsibility of
I-RES’ management team, with all
employees of the Manager becoming
employees of the I-RES Group, and full
stewardship of strategy, operational
decisions, finance, ESG, remuneration
and direction now residing at I-RES
Board and Executive Committee
level. The Board remains satisfied that
the move to a fully internalised REIT
structure will provide the foundation
for future growth.
Performance Overview
During 2021, Covid-19 continued to
present significant challenges for the
Company and our stakeholders. The
welfare of our tenants and employees
of the Company and the Manager was
to the fore. Against that challenging
backdrop, we continued to generate
strong results, with revenue and
NRI continuing to grow during the
year. Our continued investment in
new properties helped deliver rental
income growth of 6.7% for the year,
while also maintaining a consistently
high occupancy rate of 99% across
our portfolio. Profit increased by
16%. Our adjusted EPRA EPS (before
non-recurring costs) was 7.0 cent,
consistent with 2020, while our IFRS
Basic NAV per share grew by 3.9%
to 166.5 cent. As a result of this
strong performance, we declared
total dividends of 5.99 cent per share
for the twelve months ended 31
December 2021 (2020 5.97 cent per
share). Demonstrating the resilience
of the business, during the period
under review, we did not receive any
government support through furlough
schemes and, post period end, as part
of our internalisation, have added new
jobs and substantially increased our
headcount.
Outside of traditional financial
measures, there has been a continued
focus on ESG during 2021, with a
particular emphasis from the CEO on
efforts to develop an ESG strategy
roadmap. The Company made its first
public GRESB submission, continued to
measure against EPRA ESG indicators,
commissioned an initial ESG Materiality
Assessment and continued to make
strides to enhance its programme of
stakeholder engagement. During 2021,
the Company received the EPRA Gold
award for ESG reporting. I-RES also
ranked 2nd in Ireland among listed
companies and 20th overall among
668 listed companies in 19 European
countries in the European Women on
Boards Gender Equality Index report
for diversity and inclusion on the Board
and in executive management. The
Committee is satisfied that the CEO
has performed strongly in driving both
financial and ESG performance over
the last financial year.
During 2021, the Company also
continued to deliver on its growth
strategy with: the completion of
the acquisition of 146 residential
units located in the Phoenix Park
Racecourse, Castleknock, Dublin 15; the
ongoing development, under a forward
purchase contract, of 69 residential
units at Merrion Road, Dublin 4; the
disposal of a commercial unit and the
food court at Tallaght Cross West
for net proceeds of €1.6 million; the
execution of an index-linked 25-year
lease for 128 units at Hampton Wood;
and the execution of contracts for
the acquisition of 152 residential units
located in Ashbrook, Clontarf, Dublin 3.
Report of the
Remuneration
Committee
_
I-RES
84
A Changing Business
As mentioned above, 2021 was an
important year for the development of
our business. In parallel to delivering
strong growth and good financial
performance against a challenging
COVID-19 backdrop, we have taken
significant strategic steps to position for
continued growth. Under the leadership
of the CEO, on 29 January 2022, the
Company and CAPREIT entered a
share purchase agreement, effective
from 31 January 2022, resulting in a
successful acquisition of the Manager
by I-RES, with all employees of the
Manager becoming part of the I-RES
Group. While this will not result in a
fundamental shift in our strategy it
has altered the role of our Company
and those who lead it. We now have
a much larger scope of operations;
employee base; and technology
responsibilities, all of which dictates
a greater responsibility for people
development, risk management and
executive leadership. As context, I-RES
had three employees at the beginning
of the 2021 financial year and ended
with 11 employees. As of the date of
this letter, that number is 93 and is
expected to continue to grow over the
medium-term.
Remuneration Outcomes
The 2021 annual bonus outcome
was subject to a combination of
EPRA earnings, net rental income
(NRI), NAV and strategic objectives.
These measures, broadly in line with
those used in the prior year, were
combined to ensure there was a
balance between a continued focus
on improving profit and rental income
growth, while focusing on key non-
financial deliverables which underpin
our strategy, as well as core ESG
priorities. Performance against the
EPRA Earnings measure was at 85.2%
of maximum while the maximum
targets under the NRI and NAV metrics
were exceeded for full pay-out.
Under the strategic objectives, the
CEO received a full pay-out for a
range of contributions during the year,
each of which drew a sharp focus
on key strategic priorities aligned to
the delivery of value for stakeholders.
While those measures are designated
non-financial in nature, they have
a clear link to long-term financial
performance, and the Committee is
satisfied that they reflect key priorities
of the Group as we look to deliver on
our long-term strategy. In particular,
the CEO led the development of a
number of different transition priorities,
including selection and oversight
of a new IT network, core systems
and digital technology platform;
recruitment of key management
personnel; and implementation of
the Board decision to acquire the
Manager as well as preparation and
implementation of plans to transition
corporate services from CAPREIT to
the Company.
There were no LTIP awards eligible to
vest during 2021.
Remuneration – Policy Review
2022 will be another important
year in the business’ growth, with
the Committee already putting
in place plans for a consultation
around the renewal of our three-year
remuneration policy. Prior to that
consultation and proposal of a new
remuneration policy for 2023, there
will be no material changes to the
bonus and LTIP structure, with the
measures and limits continuing to
apply in 2022. The maximum bonus
permitted continues at 150% of salary,
with awards under the LTIP capped at
135% of salary. As part of the review
of the remuneration policy in 2022,
the Committee will review whether the
balance between annual bonus and
LTIP remains appropriate as a means
of driving the delivery of our strategy
and generating value for stakeholders.
A key component of that review will
also be the further integration of
stakeholder and ESG measures into
our incentive frameworks.
Separately, as we expand our
headcount, we will look to enshrine
remuneration principles into the
remuneration policy that can be
replicated throughout the organisation
as a means of further developing our
people and reward strategies.
Remuneration in 2022 –
CEO Salary & Pension
In line with the strategic shift to a
fully internally managed REIT, at the
beginning of January 2022, following
a thorough assessment of the
expanded role and responsibilities
of the CEO – and with independent
advice - the Committee determined
that an increase in the base salary of
the CEO was required, recognising the
fundamental shift in her role following
the termination of the IMA and
ensuring a smooth transition to the
new structure. I-RES REIT has moved
from being an externally managed REIT
with three employees in early 2021 and
all management functions except for
CEO and Investor Relations delegated
to the external Manager, to being
a fully functioning business Group
incorporating the REIT and its wholly
owned subsidiaries.
The Committee is firmly aware of
the sensitivities around increases in
remuneration, and acknowledge the
CEO’s salary was increased during 2019,
from a low base set upon appointment
in line with good practice; however, we
are also satisfied that there has been
a genuine and meaningful increase
in the scope of the CEO’s role and
responsibilities over the past 12 months,
whereby the business has transitioned
from one with three employees and
limited management functions to one
with close to 100 employees and
standardised business functions. As
the IMA was terminated the Committee
was conscious of ensuring that
remuneration at the business replicated
the shift in structure. While the primary
rationale for the increase was the
expansion in scope of her role and the
business she leads, her track record as
CEO, ensuring stability coming out of a
turbulent period and the gap between
her salary and those of competitors
were also considerations. In determining
the appropriate level for the CEO’s
increased salary, the Committee
referenced benchmarking data to
ensure any decisions were appropriate
relative to market rates. That review
indicated that the CEO’s base salary of
€400,000 was below the lower quartile
of all ISEQ, FTSE and REIT peers.
As a result of the change in role and
responsibilities, and the fact that
the CEO’s salary was considerably
below both Irish and sector peers,
the Committee determined that the
appropriate CEO salary level should
be €550,000. This would position the
CEO salary for I-RES at the median
of similarly sized companies both in
the UK and Ireland. Relative to other
listed companies, it is also important
to note that the CEO’s total variable
opportunity remains well below the
median. The Remuneration Committee
determined that the adjustment to
bring current CEO salary to a market
based level for an internally managed
REIT would be phased in over two
years with an increase implemented
from January 2022 to bring salary to
€475,000. The second adjustment
would take effect from January 2023.
In making this decision the Committee
has considered the challenges that
the Company faces in successfully
integrating I-RES Fund Management
Limited, the Company’s strategy
Strategic Report
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Supplementary Information
2021 Annual Report
85
Amend sentence to ‘
for growth and relative levels of
remuneration for similar positions
at other FTSE listed companies of
a similar size and complexity. Since
her appointment, the CEO has
performed strongly and her knowledge
and understanding of the business,
our stakeholders and key risks
and opportunities are increasingly
important at an important juncture for
the company.
In light of the increase in salary set out
above, which is being implemented in
two phases, there will be no further
increases above the workforce or
inflation over the three years of the
policy to be proposed in 2023.
In line with the wider focus on
workforce pension alignment, and in
the context of the increase in base
salary for 2022, the CEO has agreed
to maintain the 2021 level of pension
contribution (i.e. 15% of €400,000
base salary) as a fixed contribution
despite the increase in base salary.
Consequently, the CEO will receive a
pension contribution of €60,000 for
2022 and future years representing
12.6% of salary in 2022 and a further
reduction to 10.9% of salary in 2023.
Conclusion
As set out above, 2021 was another
year of strong performance and
returns for stakeholders due to an
effective strategy and the efforts of
our leadership. The Committee strongly
believes there is a very close alignment
between this performance and the
remuneration outcomes for the CEO.
We look forward to your support for
the remuneration-related resolutions on
the agenda of the 2022 AGM, where
I will be available to answer any of our
shareholders questions on the contents
of this report.
Aidan O’Hogan
Chair of the Remuneration Committee
Members:
Aidan O’Hogan (Chair),
Joan Garahy, Tom Kavanagh and
Declan Moylan.
Bessboro
Terenure
40
Residential Units
I-RES
86
The Remuneration Committee is
chaired by Aidan O’Hogan. All members
of the Remuneration Committee
were independent non-executive
directors when appointed by the Board
and continue to be independent.
Accordingly, the Remuneration
Committee is constituted in compliance
with the Codes and the Articles of
Association regarding the composition
of the Remuneration Committee.
No member of the Remuneration
Committee has any conflicts of interest,
nor do they have any personal financial
interest other than as shareholders
(where relevant).
All members of the Remuneration
Committee are appointed for an initial
term of up to three years, which may
be extended by the Board.
The term of appointment for Tom
Kavanagh expired on 31 May 2021.
Accordingly, the Board agreed that
the appointment of Tom Kavanagh
would be extended for an additional
term of approximately three years
commencing on 1 June 2021 and
expiring at the end of the 2024 AGM
(subject to him continuing to meet
the criteria for membership of the
Remuneration Committee).
As highlighted in the biographies of
each member of the Remuneration
Committee on pages 64 to 65,
the members of the Remuneration
Committee bring a range of
different experience and skills to the
Committee.
Meetings of the Remuneration
Committee
The Remuneration Committee met
eight (8) times during the period
from 1 January 2021 to 31 December
2021. The Remuneration Committee
members’ attendance at each meeting
is set out on page 70.
Remuneration Policy
The Company’s remuneration policy is
to ensure that executive remuneration
includes a mix of basic salary and
short-term and long- term incentive
awards, aligned to the Company’s
strategy and key performance
indicators. The mix of executive
remuneration is designed to reflect
the relative impact of the executive’s
role on the Company’s performance
and considers how that mix aligns with
long-term shareholder value creation.
In determining the target mix of
compensation, the Remuneration
Committee considers market
compensation data available for
comparator real estate investment
trusts, which includes real estate
investment trusts in jurisdictions inside
and outside of Ireland (including
countries where executives are
employed and paid by the real estate
investment trust), to ensure that the
compensation mix is competitive with
comparator real estate investment
trusts and appropriate in light of
the Company’s business strategy
and changing structure including
increased scale and responsibilities of
the CEO role to ensure retention of
experienced management at a time of
significant change for the Company in
its structure as well as in the external
environment from regulatory changes
and wider macro challenges.
Executive and Non-Executive
Directors Considerations
The following section sets out the
Company’s Remuneration Policy
for Executive and Non-Executive
Directors, which was approved by
99.2% of shareholders at the 2020
annual general meeting (the “2020
Remuneration Policy”).
The Committee’s intention is that
the 2020 Remuneration Policy will
be reviewed and refreshed during
the course of 2022 to ensure that
it will align with the business’ needs
and Company strategy following the
internalisation process as well as
evolving best practice and regulatory
developments. The committee will
prepare proposals for a new three-
year policy for the period January
2023 to January 2026 (the “2023
Remuneration Policy”). The preparatory
work on the 2023 Remuneration Policy
will be completed during the course of
2022, including extensive shareholder
consultation. As part of this process,
all aspects of the Remuneration Policy
will be reviewed including in respect
of alignment on pension contributions
with the wider workforce. The 2023
Remuneration Policy will also ensure
the further integration of ESG focused
measures into the remuneration
structure. That policy will be put to the
shareholders for a vote at the 2023
AGM in line with the EU Shareholders’
Rights Directive legislation.
Set out below are minor adjustments
to wording have been made for clarity.
For the definitive version of the 2020
Remuneration Policy as approved by
shareholders, please see the 2019
annual report. In developing the 2020
Remuneration Policy, the Remuneration
Committee was mindful of the factors
set out in the UK Code Provision 40:
↘
Clarity and Simplicity:
The
Remuneration Committee aimed
to incorporate simplicity and
transparency into the design and
delivery of the 2020 Remuneration
Policy. The remuneration structure
is simple to understand for both
participants and shareholders and
is aligned to the strategic priorities
of the business.
↘
Risk:
The 2020 Remuneration
Policy includes a number of
points to mitigate potential risk:
↘
Defined limits on the maximum
opportunity levels under
incentive plans
↘
Provisions to allow malus and
clawback to be applied where
appropriate
–
Performance targets calibrated
at appropriately stretching but
sustainable levels
–
Bonus deferral, LTIP holding
periods, in-employment and
post-employment shareholding
requirements ensuring alignment
of interests between Executive
Directors and shareholders
and encouraging sustainable
performance
↘
Predictability:
We aim for our
disclosure to be clear to allow
shareholders to understand the
range of potential values which may
be earned under the remuneration
arrangements.
↘
Proportionality:
A significant
part of an Executive’s reward is
linked to performance with a clear
line of sight between business
performance and the delivery
of shareholder value.
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87
↘
Alignment to culture:
The incentive
arrangements and the performance
measures used are strongly aligned
to those that the Board considers
when determining the success
of the implementation of the
Company’s purpose, values and
strategy. Please see page 47 of
this Report for more information
on the Company’s strategy and
key performance indicators.
The Company’s strategy of growth
in both Net Rental Income and NAV,
with secure and favourable leverage,
alongside quality standards of
accommodation and resident service,
is well aligned with the substantially
deferred rewards available to the CEO
through both the bonus and the LTIP
share awards if and when certain
benchmarks are achieved. Moreover,
the significant deferral combined with
the malus and clawback provisions
minimises the risk of any exceptional
short-term focus.
Element
Operation
Opportunity
Performance
metrics
Basic Salary
To provide a
fixed level of
compensation
reflecting the
individual’s skills and
experience
The Remuneration Committee will consider the salary level
from time to time during the policy period, having regard
to any significant changes in the size and scope of the role
and the business, material changes in comparative market
data for similar roles and reward for individual development.
No maximum level Not applicable
Benefits
To provide
benefits which are
competitive with
market practice
An annual taxable cash allowance towards car, health cover
and risk benefits such as death in service critical illness and
disability cover contributions.
No maximum level
Benefits allowance
from 1January
2019: €25,000 p.a.
Not applicable
Pension
To provide
competitive post-
retirement benefits
Fixed contributions into an approved Company defined
contribution executive pension scheme or an equivalent
cash supplement is proposed.
15% of basic salary
Not applicable
Annual Bonus
To support the
delivery of the
Company’s business
strategy and KPIs
and reward annually
for contribution
to financial and
non- financial
performance
Annual bonus based on stretching performance conditions
set by the Remuneration Committee at the start of each year.
20% of any bonus paid will be paid as restricted Company
shares to promote sustainable performance and provide
additional alignment of the CEO with shareholder interests.
Dividends will be paid as they arise.
Any bonus payments will be subject to withholding (malus)
or requirement of repayment (clawback) provisions in the
event of the achievement of certain financial results that were
subsequently the subject of or affected by a restatement
of all or a portion of the Company’s Consolidated financial
statements; engagement in gross negligence, intentional
misconduct or fraud that caused or partially caused the need
for the restatement, as finally determined (beyond any right of
appeal) by a court of competent jurisdiction, and the bonus
payment received would have been lower had the financial
results been properly reported.
The Remuneration Committee has the discretion to override
formulaic outcomes in circumstances where it judges it would
be appropriate to do so and, in such circumstances, the basis
for the exercise of any such discretion will be disclosed in the
Annual Report.
The cash portion of the bonus may be payable (in whole or in
part) as an employer pension contribution if agreed between
the individual and Remuneration Committee.
Maximum
opportunity of
150% of basic
salary
For the
achievement
of Target
performance, 50%
of the Maximum
opportunity
(75% of basic
salary) would be
expected to be
payable.
The
Remuneration
Committee will
determine the
performance
measures, their
weightings and
the calibration
of targets each
year and will
clearly disclose
these in the
Remuneration
Report.
2021
performance
measures and
targets are set
out on page 91.
I-RES
88
Element
Operation
Opportunity
Performance
metrics
Long -Term
Incentives
To align the
interests of the
CEO with those
of shareholders
and reward the
delivery of long-
term strategic
performance
objectives and
the creation of
shareholder value
On her appointment as CEO, a share option award was
granted to Margaret Sweeney and she was entitled to be
awarded options to acquire 3% of the number of shares
issued by the Company from time to time pursuant to any
equity raise (private or public) of the Company.
From 2020, this share option arrangement for the CEO was
replaced with annual awards of shares, subject to stretching
three-year performance conditions.
Following the three-year performance period, there is
a further two-year holding period to further promote
sustainable performance and shareholder alignment.
Dividend equivalents (as a cash amount or additional shares)
will be paid at the end of the vesting period.
All LTIP awards will be subject to malus and clawback
provisions.
The Remuneration Committee has the discretion to override
formulaic outcomes in circumstances where it judges it would
be appropriate to do so and in such circumstances, the basis
for the exercise of any such discretion will be disclosed in the
Annual Report.
In the event of an equity restructuring, the Remuneration
Committee may make an equitable adjustment to the terms of
share and share option awards by adjusting the number and
kind of shares which have been granted.
Outstanding LTIP awards would normally vest and become
exercisable on a change of control, subject to plan rules,
and taking account of the degree to which performance
conditions have been satisfied.
The Remuneration Committee may exercise its discretion to
vary the level of vesting having regard to the circumstances
and reasons for the events giving rise to the change of
control or determine that it would be appropriate for the
LTIP awards to be exchanged for equivalent awards in
the purchaser’s shares where such an award would be
substantially equivalent, in value and in terms and conditions,
to the award in the Company.
The LTIP limit cannot exceed 10% of the Company’s issued
ordinary share capital (adjusted for share issuance and
cancellation) during the 10-year period prior to that date.
Awards of face
value up to 135%
of salary
The vesting of
these shares will
be determined
by performance
against earnings
per share (“EPS”)
and relative total
shareholder
return (“TSR”
conditions
set by the
Remuneration
Committee at
the time of each
grant.
The performance
targets for
each award
will be clearly
disclosed in the
relevant year’s
Remuneration
Report.
2021
performance
conditions are
set out on page
94.
Shareholding
Requirement
To further align
the interests of the
CEO with those
of shareholders
and encourage
sustainable
performance
From 2020, the CEO was required to build and maintain a
shareholding interest in the Company equivalent to at least
200% of her basic salary.
There will be a five-year period to build up this holding from
the introduction of the policy.
For the purposes of the requirement, “shareholding interest”
includes shares if vesting is not subject to any further
performance conditions. Vested but unexercised share
options, deferred bonus shares and LTIP shares during the
two-year holding period following the achievement of the
performance condition will be included with a 50% discount
applied where appropriate to reflect the number of shares
which would be owned assuming sufficient shares were sold
to pay tax due.
A post-employment shareholding requirement will also
apply: A shareholding interest in the Company equivalent
to at least 200% of basic salary (or the actual shareholding
interest on exit if lower) will be required to be held for a
period of two years after leaving employment.
Not applicable Not applicable
Derogation from
Remuneration
Policy
Only in accordance with the terms of the Remuneration
Policy and/or the European Union (Shareholders’ Rights)
Regulations 2020, which provides for temporary derogation
in exceptional circumstances, where doing so is to serve the
long- term interests and sustainability of the Company as a
whole or to assure its viability.
Not applicable Not applicable
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Financial Statements
Supplementary Information
2021 Annual Report
89
Service contracts
Margaret Sweeney has a service
contract with the Company terminable
upon six months’ prior written notice at
the discretion of Margaret Sweeney or
12 months’ prior written notice at the
discretion of the Company. Margaret
Sweeney is entitled to be paid her full
remuneration (net of any social welfare
benefits) during any periods of inability
to work due to illness or accident, not
exceeding in aggregate six weeks in
any consecutive 12-month period; and
thereafter six weeks’ half remuneration
(net of any social welfare benefits).
Ms. Sweeney’s notice period
entitlements are limited to salary
and benefits over 12 months or less,
subject to mitigation.
Policy for Recruitment of New
Executive Directors
The Remuneration Committee
will determine the remuneration
arrangements in respect of any newly
appointed Executive Directors that
may be appointed in the future, in line
with and subject to the limits in the
Remuneration Policy as set out above,
including use of performance criteria,
holding periods and application of
recovery or withholding periods.
Salary levels will be determined taking
into account the experience of the
individual, the size and scope of the
role and the business, and comparative
market data for similar roles.
Relocation benefits may be provided
if necessary.
If for an external appointment it
is necessary to buy out incentive
arrangements which would be
forfeited on leaving the previous
employer, this will be done taking
into account the form (e.g. cash
or shares), vesting period and any
performance conditions applicable to
the remuneration being forfeited.
If an internal appointment is made,
remuneration arrangements awarded
prior to promotion to Executive
Director level will continue to run in
line with the schedule and conditions
determined at time of grant.
Non-Executive Director Fees
The remuneration of the non-executive
directors is determined by the Board
as a whole. No director may be
involved in any decisions in respect of
his or her own remuneration.
Levels of remuneration for non-
executive directors reflect the time
commitment and responsibilities of the
role. The fees paid to non-executive
directors are therefore set at a level
which aims to attract individuals with
the necessary experience and ability to
make a significant contribution to the
Company and to compensate them
appropriately for their role. Levels of
fees may be reviewed from time to time
during the policy period, having regard
to any significant changes in the size
and scope of the role and the business,
and material changes in comparative
market data for similar roles.
As set out on page 95, with effect
from 1 July 2021, the Board approved
an increase in the level of fees for
non-executive directors; for the
Chairman; and awarded a fee for the
Senior Independent Director.
Potential derogation from the
Remuneration Policy
The Remuneration Committee intends
that remuneration arrangements
will operate in accordance with the
above Remuneration Policy until an
amended Remuneration Policy is
put to shareholders for approval.
The European Union (Shareholders’
Rights) Regulations 2020 allow for the
potential for a temporary derogation
from the Remuneration Policy where
doing so is necessary in exceptional
circumstances, to serve the long-
term interests and sustainability of the
traded PLC as a whole or to assure
its viability. By definition, it is not
possible to fully list all such exceptional
circumstances, but the Remuneration
Committee would only use such
ability to apply a derogation after
careful consideration and where the
Remuneration Committee considers
the circumstances were truly
exceptional and the consequences
for the Company and shareholders
of not doing so would be significantly
detrimental. Where time allowed,
shareholders would be consulted
prior to applying such a change, or, at
minimum where this was not possible,
the full details of the derogation would
be communicated as soon as practical
(e.g., by market announcement/on the
Company’s website) and disclosed in
detail in the next Remuneration Report.
Under the potential derogation, the
Remuneration Committee would have
the ability to vary the elements of
remuneration described in the above
table, including levels and performance
conditions applicable to incentive
arrangements.
I-RES
90
Remuneration Report
Implementation of Remuneration Policy in 2021
Total Remuneration of Directors in 2021
The table
(1)
below sets forth the total remuneration received by each director in respect of 2020 and 2021.
Fixed Remuneration Variable Remuneration
Name
Yea r
Basic
salary
(€’000)
Fees
(€’000)
Benefits
(€’000)
(2)
Annual
Bonus
Cash
(€’000)
Deferred
Bonus
(€’000)
Long-
term
Incentive
(€’000)
(3)
Extraordinary
items
(€’000)
(4)
Pension
(€’000)
Tota l
Remuneration
(€’000)
Proportion
of fixed and
variable
Remuneration
(5)(6)
Margaret
(7)
Sweeney
2021
400 115 1,058 46% / 54%
-
459 25
-
60 2020
400 632 77% / 23%
-
118 25
29
- -
60 Philip
Burns
2021
- - - - - -
58
- 58 100% / 0%
2020
- - - - - -
50
- 50
100% / 0%
Joan
Garahy
2021
- - - - - -
83
- 83 100% / 0%
2020
- - - - - -
75
- 75
100% / 0%
Tom
Kavanagh
2021
- - - - - -
71
- 71 100% / 0%
2020
- - - - - -
50
- 50
100% / 0%
Mark
Kenney
(8)
2021
- - - - - - - - -
n/a
2020
- - - - - - - - -
n/a
Declan
Moylan
2021
- - - - - -
170
- 170 100% / 0%
2020
- - - - - -
140
- 140 100% / 0%
Aidan
O’Hogan
2021
- - - - - -
90
- 90 100% / 0%
2020
- - - - - -
75
- 75
100% / 0%
Stefanie
Frensch
(9)
2021
- - - - - -
33
- 33 100% / 0%
2020
-
n/a
- - - - - - -
n/a Total
2021
400 115 1,563 n/a
505
459 25
- -
60 2020
400 390 1,022 n/a
25
118 29
- -
60 (1) The table includes all emoluments paid to or receivable by directors in respect of qualifying services during the review period.
(2) Non-executive directors do not receive any benefits.
(3) For more information on options and Restricted Shares granted under the LTIP to the directors, please refer to the section below titled “Long-
term Incentives”.
(4) No compensation for loss of office, payments for breach of contract or other termination payments were paid to any current or former director in
the period under review.
(5) These proportions have been calculated based on the figures in this table. Note that, as share options awarded in 2019 were market priced, their
intrinsic value at the date of grant (and therefore the value included in this table) was zero. Full details of the awards made in 2021 and in previous
years are included in the tables below under “Long-term Incentives”.
(6) Note that Restricted Shares awarded to the CEO will be included in this table when performance conditions have been met. For further details on
Restricted Shares granted to the CEO in 2021, please refer to page 94 of this Report.
(7) Remuneration in respect of 2021 was in line with the Remuneration Policy approved by shareholders at the 2020 annual general meeting.
(8) To resignation date of 2 July 2021
(9) Fees from appointment date of 1 July 2021
Tallaght Cross West
Dublin 24
460
Residential Units
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Financial Statements
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2021 Annual Report
91
Remuneration in 2021
Salary
There were no changes to salary
during 2021.
Benefits
The CEO receives an annual taxable
cash allowance of €25,000 towards
car, health cover and risk benefits
such as death in service critical illness
and disability cover contributions.
Pension
The CEO participates in a defined
contribution pension arrangement and
received a contribution equivalent to
15% of basic salary during 2021.
Annual bonus
The CEO’s annual bonus maximum
opportunity level for 2021 was
150% of basic salary in line with the
shareholder- approved Remuneration
Policy. A bonus deferral arrangement is
in place such that 20% of any bonus
paid is deferred into Company shares
for a period of three years to promote
sustainable performance and provide
additional alignment of the CEO with
shareholder interests.
For 2021, 70% of annual bonus for
the CEO was determined by financial
performance measures and 30% was
based on strategic objectives. The
weightings, targets and performance
against each are summarised in the
tables below:
2021 quantitative financial measures
Measure
Weighting
(% of
Maximum
bonus)
Threshold
performance
(25% of
Maximum
payout)
Targ et
performance
(50% of
Maximum
payout)
Stretch
performance
(100% of
Maximum
payout)
Performance
achieved
Maximum
payout
Actual
payout
(% of
salary)
EPRA earnings
(1)
30% €34.63m €36.45m €37.36m
€
37.09
m
€180,000
€153,297
Net Rental Income €59.64m €61.13m €63.04m €120,000 €120,000
20%
€56.65m NAV
20%
€802.75m €845.00m €866.13m €881.44m €120,000 €120,000
(1) EPRA Earnings have been adjusted for non-recurring costs during the year. See further detail on non-recurring costs on page 26.
2021 qualitative measures
Measure
Weighting
(% of Maximum
bonus)
Commentary on performance achieved
Rating
(1)
ESG
↘
Completion of
materiality assessment;
development of strategy
aligned with overall
business strategy
↘
Building and
development of
organisational resource
on sustainability
↘
Enhancement of Group
disclosure on ESG
to meet investor and
funder expectations
↘
Assist Board with
establishment of Board
Sub Committee on
sustainability including
terms of reference
↘
Access to necessary
expertise and formalising
reporting
9%
↘
The various objectives set out for ESG for 2021 have been
progressed significantly in line with objectives:
↘
The CEO supported the successful establishment of a
Board Sustainability Committee, its terms of reference
and building out its agenda as the company puts in
place the necessary building blocks for a comprehensive
sustainability strategy supported by organisational
structure, resources and reporting;
↘
The Materiality assessment was completed and reported
to Board;
↘
A 3-year Strategy Roadmap based on the materiality
assessment was completed and approved by the Board.
This was also updated by management into business
planning with regular updates to the Management ESG
Committee and Board Sustainability Committee;
↘
The Director of Sustainability and Corporate Development
was recruited. She also supports and reports to the Board
Sustainability Committee;
↘
The Company published its first ESG Report in 2021
and made a formal submission to GRESB;
↘
The CEO had ongoing engagement with investors on
sustainability requirements and evolution of company
reporting in this regard. An assessment was made
across the different indices being used by investors and
establishing the company’s data inputs; and
↘
The Company achieved EPRA Gold rating for most
improved ESG reporting in 2021 and achieved recognition
from European Women on Boards for diversity and
inclusion.
Green
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92
Measure
Weighting
(% of Maximum
bonus)
Commentary on performance achieved
Rating
(1)
Risk Management
Successfully oversee the
risk management strategy
to ensure no material
avoidable and within our
control risks materialise.
7%
The Company’s Growth strategy continued to be implemented
in the context of managing leverage in line with the Board
policy and risk environment and added value for shareholders.
The CEO devoted enormous focus and efforts to successfully
deal with the termination of the IMA notified by the Manager
on 31 March 2021 and the subsequent plans for internalisation.
This was complex and multifaceted with potential significant
attendant risk for the Company. The plans, process and
negotiations were developed to manage risk and ensure
regular reporting to the Board Related Party Committee. This
included risk assessment and progress reporting across 12
different workstreams.
The Covid-19 pandemic represented a significant potential risk
to the Company. The Group navigated this challenging period
successfully, in no small part, due to the implementation of a
crisis management team led by the CEO and through regular
reporting from the CEO to the Board on the potential impact
of Covid-19 on the Company.
The CEO’s experience and crisis management skills proved of
significant value to the Board and facilitated the continued
successful operation of the Company and delivery of strategy
during this extraordinary Covid-19 period and notice of
termination of the IMA.
Green
Investor Relations and
Funding
Develop and manage a
proactive investor relations
and funding plan with
existing and prospective
investors and lenders
to support delivery of
the approved Company
strategy
7% The CEO had extensive interaction with existing and
prospective investors in 2021.
In 2021, the CEO attended approximately 144 separate
meetings and conference calls. In addition, the CEO attended
2 in person investor conferences which included prospective
investors, investment banks and analysts.
The CEO undertook thorough roadshows following the
announcement of the Preliminary Results for 2020 in February
2021 and the Interim Results in August 2021, meeting virtually
a range of investors in Ireland, the UK, Europe, North America
and Canada.
In addition, the CEO and the Company participated in various
conferences and took ad-hoc meetings and calls on an
ongoing basis as well as site visits in December.
The CEO proactively managed Shareholder communication
related to the termination of the Investment Management
Agreement and Internalisation of management of the
Company.
Green
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93
Measure
Weighting
(% of Maximum
bonus)
Commentary on performance achieved
Rating
(1)
Strategy
Delivery of Company
strategy during 2021
7% Despite the ongoing COVID pandemic and the related impact
on real estate, the CEO worked closely with the management
team to continue delivering on the growth strategy.
Having regard to dramatically changed global and local
conditions, she led the successful direction of the Board
growth strategy in modified conditions, including capital
constraints as well as managing risk and return.
After numerous challenges, the CEO closed the acquisition of
146 residential units at Phoenix Park Racecourse, Castleknock,
Dublin 15 for €60 million (including VAT but excluding other
transaction costs) in January 2021 and its successful
integration into the portfolio.
The CEO saw the opportunity to add value by progressing
to finalise a 25-year index linked lease on Hampton Wood in
August 2021, which has added significantly to the value of
that asset.
Continuing focus on asset value also resulted in further value
from under-utilised commercial space including the sale of
the Food court in Tallaght and the finalisation of the lease
with Tallaght Hospital.
Despite the issue of the termination notice on the IMA,
the CEO ensured the Manager stayed focused on growth
resulting in finalisation of contracts for 152 units at Ashbrook,
Clontarf in December 2021.
In addition, the CEO continued the focus on the delivery of
the company’s two developments at Bakers Yard and Merrion
Road to ensure delivery of a further 130 units in the first half
of 2022 despite COVID challenges.
Green
Time Place, Sandyford
Dublin 18
67
Residential Units
I-RES
94
Performance level Vesting level
Adjusted EPS portion
(50% weighting)
Percentage growth in
EPS: 2023 compared to
base year of 2020
TSR portion (50%
weighting)
TSR relative to
constituents of the FTSE
EPRA/NAREIT Europe
Developed Index
Below Threshold 0% Below 2% p.a. Below Median
Threshold Median
25%
2% p.a.Stretch (or above) 100% 3% p.a. Upper Quartile (or above)
Between Threshold
andStretch
Pro-rata between 25%
and100%
Between 2% and 3% p.a. Between Median and
UpperQuartile
Name
Number of shares awarded
in 2021
Share Price at Date
of award
Face Value at Date
of award
Margaret Sweeney 335,820 €1.61 €540,670.20
Adjusted EPS targets are based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the
effects of certain non-recurring and exceptional items. EPRA earnings are calculated using a different method than standard
EPS. In determining the Adjusted EPS performance range detailed above, the Committee considered a number of key
factors. In particular, internal modelling and external analyst forecasts were reviewed, as well as the Company’s strategy
over the coming three years. The Committee also considered and discussed appropriate benchmarks in the context of the
Company’s REIT structure and regulation of the private residential market in Ireland, most recently around stamp duty and
restrictions around changes to rental prices.
The Committee determined that a range of 2% to 3% growth per annum included considerable stretch and achievement of
the targets would result in the creation of significant value for shareholders and stakeholders. In coming to that conclusion,
the Committee was also mindful of the significant growth in the business over the past two years as well as regulation
around rentals.
As noted above, the Adjusted EPS measure is based on the EPRA earnings methodology, which excludes certain factors that
would be incorporated into a standard EPS calculation.
The Remuneration Committee
assessed performance against each
of the qualitative measures on a
‘traffic light’ basis: Green – Fully
Achieved, Orange – Partially Achieved,
Red – Not Achieved.
The Committee considered
achievement and performance of the
CEO against the specific qualitative
objectives set for 2021. For the
qualitative measures, the Committee
placed enhanced weighting on
delivery of the Company strategy
in light of the termination notice in
respect of the IMA. The Committee
particularly noted how the CEO had
navigated the business through both
the termination of the IMA and the
preparations for internalisation as
well as managing the business during
the ongoing Covid-19 pandemic
to ensure continuity of delivery of
the strategy, careful and focused
management of risks and effective
stakeholder management. In addition,
the clear leadership on ESG from
the CEO has been evident in the
company’s performance over the
past 12 months, reflecting another
clear priority set by the Board over
the past two years. Based on the
evaluation and factors considered
above, the Committee determined
that the qualitative objectives for 2021
were fully achieved. Having reviewed
pay-outs, the Committee was satisfied
that pay-outs were aligned with overall
company and individual performance
as well as stakeholder experience
during the performance period.
The total bonus achieved by the CEO
in respect of the financial year ended
2021 was 143.32% of her base salary
(maximum bonus opportunity 150%). In
line with this, on 22 February 2022, the
Remuneration Committee awarded the
CEO a performance-related bonus of
€573,297 in respect of the Company’s
financial year ended on 31 December
2021 (the “2021 Bonus”).
Of this €458,638 (representing 80% of
the 2021 Bonus) was paid to the CEO
in cash. The remainder of the 2021
Bonus, €114,659 (representing 20%),
was settled as a restricted entitlement,
to the beneficial interest in 78,534
ordinary shares in the capital of the
Company (the “2021 Restricted Bonus
Shares”).
Awards Granted During the
Past Year
On 5 March 2021, in line with the
Remuneration Policy the Remuneration
Committee awarded the CEO
a conditional award of 335,820
Restricted Shares under the terms of
the LTIP (equivalent to 135% of basic
salary) in the capital of the Company.
The vesting of the 2021 award is
subject to the achievement of the
performance conditions set out in the
table below. In the event of vesting,
awards will be held for a further two-
year period from the completion of the
three year performance period.
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95
Share options awarded in years prior to 2022
Director
Grant
Date
Exercise
Price (€)
No of
Options
01 - Jan
21
Options
Granted
during the
Period
Options
Vested
during the
Period
Options
Exercised
during the
Period
Options
Cancelled/
forfeited
during the
Period
No. of
Options 31
Dec 2021
Vesting
Date(s)
Latest
Date for
Exercise
Margaret
Sweeney
10-Jul-19 1.682 1,294,038 – 431,346 – – 1,294,038 One third in
each year
starting
10-Jul-2020
9-Jul-26
Margaret
Sweeney
18-Jun-19 1.71 1,302,461 – 434,154 – – 1,302,461 One third in
each year
starting
18-Jun-2020
17-Jun-26
Margaret
Sweeney
16-Nov-17 1.489 – – –
2,000,000
–2,000,000
One third in each year
starting 16 Nov
2018
15-Nov-24
Mark
Kenney
(1) (2)
26-Mar-15 1.005 –
500,000
–500,000
(3)
– – One third in
each year
starting 26 Mar
2016
25-Mar-22
(1) Options were first granted at I-RES’ initial offering on 16 April 2014.
(2) At the time of his appointment as a Non-Executive Director, Mark Kenney held 1,500,000 options of I-RES previously awarded to him in his capacity as an employee of CAPREIT. On
20 November 2020 Mark Kenney assigned 1,000,000 options to subscribe for shares in the Company, granted to him in April 2014 under the LTIP, to CAPREIT through its qualifying
investor alternative investment fund, Irish Residential Properties Fund (the “QIAIF”). The Remuneration Committee granted consent for this assignment. Following assignment of
these options by Mr. Kenney, the QIAIF immediately exercised the options and effected the payment of the Exercise Price (of €1.04 per option) to the Company, whereupon the
QIAIF was allotted 1,000,000 ordinary shares of nominal value €0.10 each in the capital of the Company. In consideration for the assignment of these options to the QIAIF, the
QIAIF agreed to pay Mark Kenney the amount of €0.4770 per option, representing the difference between the Exercise Price and the volume weighted average price of the
underlying Ordinary Shares for the five-business day period to close of business on 19 November 2020, being the business day immediately prior to the date of assignment
(3) On 4 June 2021 Mark Kenney exercised his remaining 500,000 options at an exercise price of €1.005 per option.
Restricted Share Awards
Director
Grant Date No of
restricted
shares 01-Jan
21
Restricted
shares granted
during the
period
Restricted
shares vested
during the
period
Restricted
shares
cancelled/
forfeited
during the
period
Total No of
restricted
shares 31 Dec
21
Performance
period for new
Restricted
Shares
Vesting date
for new
Restricted
Shares
Margaret
Sweeney
27 March 20 437,601
— — — 437,601
1 Jan 20 to
31 Dec 22
27 March 23
Margaret
Sweeney
05 March 21 — 335,820 — — 335,820 1 Jan 21 –
31 Dec 23
5 March 24
Non-Executive Director Fees in 2021
Following a review of Chair and Non-Executive Director fees, which had not been increased since 2014, it was determined
that increases in line with market rates were appropriate. Therefore, with effect from 1 July 2021 the Board approved an
increase in the level of fees for non-executive directors from €50,000 to €65,000. They also approved an increase in fees
for the Chairman from €140,000 to €200,000 and awarded a fee for the Senior Independent Director of €15,000 all also
with effect from 1 July 2021.
There was no change during the period in respect of the fee for Committee Chairs, although with the creation of the Board
Sustainability Committee there is now one additional Committee Chair. The fees for non-executive Directors had last been
reviewed in 2019. In approving these changes, the Board had regard to advice from and a benchmarking exercise carried
out by its remuneration advisers. There will be no changes in fees for Directors prior to the completion of our policy to be
proposed in 2023, save in exceptional circumstances.
I-RES
96
Comparative information on the change of remuneration and company performance
The table below compares the year-on-year change in total remuneration of each of the directors over the past five years
with company performance over the same period. Note that, as at 31 December the Company had only 11 employees (one
of whom sits on the Board) and the majority of whom were appointed in the latter half of 2021. During 2021, because the
Company was externally managed, items of disclosure required by the European Union (Shareholders’ Rights) Regulations
2020 and the UK Code relating to workforce remuneration arrangements were not applicable.
Name
Role 2017 2018 2019
2020 2021
Executive Directors’ remuneration
Margaret
Sweeney
Chief Executive Officer
and Executive Director
Total Remuneration (€) 1.037 632 1,058
127
730% change from previous year
—
474%
(1)
42% (39%)
67%
Non-Executive Directors’ remuneration
Margaret
Sweeney
Non-Executive Director Total Remuneration (€) 56
— — — —
% change from previous year 12%
(1)
— — — —
Phillip Burns Non-Executive Director Total Remuneration (€)
50 50 50 50
58% change from previous year
28%
(2)
0% 0% 0% 16%
Joan Garahy
Non-Executive Director Total Remuneration (€) 39
75 75 75
83% change from previous year — 92%
(3)
0% 0% 11%
Tom Kavanagh Non-Executive Director Total Remuneration (€)
n/a
7129
50 50
% change from previous year — —
72%
(4)
— 42%
Mark Kenney
Non-Executive Director Total Remuneration (€)
n/a n /a
— — —
% change from previous year
— — — — —
Declan Moylan Non-Executive
Chairman
Total Remuneration (€) 88
100
134140
170
% change from previous year
76%
(5)
14%
34% 5% 21%
7
Aidan O’Hogan Non-Executive Director Total Remuneration (€) 54
75 75 75
90% change from previous year 0.08 39%
(6)
0 0
20%
Stefanie
Frensch
Non-Executive Director Total Remuneration (€)
— — — —
33
% change from previous year
— — — —
n/a
Company performance
EPRA Earnings Total (€ millions) 24.87 27.78 33.07 34.03 31.65
% change from previous year 21.0% 12.0% 19.0% 3.0% (7%)
EPRA EPS Total (cents) 6 6.5 6.9 6.5 6
% change from previous year 22.0% 8.0% 6.0% (6%) (8%)
Total number of residential units 3688
Total
36662450
2679
3829
% change from previous year 3.0% 9.0% 37.0% 1.0% 3.8%
Additional numbers
Adjusted EPRA Earnings Total (€ millions) 24.87 27.78 33.07 36.36 37.08
% change from previous year 21% 12% 19% 10% 2%
Adjusted EPRA EPS Total (cents) 6 6.5 6.9 7.0 7.0
% change from previous year 22% 8% 6% 1% —
(1) Margaret Sweeney served as a non-executive director in 2016 and 2017 and received fees in respect of this role. She was the Chair of Audit
Committee from 23 March 2016 until 1 November 2017. On 1 November 2017, Ms. Sweeney was appointed Chief Executive Officer and full-time
executive director and this accounts for the substantial change in remuneration in 2018 above to include salary, pension contributions and bonus.
(2) Phillip Burns was appointed to the Board on 23 March 2016. The increase of 28% in 2017 was due to Mr. Burns being part of the Board for a full year.
(3) Joan Garahy was appointed to the Board on 18 April 2017 and was appointed as Chair of the Audit Committee on 1 November 2017, succeeding
Margaret Sweeney. As of 1 July 2021, Ms. Garahy’s annual fee for her non-executive role is €65,000 and, with effect from 1 November 2017,
€25,000 for her position as Chair of the Audit Committee. The increase of 92% in 2018 was due to Joan being part of the Board for a full year
and her new position as Chair of the Audit Committee.
(4) Tom Kavanagh was appointed to the Board on 1 June 2018. The increase of 72% in 2019 was due to Mr. Kavanagh being part of the Board for a
full year. Mr Kavanagh’s annual fee for his non-executive role is €65,000 and, with effect from 11 May 2021, €25,000 for his position as Chair of
the Sustainability Committee The increase of 42% in 2021 was due mainly to his appointment as the Chair of the Sustainability Committee.
(5) Declan Moylan was appointed as Chairman on 31 March 2017. As a result, Mr. Moylan’s annual fee was increased from €50,000 to €100,000
with effect from 31 March 2017. The increase of 76% in 2017 was due to Declan’s new role as Chairman.
(6) Aidan O’Hogan was appointed as Chair of the Remuneration Committee on 31 March 2017, succeeding Declan Moylan. Mr. O’Hogan’s annual
fee for his role as a non-executive director is €50,000 and, with effect from 1 November 2017, he was paid €25,000 for his role as Chair of the
Remuneration Committee. The increase of 39% in 2018 was due to Aidan’s new role as Chair of the Remuneration Committee.
(7) Declan Moylan’s annual fee for his role as the Chairman was increased to €200,000 per annum effective 1 July 2021 which resulted in a 21%
increase from 2020 to 2021.
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Interests of Directors and the
Secretary in the share capital
The interests of directors and the
Secretary in the share capital of the
Company set out in page 113 of the
Report of the Directors is incorporated
by reference in this Report of the
Remuneration Committee.
As of 31 December 2021, the CEO
maintained a ‘shareholding interest’ of
approximately 895% of basic salary
based on a market price of €1.68 being
the closing price of the Company’s
shares on 31 December 2021.
Implementation of Remuneration
Policy in 2022
CEO Remuneration in 2022
Basic salary
As detailed in the letter of the
Committee Chair, there has been a
significant change in structure of the
Company from an externally managed
REIT to a fully internalised structure with
effect from 1 February 2022. This has
increased significantly the operational
scope and responsibility of the CEO,
underpinned by the termination of
the IMA and the internalisation of the
Manager including implementation of
new technology and systems across
the business.
As a result of considering the change
in circumstances, and the fact that
the CEO’s salary was considerably
below both Irish and sector peers,
the Committee determined that the
appropriate CEO salary level should
be €550,000. This would position the
CEO salary for I-RES at the median
of similarly sized companies both in
the UK and Ireland. Relative to other
listed companies, it is also important
to note that the CEO’s total variable
opportunity remains well below the
median. The Remuneration Committee
determined that the adjustment to
bring current CEO salary to market
based level for an internally managed
REIT would be phased in over two
years with an increase implemented
from January 2022 to bring salary to
€475,000. The second adjustment
would take effect from January 2023.
In setting this level, the Remuneration
Committee has considered the
significant transition to a fully internally
managed REIT including a whole of
business IT implementation, transition
of services from CAPREIT LP,
successfully integrating I-RES Fund
Management Limited, the Company’s
strategy for growth and relative levels
of remuneration for similar positions
at other FTSE listed companies of a
similar size and complexity.
The CEO’s role has not only grown in
complexity and strategic importance
but is now larger in scope. Specifically,
the CEO is now responsible for over
90 employees and operations that
are significantly larger than when
she joined. In addition, separate to
the meaningful change in the scope
and responsibilities of the CEO, the
Committee was also conscious of
ensuring continuity and stability at
the head of the organisation during
a period of change, against the
backdrop of a competitive market for
talent. As outlined, there will be no
further salary’ increases awarded to
the CEO above those granted to the
general workforce over the lifetime
of the policy to be proposed at the
2023 AGM.
Annual Bonus
The CEO’s opportunity under the
annual bonus for 2022 will remain 150%
of basic salary, with 20% of any bonus
payment deferred for three years into
shares in line with the shareholder
approved Remuneration Policy set out
above. The table below sets out the
measures and weightings that will apply
for 2022. The full details of targets and
performance against each will be set
out on a retrospective basis on next
year’s Remuneration Report.
Measure
Weighting (% of Maximum bonus)
EPRA earnings
(1)
30%
Net Rental Income
20%
NAV
20%
Qualitative strategic objectives 30%
(1) EPS is based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and
exceptional items.
The Committee has maintained the same performance measures as those utilised during 2021, as it believes that those
measures align strongly with the key strategic priorities of the business transition plan and continued delivery of the
Company’s strategy over the coming 12 months. The Committee also recognises the importance in 2022 of optimising the
existing portfolio and so have maintained the focus on maximising Net Rental Income alongside EPRA earnings and NAV.
The Committee has also maintained the weighting of 30% for the qualitative measures utilised under the bonus plan. The
Committee has agreed measures that place enhanced weighting on delivery of the integration of the acquired Manager and
transition including the continued focus on ESG and risk management outcomes alongside investor relations / funding and
on delivery of the Company’s strategy, each of which have taken on a bigger role since the internalisation. Full disclosure of
these measures and performance against them will be made in the 2022 Annual Report.
I-RES
98
Long Term Incentives
On 23 February 2022, in line with the Remuneration Policy the Committee confirmed an award to the CEO, subject to
certain conditions, of a conditional share award of 430,369 ordinary shares (equivalent to 135% of basic salary). The vesting
of the 2022 award is subject to the achievement of the performance conditions set out in the table below. The award will be
required to be held for a further two-year period from the vesting date in 2025.
Performance level Vesting level
EPS portion (50%
weighting)
Percentage growth in
EPS: 2024 compared to
base year of 2021
TSR portion (50%
weighting)
TSR relative to
constituents of the FTSE
EPRA/NAREIT Europe
Developed Index
Below Threshold 0% Below 2% p.a. Below Median
Threshold Median
25%
2% p.a.Stretch (or above) 100% 3% p.a. Upper Quartile (or above)
Between Threshold
andStretch
Pro-rata between 25%
and100%
Between 2% and 3% p.a. Between Median and
UpperQuartile
As with previous awards, EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA
earnings the effects of certain non-recurring and exceptional items. The Committee is satisfied that the EPS performance
range is stretching relative to internal modelling and external forecasts, particularly given the increasing regulatory pressure
facing the business and sector through rental caps. The Committee will conduct a rigorous review of the stretch element
of the EPS performance targets on a regular (at least annual) basis, to ensure they continue to balance the need to be
stretching while achievable.
The Committee notes the timing of grant of awards in the first quarter of 2022 and the perception that participants may
benefit from ‘windfall gains’ where awards were made of a value which may have been impacted by a fall in share price.
While there was a fall in share price in the first quarter of 2022, awards were made in line with requirements of the LTIP and
based on the revised salary for 2022. As such, while there was an increase in the underlying number of shares awarded
during 2022 over 2021, there had been a significant decrease from 2020 to 2021, reaffirming the Committee’s conviction
that the granting of awards to participants is fully aligned with the interests of shareholders as the share price increases or
decreases.
Year
Number of shares awarded Share price at time of grant
2020
437,601 €1.24
2021
335,820 €1.61
2022
430,369 €1.49
As with each award, the Committee will conduct a rigorous evaluation of vesting levels against the shareholder and
stakeholder experience at the conclusion of the performance period.
Executives’ external appointments
The executive director (and any future executive director(s) that might be appointed) are permitted to take on external
appointments with another publicly listed company with the prior approval of the Board. The Board recognises that there
are benefits to both the Company and the executive director, for the executive director to serve as a non-executive
board member of other companies. The executive director is permitted to retain any payments received in respect of such
appointments.
On 27 February 2014, Margaret Sweeney was appointed as a non-executive director of Dalata Hotel Group plc, for which
she received an annual fee in 2021 of €82,000.
Payment for loss of office / exit payments
No payments were made in the year in relation to loss of office.
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99
External Services
The Remuneration Committee has
engaged remuneration consultants,
Willis Towers Watson, which have
no other relationship with the Group
or any individual director, to provide
advice in relation to executive
remuneration and the remuneration
report. Willis Towers Watson’s fees for
advice during 2021 were €32k.
Key Priorities of the Remuneration
Committee for 2022
1. To review and propose an updated
Remuneration Policy that will
ensure appropriate Remuneration
arrangements are in place in the
Group to properly reflect the
internalised management structure.
2. To set suitable targets for the
bonus scheme and for the long-
term incentive scheme for 2023.
3. To monitor comparator
performance and their reward
schemes to ensure a high level
of awareness at Board level of
the relative performance of our
Remuneration Policy.
4. To ensure alignment of our
Remuneration Policy with current
governance recommendations.
5. To assess company performance
achieved and determine Executive
Director incentive outcomes that
are appropriate in this context
and also aligned with broader
stakeholder experience.
Terms of Reference and
Principal Duties
The terms of reference for the
Remuneration Committee were initially
approved and adopted by the Board
on 31 March 2014 and are regularly
reviewed and updated for best
practice and compliance with the
Codes. The Board reviewed the terms
of reference for the Remuneration
Committee on 17 November 2021
and confirmed that there was no
changes required based on the model
terms of reference for remuneration
committees published by the ICSA in
January 2020, which are designed to
comply with the UK Code. The roles
and responsibilities delegated to the
Remuneration Committee under the
terms of reference can be accessed
electronically at https://iresreit.ie/
company-and-strategy/corporate-
governance.
The Remuneration Committee reviews
its terms of reference on an annual
basis and if necessary, proposes for
formal Board adoption amendments
to the Remuneration Committee’s
terms of reference. The Remuneration
Committee evaluates its own
performance relative to its terms of
reference. Following the 2021 annual
review, it was concluded that the
Remuneration Committee was satisfied
with its performance.
The Remuneration Committee’s
principal duties include:
a) delegated responsibility for
determining the policy for
directors’ remuneration and setting
remuneration for the Company’s
chair and executive directors and
senior management, including the
company secretary, in accordance
with the Principles and Provisions
of the UK Code;
b) to establish remuneration
schemes that promote long-term
shareholding by executive directors
that support alignment with long-
term shareholder interests, having
regard to the recommendations of
the UK Code;
c) to design remuneration policies
and practices to support
strategy and promote long-term
sustainable success, with executive
remuneration aligned to Company
purpose and values, clearly linked
to the successful delivery of the
Company’s long-term strategy, and
that enable the use of discretion to
override formulaic outcomes and
to recover and/or withhold sums
or share awards under appropriate
specified circumstances;
d) when determining executive
director remuneration policy and
practices, consider the UK Code
requirements for clarity, simplicity,
risk mitigation, predictability,
proportionality and alignment to
culture;
Waterside,
Malahide
55
Residential Units
I-RES
100
e) in determining remuneration
policy, take into account all other
factors which the Remuneration
Committee deems necessary
including relevant legal and
regulatory requirements, the
provisions and recommendations
of the UK Code and associated
guidance. The objective of
such policy shall be to attract,
retain and motivate executive
management of the quality
required to run the Company
successfully without paying more
than is necessary, having regard to
views of shareholders and other
stakeholders;
f) to review the ongoing
appropriateness and relevance of
the remuneration policy;
g) within the terms of the agreed
remuneration policy and in
consultation with the chair and/
or chief executive, as appropriate,
determine the total individual
remuneration package of each
executive director, the company
chair and senior managers
including bonuses, incentive
payments and share options or
other share awards. The choice
of financial, non-financial and
strategic measures is important,
as is the exercise of independent
judgement and discretion when
determining remuneration awards,
taking account of company and
individual performance, and wider
circumstances;
h) to have full authority to appoint
remuneration consultants and
to commission or purchase any
reports, surveys or information
which the Remuneration
Committee deems necessary at
the expense of the Company.
However, the Committee should
avoid designing pay structures
based solely on benchmarking to
the market or on the advice of
remuneration consultants;
i) to review the design of all share
incentive plans for approval by
the Board and, where required,
shareholders. For any such plans,
determine each year whether
awards will be made, and if so,
the overall amount of such awards,
the individual awards for executive
directors and senior managers,
and the performance targets to
be used;
j) to review workforce remuneration
and related policies; and
k) to work and liaise as necessary
with other board committees,
ensuring the interaction between
committees and with the Board is
reviewed regularly.
No director may be involved in any
decisions in respect of his or her own
remuneration.
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Financial Statements
Supplementary Information
2021 Annual Report
101
Dear Shareholder,
On behalf of the Nomination
Committee, I am pleased to present
the Report of the Nomination
Committee for the year ended
31December 2021.
The Board is comprised of directors
who have been involved with the
Company since its inception and have
invaluable insight into the history and
growth of the Company and more
recently appointed directors who
offer fresh perspectives and enhance
Board diversity. The Nomination
Committee remains satisfied with
the structure, size, composition
and balance (including the skills,
knowledge, experience, independence
and diversity) of the Board and
itscommittees.
A report issued in June 2019 by the
Balance for Better Business Review
Group, which is an independent
business-led review group established
by the Government of Ireland to
improve gender balance at the senior
leadership level in Ireland, encouraged
Irish companies that form part of the
ISEQ 20 Companies to target 25%
female representation on boards by
2020. We are pleased to report that
as at 31st December 2021, 42.8% of
the directors on the Board are female,
which includes the Company’s CEO
and the Chair of the Audit Committee.
These are significant roles and
demonstrate the Board’s commitment
to ensuring appropriate gender
diversity on the Board. The Company’s
Board Diversity and Inclusion Policy,
as updated in 2020 sets targets
for female representation on the
Board consistent with those targets
recommended by the Balance for
Better Business Review Group.
This year the Board conducted an
internal evaluation of the Board,
itsmain committees, the Chairman
and individual directors led by the
Company Secretary.
Looking ahead
With two directors, including myself,
having served on the Board for eight
years, the Nomination Committee
will continue to focus on Board
succession planning and will have
regard to the outputs from the Board
skills matrix and the Board Diversity
and Inclusion Policy in any such
appointments. In terms of director
development, we will continue to
focus on enhancing the Board’s
ESGcompetency.
Declan Moylan
Chair of the Nomination Committee
Members:
Declan Moylan (Chair),
Phillip Burns, Joan Garahy and
AidanO’Hogan.
The Nomination Committee is chaired
by Declan Moylan, who is also the
Chairman. The Company considers
the Chairman of the Company to
be independent and accordingly a
majority of members of the Nomination
Committee are independent.
Therefore, the Nomination Committee
is constituted in compliance with the
Codes and the Articles of Association
regarding the composition of the
Nomination Committee.
All members are appointed for an initial
term of up to three (3) years, which
may be extended by the Board. The
term of appointment for Phillip Burns
expires at the end of the AGM in 2022.
Report of the
Nomination
Committee
_
Introductory
Statement from
the Nomination
Committee Chair
I-RES
102
Meetings of the Nomination
Committee Meeting
The Nomination Committee meets at
least twice per year and as otherwise
required. The Nomination Committee
met six (6) times during the period
from 1January 2021 to 31 December
2021. The Nomination Committee
members’ attendance is set out
onpage70.
Terms of Reference and
PrincipalDuties
The terms of reference for the
Nomination Committee were initially
approved and adopted by the Board
on 31 March 2014 and are regularly
reviewed and updated for best
practice and compliance with the
Codes. The Board reviewed the terms
of reference for the Nomination
Committee on 17 November 2021
and confirmed that there were no
changes required based on the model
terms of reference for nomination
committees published by the ICSA in
January 2020, which are designed
to comply with the UK Code. The
roles and responsibilities delegated
to the Nomination Committee under
the terms of reference can be
accessed electronically at https://
www.iresreit.ie/company-and-strategy/
corporate-governance
The Nomination Committee reviews
its terms of reference on an annual
basis and, if necessary, proposes for
formal Board adoption amendments to
the Nomination Committee’s terms of
reference. The Nomination Committee
evaluates its own performance relative
to its terms of reference. Following the
2021 annual review, it was concluded
that the Nomination Committee was
operating effectively.
The Nomination Committee’s principal
duties include:
a) to regularly review the structure,
size and composition of the Board
and make recommendations to the
Board with regard to any changes
and to evaluate the balance of
skills, knowledge, experience and
diversity on the Board;
b) to be responsible for identifying
and nominating, for the approval of
the Board, candidates to fill Board
vacancies as and when they arise;
and
c) to ensure plans are in place for
appointments to and orderly
succession to the Board and senior
management positions and oversee
the development of a diverse
pipeline for succession, taking
into account the challenges and
opportunities facing the Company,
and the skills and expertise needed
on the Board in the future.
The Nomination Committee leads the
process for considering appointments
to the Board and its committees.
Thereis a formal, rigorous and
transparent procedure for appointment
of new directors to the Board. The
Nomination Committee identifies
and nominates for the approval of
the Board, candidates to fill board
vacancies as and when they arise.
Before any appointment is made by
the Board, the Nomination Committee
evaluates the balance of skills,
knowledge, experience and diversity
on the Board and, in the light of this
evaluation, prepares a description of
the role and capabilities required for
a particular appointment and the time
commitment expected.
In identifying suitable candidates,
the Nomination Committee either
advertises directly or uses the
services of external advisers to
facilitate the search, asnecessary;
considers candidates from a wide
range of backgrounds; and considers
candidates on merit and against
objective criteria, having due regard to
the benefits of diversity on the Board
and taking care that appointees have
enough time available to devote to the
position.
Suitable candidates are interviewed
by specified members of the
Nomination Committee and the
results of the interviews are reviewed
by the Nomination Committee
and the candidate(s) selected
by the Nomination Committee
are recommended to the Board
forapproval.
Prior to the appointment of a director,
all other directorships, appointments,
significant commitments and interests
of the candidates are required to be
disclosed to the Board.
On appointment to the Board, the
Nomination Committee ensures that
non-executive directors receive a
formal letter of appointment setting
out clearly what is expected of them in
terms of time commitment, committee
service and involvement outside
boardmeetings.
On appointment to the Board, new
directors participate in the Company’s
induction process.
The Nomination Committee also
makes recommendations to the Board
concerning the re-appointment of
any non- executive director at the
conclusion of their specified term
in office and the re-election by
shareholders of directors who are the
subject of annual re-election.
Key activities during 2021
The Nomination Committee undertook
the following key activities during the
2021 financial year:
↘
developed a work plan for 2021;
↘
based on the results of the skills
matrix completed in 2020 and
cognisant of the updated Company
Board Diversity and Inclusion Policy,
carried out a search process with
the assistance of external expertise,
and ultimately recommended to the
Board the appointment of Stefanie
Frensch as a Director of the Board
and for membership of the Board
Audit and Sustainability Committees
with effect from 1 July 2021; and
↘
considered and recommended to
the Board that the appointment of
Tom Kavanagh as a director of the
Company (and as a member of the
Audit Committee and Remuneration
Committee) be extended for an
additional term of approximately
three years expiring at the end
of the Company’s 2024 annual
general meeting;
↘
considered and recommended to
the Board that Mr Tom Kavanagh
be appointed as the Chair of
the new Board Sustainability
Committee for a term of three (3)
years expiring at the end of the
Company’s 2024 annual general
meeting;
↘
reviewed the time commitments of
the Chairman, Senior Independent
Director and non-executive
directors;
↘
considered the scale of other
appointments the Chair of the
Board and other non-executive
directors may take on without
compromising their effectiveness;
↘
reviewed ongoing succession
planning;
↘
adopted an updated skills matrix
for Board members in line with the
Company’s strategy to aid future
succession planning and talent
management, as well as ensure that
an appropriate balance of skills and
expertise exists;
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
103
↘
reviewed the findings of the
board evaluation with respect to
composition of the Board and its
main committees;
↘
assessed the balance of skills,
experience, independence,
diversity and knowledge of each
director and across the Board;
↘
discussed and reviewed any
new corporate governance
requirements and any new or
forthcoming amendments to
relevant laws or regulations that
will, or are likely to, impact the
roles and duties of the Nomination
Committee.
Succession planning
The Nomination Committee assesses
the aggregate skills and experience
of the directors in light of the current
and future needs of the Board and its
committees, both on a routine basis
and in particular when considering
renewal of contracts and potential
newappointments.
Each non-executive director,
including the Chairman of the
Board, is expected to serve until the
end of the annual general meeting
following the third anniversary of his
or her appointment unless his or her
appointment is otherwise terminated
earlier in accordance with the terms
of his or her letter of appointment
or he or she is invited by the Board
and agrees to serve for an additional
period. In its work in the area of Board
renewal, the Nomination Committee
looks at a number of issues including:
↘
skills, knowledge and expertise in
areas relevant to the operation of
the Board;
↘
diversity; and
↘
the need for an appropriately
sizedBoard.
There were some changes to the
Board composition during 2021.
The Manager’s nominee, Director Mark
Kenney resigned on 2 July 2021 and
was not replaced. With the termination
of the IMA with effect from 31 January
2022 the Manager no longer has an
entitlement to nominate a member to
the Board of the Company.
Ms Stefanie Frensch joined the
Board on 1 July 2021. The Nomination
Committee prepared a position
description and engaged Korn Ferry,
an international executive search
firm, to carry out an extensive search
process for suitable candidates
for the Board. The Committee
considered several candidate reports
and reference reports prepared by
Korn Ferry, in making their decision
for the appointment of MsFrensch.
TheCommittee noted the background,
knowledge, skills and experience
of Ms Frensch against the position
description previously approved by
the Committee and also carried out
extensive due diligence including
a detailed consideration of other
time commitments, and any matters
that would likely create any actual
or perceived conflict of interest.
On completion of this suitability
assessment the Nomination Committee
recommended the appointment of
MsFrensch to theBoard.
Mr. Kavanagh completed his first
three-year contract at the end of
Company’s 2021 annual general
meeting. Accordingly, in February 2021,
the Nomination Committee considered
and recommended to the Board the
renewal of Mr. Kavanagh’s appointment
to the Board for an additional term
of approximately three years expiring
at the end of the Company’s 2024
annual general meeting. Inaddition,
the Nomination Committee considered
and recommended to the Board
the renewal of Mr.Kavanagh’s
appointments to the Audit Committee
and Remuneration Committee,
whichappointments were due
to expire on 31 May 2021, for an
additional term of approximately three
years. Mr. Kavanagh did not participate
in the discussion or vote with respect
to his re-appointment to the Board
and committee positions.
The number of directors is currently
considered by the Nomination
Committee to be sufficiently small to
allow efficient management of the
Company while being large enough
to ensure an appropriate mix of skills
andexperience.
Board and Committee evaluation
The Nomination Committee reviewed
those elements of the board evaluation
that related to the composition of the
Board and its committees, succession
planning and the time commitment
required from non-executive directors.
These were rated positively, and the
Nomination Committee continues
to monitor the skills and experience
requirements throughout the year.
The Nomination Committee believes
that each non-executive director
brings a distinct range of skills and
experience that complements those
brought by the other non-executive
directors.
Diversity
The Board and the Nomination
Committee recognise the
importance of, and are committed
to supporting, diversity and inclusion
in the boardroom where directors
believe that their views are heard,
theirconcerns are addressed and
they serve in an environment where
no bias, discrimination or harassment
is tolerated on any matter. The Board
and the Nomination Committee
understand that a diverse Board will
offer different perspectives in order
to provide effective oversight of the
Company’s business and guide the
Company towards its strategic aims.
Diversityalso improves the quality
of decision-making by the Board
by reducing the risk of group-think
and supports the development of a
diverse pipeline of candidates to serve
ontheBoard.
The Company’s Board Diversity
and Inclusion Policy requires the
Board to consider a broad range of
characteristics when considering
diversity including, but not limited to:
↘
age, gender, social and ethnic
background;
↘
educational and professional
background, possession of
technical skills in the Company’s
field of operations, including “soft”
and cognitive skills necessary to be
an effective director;
↘
personal strengths such as
strength of character, experience,
knowledge and understanding; and
↘
expertise in relevant environmental,
social and governance
(“ESG”)matters.
The Nomination Committee in the
context of its Board evaluation
processes, regularly reviews the
structure, size and composition
of the Board, taking diversity and
the considerations noted above
in particular into account, in order
to maintain an appropriate range
and balance of skills, experience
and background on the Board.
The Nomination Committee also
considers diversity in the context of
Board appointments and succession
planning. Each of these processes
will take account of and address the
Board’s diversity at that time and
consider needs for enhancement of
diversity on the Board. In implementing
I-RES
104
the Board Diversity and Inclusion
Policy during 2021, the Nomination
Committee considered diversity in
evaluating the optimum composition
of the Board and in evaluating the
effectiveness of its Board. Based on
the skills matrix that is completed
by each director as part of the
Board evaluation, the directors have
diverseskills.
Skill
Number of Directors
with that Skill
Management
Experience
7
Financial Acumen
6
Capital Markets 5
General Real Estate
Experience
7
Development
Experience
5
Environmental
Management
3
Legal
4
Tax
3
Human Resources 6
Government Relations 3
Where outside of Board appointments
are made the Board recognises
the challenges in fully implementing
its Board Diversity and Inclusion
Policy across a relatively small pool
of individuals in order to achieve
true diversity within each of the
characteristics listed above. Where
using recruitment consultants, the
Nomination Committee seeks, and
will continue to seek, to work with
consultants who have made a
commitment to promote diversity.
All Board appointments, are based
on a transparent selection process
using objective criteria, including
consideration of diversity (including
gender and ethnicity), necessary
experience, characteristics, skillsets
and other attributes necessary to
ensure effective oversight of the
Company’s business and to guide
the Company towards its strategic
objectives.
The Company meets board gender
diversity best practice in Ireland
by having over 27% female Board
representation as at 31st December
2021. Currently, 42.8%% of the
directors on the Board are female,
which includes the Company’s
CEO and the Chair of the Audit
Committee. Both roles demonstrate
the Board’s commitment to ensuring
appropriate gender diversity on the
Board. In addition, the Company was
recognised as a best practice leader
in the European Women on Boards
Gender Equality Index report for
diversity and inclusion on the Board
and in executive management. The
Company ranked 2nd in Ireland among
listed companies and 20th overall
among 668 listed companies across 19
European countries.
Given the composition of the Board
and the development stage of
the Company, the Board and the
Nomination Committee have only set
measurable objectives in relation to
female representation on the Board.
Itis the Board’s intention to implement
a broader Diversity and Inclusion Policy
to apply to the entire workforce as
the integration of the Manager and its
workforce is completed during 2022.
With respect to gender quotas,
consistent with the targets set by the
Balance for Better Business Review
Group, the Board had set the following
targets for female representation on
the Board, and as of 31st December
2021 the Board had surpassed its
target for 2021:
By end of 2021
27%
By end of 2022 30%
By end of 2023 33%
The Nomination Committee will
consider annually whether additional
measurable objectives such as
quantitative targets and timeframes
for achieving diversity are appropriate
and, if thought fit, will recommend
such measurable objectives to the
Board for adoption. The Board is
committed to having an appropriate
balance of skills and perspectives,
including gender balance on
theBoard.
Key Priorities of the Nomination
Committee for 2022
The Nomination Committee’s plan for
the 2022 financial year includes:
↘
implement actions from the 2021
Board Evaluation (see page 71);
↘
continue to undertake our work
in relation to composition and
succession planning for the Board;
↘
having successfully implemented
the Board’s Diversity and Inclusion
Policy in respect of gender
diversity, develop a plan to include
ethnic diversity in the Board
succession planning process;
↘
continue to assess what
enhancements should be made to
Board and committee composition;
↘
review the Board’s overall
contribution to strategy;
↘
review the time commitment
and effectiveness of each non-
executive director’s contribution;
and
↘
consider the skills, availability
and performance of each Board
member.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
105
Dear Shareholder,
On behalf of the Board Sustainability
Committee, it is my pleasure to present
the Report of the Board Sustainability
Committee for the year ended 31
December 2021.
Sustainability, climate risk and
environmental, social, and governance
(‘ESG’) considerations continue to
take priority across our business,
positively influencing our operations
and investment decision making. As
one of Ireland’s leading providers of
private rental accommodation, we
strive to increase availability in the
market by continued investment,
providing professionally operated and
high-quality rental accommodation
which incorporates environmentally
sustainable building management
practices and resilience mitigation
measures to combat climate change.
This ethos informs how we implement
our growth strategy and interact with
all our stakeholders.
In May 2021, we established a Board
Sustainability Committee, which will
provide oversight of our multi-year
ESG strategy and focus on how the
Company will build the necessary
expertise and capability, ensuring we
meet, and in some instances exceed,
Government and EU commitments on
climate change. I-RES’ ambition is to
reduce our carbon emissions in line
with the ambition and commitment of
the Paris Climate Agreement. We have
carried out widespread engagement
across all our stakeholder community
over the last 18 months to inform our
strategy and planning in relation to
ESG objectives. We are proud to have
received recognition from European
Women on Boards ‘EWOB’ for diversity
and inclusion on the Board and
executive team. As the Chair of the
Board Sustainability Committee,
I am delighted to help lead I-RES in
delivering a multidimensional approach
to good governance and sustainable
leadership that ensures that the
business continues to perform strongly,
while continuing to deliver for all of
our stakeholders.
We recognise that Covid-19 has deeply
impacted many in our communities and
wider society, and we pay tribute to the
Irish health service and Government
who have successfully led us through
the pandemic, allowing us to look
forward now with better days ahead.
Finally, I wish to extend my thanks to
our stakeholders for your trust and
ongoing support as we collectively
continue to invest and deliver new
housing supply, ensuring we continue
to sustainably grow the business to
meet all stakeholders’ needs.
Finally our Sustainability Report which
can be accessed electronically at
www.iresreit.ie provides further
information on our achievements in
2021 and our key priorities for 2022.
I trust that you will find this report to be
useful in understanding the operations
and activities of the Board Sustainability
Committee during the year.
Tom Kavanagh
Chair of the Board Sustainability
Committee
Members:
Tom Kavanagh (Chair), Stefanie
Frensch and Margaret Sweeney.
The Board Sustainability Committee
is chaired by Tom Kavanagh, an
independent non-executive director.
The Board is satisfied that the Board
Sustainability Committee members are
appropriately qualified and experienced
to fulfil their roles and have a broad mix
of skills and experience arising from
senior roles they hold or have held with
other organisations, and that the Board
Sustainability Committee as a whole
has competence relevant to the sector
in which the Company operates.
Report of the
Sustainability
Committee
_
Introductory
Statement from the
Board Sustainability
CommitteeChair
I-RES
106
Meetings of the Board
Sustainability Committee
The Board Sustainability Committee
was established in May of 2021. It will
meet at least four (4) times per year
and otherwise as required. The Board
Sustainability Committee met three (3)
times during the period from 11 May
2021 to 31 December 2021. The Board
Sustainability Committee members’
attendance at each meeting is set
out on page 70.
Terms of Reference and
PrincipalDuties
The terms of reference established for
the Board Sustainability Committee
were initially approved and adopted by
the Board on 11 May 2021. The Board
reviewed the terms of reference of the
Board Sustainability Committee on 17
November 2021 and confirmed that
there was no changes required. The
roles and responsibilities delegated to
the Board Sustainability Committee
under the terms of reference can be
accessed electronically at https://
www.iresreit.ie/company-and-strategy/
corporate-governance.
The Board Sustainability Committee
will review its terms of reference on
an annual basis and, if necessary,
propose for formal Board adoption
amendments to the Committee’s terms
of reference. The Board Sustainability
Committee will evaluate its own
performance relative to its terms of
reference. Following the 2021 annual
review, it was concluded that the
Board Sustainability Committee was
operating effectively.
The Board Sustainability Committee’s
principal duties include:
↘
Developing and recommending
to the Board the Company’s ESG
strategy, policies, risks targets and
investment required to achieve the
Company’s ESG strategy;
↘
Ensuring any ESG commitments
are consistent with the Company’s
business strategy and Code of
Ethics;
↘
Making recommendations to the
Board on effective engagement
with stakeholders, including
employees, and ensuring
stakeholder views are taken into
account in Board decisions;
↘
Providing oversight in relation to
building ESG competency at the
Board and Management level;
↘
Ensuring appropriate assurance has
been provided in relation to any
ESG related disclosure or data to
be made publicly available;
↘
Reviewing and recommending
to the Board the approval of any
ESG disclosure included in the
Company’s Annual Report;
↘
Reviewing any submissions by the
Company to any benchmark or
rating agency;
↘
Reviewing the results of any
benchmark assessment;
↘
Liaising with the Company’s other
Board Committees on relevant
matters as determined from time
to time;
↘
Ensuring that a periodic evaluation
of the Committee’s own
performance is carried out; and
↘
At least annually, reviewing the
Committee’s terms of reference to
ensure it is operating at maximum
effectiveness and recommending
any changes it considers necessary
to the Board for approval.
How the Board Sustainability
Committee Discharged its
Responsibilities in 2021
In the year under review, the principal
activities of the Board Sustainability
Committee were as follows:
↘
Drafted and approved the Terms of
Reference for the Committee
↘
Reviewed and approved the
Committee Work plan 2021 – 2022
↘
Reviewed and approved the 2020
GRESB submission completed by
Evora
↘
Reviewed in detail the 2021 GRESB
results
↘
Commissioned external advisers to
carry out and reviewed the results
of a Materiality Assessment Report
and a Carbon Baseline Assessment
for the Company
↘
Reviewed current and forthcoming
legislative requirements that could
impact the Company in the area of
ESG including the Climate Action
Act 2021
↘
Reviewed and recommended
to the Board the updated ESG
strategy Roadmap
↘
Reviewed and reconfirmed the
ESG Policy
Multi-Year ESG Strategy
Our Multi-Year ESG Strategy consists
of six clear guiding principles and
objectives which are fundamental to
our business and the needs of our
stakeholders, helping us to achieve
our sustainability goals. Our ambition is
to build a sustainable and responsible
business that is aligned with the
long-term approach we take to
investing, building, and maintaining our
properties, supporting, and servicing
our residents, employees, our vendor
partners and the wider community in
which we operate.
Guided by our Multi-Year ESG Strategy,
we actively work towards aligning
our business strategy and objectives
with sustainability measures that are
supported by the Board, the Company,
and key stakeholders and where we
can make the greatest impact. For
further details on the six guiding
principles please see page 11 of the
ESG Report.
In 2021 we continued to have
widespread engagement with our
stakeholders, and this provided
valuable input to our first materiality
assessment completed during the
year. The Materiality Assessment
assists us in identifying key priorities
for and refinement of our sustainability
strategy as well as potential impacts
on our business success. Building
on the materiality matrix, we have
developed a sustainability roadmap
and prioritised actions with set targets
and milestones over a short, medium-
and long-term time horizon across 11
sustainability topics, as follows:
1. Health, Safety & Well-being
2. Business Ethics & Compliance
3. Resident/Tenant Satisfaction
4. Environmental Management
5. Sustainability Governance
& Strategy
6. Climate Change
7. Investment & Development
8. Asset Management
9. Data Privacy & Security
10. Employee Attraction
& Retention
11. Sustainable Supply Chain
Practices
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
107
Many of the topics identified as
priorities within the materiality
assessment are already key
considerations for our business,
as you will see in the various
sections of our ESG report.
Our ambition is to build a sustainable
and responsible business that is aligned
with the long-term approach we take to
investing, building, and maintaining our
properties, supporting, and servicing
our residents, employees, our vendor
partners and the wider community in
which we operate. We will continue
working with key stakeholders to
target the sustainability matters and
opportunities where we can make the
greatest impact.
ESG Strategy
2021 milestones
2022 Focus
1.
Integrating Oversight
Develop and monitor ESG cross
functional policies, objectives,
and accountability among I-RES.
↘
Established Board Sustainability
Committee and the appointment
of Stefanie Frensch
↘
Established Energy Performance
Management Committee
↘
Align our sustainability strategy
and goals across the business
↘
Review & update Policy in
alignment with emerging
sustainability policy frameworks
& regulatory requirements
2.
Advancing Competency
Empower our key stakeholders
to be advocates and enablers
of ESG transparency and
performance through training
and active engagement.
↘
Delivering cross-functional
competency with an average of
22.5 training hours completed by
our employees
↘
Diversity and Inclusion Award
↘
Develop and provide
sustainability awareness and
sector-specific training and
development programme to
employees
3.
Engaging Stakeholders
Conduct ongoing engagement
with our key stakeholders
through frequent reporting,
active consultations, and
programs.
↘
Completion of the Company’s
first Materiality assessment,
assisted in identifying key
priorities and refinement of
sustainability strategy and
roadmap for 11 areas
↘
Governance & Sustainability
Roadshow, led by the Chairman
Declan Moylan
↘
1,300+ residents took part in
annual resident satisfaction survey
↘
Continue to engage with key
stakeholders on Governance
and ESG related matters and
opportunities
↘
Establish, monitor & disclose/
report on key performance
indicators (and targets) for
measuring the performance of
resident management-related
initiatives
4.
Deliver Transparency
Establish necessary frameworks,
platforms, and practices to build
investment-grade ESG data.
↘
Independent third-party
assurance, which assesses the
quality of our disclosures and
reporting processes
↘
Complete climate scenario
analysis for our portfolio to
assess the impact on physical
climate-related risks and
opportunities
5.
Setting Targets and
Monitoring Progress
Identify and monitor the
progress of our United Nations
Sustainable Development
Goals (SDG)-aligned goals.
↘
Completion of a carbon baseline
assessment, the first step in
understanding the company’s
carbon emissions and for target
setting
↘
Sustainability strategy and
roadmap
↘
Develop a methodology to set
targets, quantify and measure
carbon emissions reduction for
the operation of our buildings
and our supply chain
6.
Reporting on
Our Performance
Build standardized, transparent,
and comprehensive ESG
disclosures.
↘
Publication of ESG Annual Report
↘
EPRA sBPR Gold Star and Most
Improved Company
↘
GRESB one-star award
↘
Further enhance sustainability
reporting/ disclosure and explore
opportunities for listing on other
sustainability/ESG rating indices
to meet investors’ requirements
I-RES
108
Annual ESG Reporting and
benchmarking scores
We published our first ESG report in
March 2021. Our 2021 ESG report is
available at www.iresreit.ie.
We will be making a submission to
GRESB again in 2022. We report under
several ratings agencies to provide an
overview of our Sustainability progress
and activities and to allow comparison
with our peers and other companies.
We have made significant progress
across several key ratings criteria,
receiving the sBPR Gold award and
Most Improved award from EPRA, while
also receiving our inaugural GRESB
score. Our ambition is to continue
to improve these scores on a yearly
basis, ensuring that ESG performance
is tracked and assessed. It also
provides stakeholders with confidence
that we are turning our commitments
and targets into action and that we
are delivering on our ambition to be a
sustainability leader in our industry.
Key Priorities of the Board
Sustainability Committee for 2022
Looking ahead to the 2022 year,
the Board Committee will remain
focused on:
↘
Reviewing and making
recommendations to the Board for
updates to the ESG Strategy of the
Company and the performance
against the Key Performance
Indicators on ESG.
↘
Making recommendations
for improvements including
recommendations on investment
required to improve ESG
performance.
↘
Reviewing and recommending
updates as required to the ESG
Stakeholder Engagement plan.
↘
Reviewing and recommending
updates as required for Policies
required to fully implement the
Company’s ESG Strategy.
↘
Reviewing and recommending
to the Board the approval of
ESG related disclosures or data
to be made publicly available,
whether in the Annual Report or
through Company submissions to
benchmarking or rating agencies.
↘
Inviting relevant independent
external speakers to present to the
Committee on developments and
trends in ESG in the real estate
rental sector and recommending
training for the Committee Chair,
the Committee members, Board
members and senior management
on ESG in the real estate rental
sector.
↘
Reviewing and recommending
to the Board the approval of the
Company’s ESG Report, which is to
be published at around the same
time as the Company’s Annual
Report.
2021 2020
EPRA
Sustainability Reporting Awards
Not rated
GRESB
Global Real Estate Sustainability
Benchmark
One Star
Not rated
MSCI
BB BB
ISS E&SQualityScore*
*Highest E&S Disclosure =1
Environment
7
Social
9
Not Available
Sustainalytics ESGRisk Rating
22.4
Medium Risk
22.4
Medium Risk
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
109
Dear Shareholder,
Although not a permanent committee
of the Board, given the importance
of its role during 2021, on behalf of
the Related Party Committee, it is my
pleasure to present a Report for the
Related Party Committee for the year
ended 31 December 2021.
In November 2019, the Related
Party Committee was appointed to
conduct a scheduled review of the
Investment Management Agreement
with the Manager and the Services
Agreement with CAPREIT LP along with
an evaluation of the strategic options
available to the Company in relation
to these agreements. This committee
did not include either Mark Kenney
(up to his resignation) or Phillip Burns
given their respective relationships to
CAPREIT (as set out in the Corporate
Governance Statement). In August
2020, the remit of this committee
was extended by the Board to include
any other matter concerning the
Company’s relationship with CAPREIT
and/or the Manager and this committee
was authorised by the Board to make
any such decisions on behalf of the
Company in connection with such remit
as it deemed appropriate.
The Company received a termination
notice in respect of the IMA and
Services Agreement from the Manager
on 31 March 2021. As a result, the
role of the Related Party Committee
intensified during 2021. Following
the receipt of that twelve month
notice of termination the Related
Party Committee progressed the
review of the Company’s strategic
options including internalisation of
the management of the Company.
In line with the terms of the IMA, the
Company gave notice of its decision to
internalise management, through the
acquisition of the Manager, on 5 August
2021, effective 31 January 2022. This
acquisition was completed on schedule
on 31 January 2022.
This report sets out the operations of
the Related Party Committee during
the year.
Declan Moylan
Chair of the Related Party Committee
Members:
Declan Moylan (Chair), Margaret
Sweeney, Joan Garahy, Tom Kavanagh,
Aidan O’Hogan and Stefanie Frensch
(joined 5 August 2021).
The Related Party Committee is chaired
by Declan Moylan, an independent non-
executive director and the Chairman
of the Board. With the exception of
Margaret Sweeney, who is the CEO
and an executive director, all members
of the Related Party Committee were
independent non-executive directors
when appointed by the Board and
continue to be independent.
Meetings of the Related
Party Committee
The Related Party Committee met
fifteen (15) times during the period
from 1 January 2021 to 31 December
2021. The Related Party Committee
members attendance at each meeting
is set out on page 70. The Finance
Director and advisers from William
Fry LLP, Rothschild & Co, Davy and
Grant Thornton attended Committee
meetings as required.
How the Related Party Committee
Discharged its responsibilities in
2021
The termination of the IMA, notified by
the Manager on 31 March 2021, and
the subsequent plans for internalisation
were complex and multifaceted with
lots of potential attendant risks. Plans,
processes and negotiations were
developed to manage risk and ensure
regular reporting to the Related Party
Committee across twelve different
workstreams.
The internalisation project included:
↘
the acquisition of the Manager
(a wholly owned subsidiary of
CAPREIT LP);
↘
the selection of new Company
wide IT systems; the recruitment
of key personnel; the transition of
services from CAPREIT LP; and
↘
data migration from CAPREIT’s
systems to the new IT systems
(“Internalisation”).
During 2021 the Related Party
Committee met at least once per
month with Management and all
advisers, including Grant Thornton
(specifically on IT Infrastructure
and Data Migration elements of the
internalisation), Rothschild & Co, Davy
and William Fry LLP. Each of these
meetings included risk assessment and
progress reporting on Internalisation
across the 12 different workstreams.
Report of the
Related Party
Committee
_
Introductory
Statement from
the Related Party
Committee Chair
I-RES
110
Regular reports on Internalisation
were also provided to the Board by the
Related Party Committee.
After careful consideration of all of
the possible options and having taken
appropriate independent advice, the
Related Party Committee resolved,
on 5 August 2021, that it was in the
best interests of the Company to
internalise the management of the
Company including the acquisition
of the Manager, subject to receipt of
the consent of the Central Bank of
Ireland and that the Company should
therefore serve notice of termination
on the Manager, with effect from 31
January 2022.
As part of its monthly meetings the
Related Party Committee:
↘
Received and reviewed
presentations on the process
for the review and selection of
new Company wide IT systems,
ultimately selecting the industry
leading cloud-based property
Management solution Yardi and the
Microsoft Cloud platforms, as part
of the preparation for internalisation
of management. The Committee
continued to review progress on
the implementation of these new IT
systems throughout 2021;
↘
Received and reviewed
presentations on the data migration
plan and process for migrating 7
years’ worth of Company data, as
well as live data on cutover, from
CAPREIT’s IT systems to the new
Yardi and Microsoft IT systems;
↘
Received and reviewed
presentations on the recruitment
of appropriate personnel and the
transition process for all corporate
functions, including finance,
company secretary, legal, internal
audit, risk, privacy and marketing
and communications, from CAPREIT
to the new team in the Company;
↘
Had continuous engagement with
the Company’s legal advisers and
engagement with CAPREIT LP on
progress on the due diligence
process on the Manager and
ultimately the negotiation and
finalisation of the legal agreements
for the acquisition of the Manager
and the Transition services
agreement; and
↘
Reviewed and approved the required
submissions to the Central Bank
of Ireland, seeking approval for the
acquisition of the Manager, including
engagement with the Manager’s
Board and with CAPREIT LP.
On 29 January 2022 the Related
Party Committee approved the Share
Purchase Agreement to complete the
acquisition of the Manager with effect
from 31 January 2022.
As part of the Completion agreements
a Transition Services Agreement was
put in place on 31 January 2022
between CAPREIT LP, the Manager
and the Company for a three-
month period. The Related Party
Committee continues to monitor
the implementation of the Transition
Services Agreement.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
111
Principal Activity
The Company is an Irish real estate
company, focused on the private
residential rental property market on
the Island of Ireland. The Company
owns interests primarily in residential
rental accommodations and
ancillary and/or strategically located
commercial properties located in and
near major urban centres in Ireland,
in particular Dublin. The Company
purchased its first real estate assets on
10 September 2013 and is now one of
the largest private residential landlords
in Ireland. The Company’s net assets
and operating results are derived from
real estate located in Ireland.
Review of Activities, Business
Performance Measures, and Events
since the Year End
The Chairman’s Statement on pages
12to14, the Chief Executive Officer’s
Statement on pages 15to19, the
Manager’s Statement on page20,
and the Business Review on pages
21to32 contain a review of the
development and performance of the
business during the year, the state of
affairs of the business at 31 December
2021, recent events and likely future
developments. Information in respect
of events since the year end as
required by the Companies Act, 2014 is
included in these sections and in note
29 of the Group financial statements
on page169.
The Corporate Governance Statement
on pages 67to77, theReport of the
Audit Committee on pages 78to82,
the Report of the Remuneration
Committee on pages 83to100,
theReport of the Nomination
Committee on page101 to 104, the
Report of the Sustainability Committee
on pages 105 to 108 and the Business
Review on pages 21to32 are deemed
to be included in this Report of the
Directors for the purposes of the
CompaniesAct, 2014.
This Report, the documents referred
to therein, which include a description
of the principal risks and uncertainties
facing the Company, the Chairman’s
Statement on pages 12to14, theChief
Executive Officer’s Statement
on pages 15to19, theManager’s
Statement on page 20, the Business
Review on pages 21to32 and the Risk
Report on pages 50to62 are deemed
to be the management report as
required by the Transparency (Directive
2004/109/EC) Regulations 2007 (the
“Transparency Regulations”).
Revenue for the financial period
amounted to €79.74 million
(€74.74 million for the 2020 year).
Theprofit for the year attributable to
shareholders amounted to €67.55
million (€58.26 million for the 2020
year). Basic Earnings per Share
and Diluted Earnings per Share
amounted to 12.8 cents and 12.8 cents,
respectively (11.2 cents and 11.1 cents
for the 2020 year). EPRA Earnings
per Share were 6.0 (6.5 cents for the
2020 year), and EPRA NAV per share
was 166.5 cents (160.3 cents as at 31
December 2020). Further details of
the results for the year are set out in
the consolidated statement of profit or
loss and other comprehensive income
on page128.
REIT Status
The Company elected for REIT status
on 31 March 2014 under section 705 E
of the Taxes Consolidation Act, 1997.
As a result, the Company does not pay
Irish corporation tax on the profits and
gains from qualifying rental business
in Ireland from that date, provided it
meets certain conditions.
As an Irish REIT, the Company
is required 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 (provided it has sufficient
distributable reserves). Failure to meet
this requirement will result in an Irish
REIT incurring a tax charge calculated
by reference to the extent of the
shortfall in the dividends paid.
The directors confirm that the Group
complied with all the above REIT
requirements for the period from
1January 2021 to 31 December 2021.
Report of the
Directors
_
The directors of the
Company present
their report and the
audited financial
statements for the
financial period from
1 January 2021 to
31December2021.
I-RES
112
Dividends
Under the Irish REIT Regime, subject to
having sufficient distributable reserves,
the Company is required to distribute
to shareholders at least 85% of the
Property Income of its Property Rental
Business for each accounting period.
Each year it is the Board’s intention
to propose semi-annual dividends
payable in March and September.
Accordingly, in 2021, the Board paid
dividends of approximately €31.2
million for the 2020 accounting period
and approximately €15.4 million in
respect of the period from 1 January
2021 to 30 June 2021. On 23 February
2022, the directors announced an
additional dividend of €16,307,181.54
(dividends per share of 3.08 cents)
for the year ended 31 December
2021, to be paid on 29 March 2022 to
shareholders on record as of 4 March
2022. This dividend was made up of a
Property Income Distribution (“PID”),
asdefined in the Irish REIT Legislation.
Therefore the total dividend paid in
respect of the 2021 accounting period
was 5.99 cent per share.
Share Capital
The authorised share capital of the
Company is 1,000,000,000 ordinary
shares of €0.10 each, of which
529,453,946 shares were in issue at
31 December 2021. All of these shares
are of the same class. They all carry
equal voting rights and rank equally for
dividends. No shares in the Company
were acquired or redeemed by the
Company during the financial period
ended 31 December 2021 or made
subject to charge or lien. There are no
securities holding special rights with
regard to control of the Company.
Particulars of the authorised and
issued share capital of the Company
as at 31 December 2021 are set out
in note 13 of the Group financial
statements on page149.
During the financial period ended 31
December 2021 and as at 23 March
2022, the Company held no shares in
treasury, and no subsidiary undertaking
of the Company held shares in the
Company.
Save for restrictions imposed by the
Company on relevant persons in
order to comply with its obligations
under the Market Abuse Regulation
(596/2014), for example under its
share dealing code, there are no
restrictions on the transfer of shares
in the Company and no requirements
to obtain approval of the Company,
or of other holders of securities in the
Company, for a transfer of shares in
the Company, save that the directors
may decline to register any transfer
ofa share:
↘
to or by a minor or a person with
amental disorder (as defined by
the Mental Health Act, 2001);
↘
in certain circumstances where
the directors have given notice
to a shareholder under the
Articles of Association requiring
such shareholder to notify the
Company of his or her interest
in any shares in the Company
(and/or the interests of all persons
having a beneficial interest in
any shares in the Company held
by such shareholder and/or any
arrangement entered into by such
shareholder or any such person
regarding a transfer of any such
share or acting in relation to any
meeting of the Company) and
such shareholder is in default for a
prescribed period in supplying such
information to the Company;
↘
if the transfer is in favour of any
person, as determined by the
directors, to whom a sale or
transfer of shares, or whose direct,
indirect or beneficial ownership
of shares would or might cause a
specific regulatory burden to be
imposed on the Company, such as
under the US Securities Exchange
Act of1934;
↘
in certificated form where the
following documents have not
been produced: the original share
certificate and the usual form of
stock transfer, duly executed by the
holder of the shares and stamped
with the requisite stamp duty; and
↘
in uncertificated form only in such
circumstances as may be permitted
or required by the Companies Act,
1990 (Uncertificated Securities)
Regulations, 1996.
Lansdowne Gate
Drimnagh
224
Residential Units
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
113
Interests of Directors and
Secretary in Share Capital
The current directors and Secretary,
had no interests in the share capital at
their date of appointment.
The movement in directors’ and
Company Secretary’s shares during
the year is set out below:
CEO 2020 Bonus award
An element of the 2020 bonus
awarded to the CEO, representing
€29,403, was settled as a restricted
entitlement, subject to certain
conditions, to the beneficial interest in
19,340 ordinary shares in the capital
of the Company (the “2020 Restricted
Bonus Shares”). The 2020 Restricted
Bonus Shares are reflected in the table
above for the CEO under “Ordinary
Shares as at 31 December 2021”.
CEO 2021 LTIP award
On 5 March 2021, the Remuneration
Committee awarded the CEO,
subject to certain conditions, a
conditional share award of 335,820
ordinary shares in the capital of the
Company as Restricted Shares under
the terms of the LTIP (the “2024
Restricted Shares”). In order for the
CEO to receive the 2024 Restricted
Shares, she must meet the applicable
performance conditions (as disclosed
on page 94 of the Report of the
Remuneration Committee). The 2024
Restricted Shares are to be held on
trust for the CEO for a further two-
year period from the vesting date in
2024. The 2024 Restricted Shares
are reflected in the table above
under Outstanding Restricted Shares
pursuant to the LTIP as at 31 December
2021 for the CEO.
CEO 2021 Bonus Award
An element of the 2021 bonus awarded
to the CEO, representing €114,659,
was settled as a restricted entitlement,
subject to certain conditions, to the
beneficial interest in 78,534 ordinary
shares in the capital of the Company
(the “2021 Restricted Bonus Shares”).
The 2021 Restricted Bonus Shares are
reflected in the table above for the
CEO under “Ordinary Shares as at 23
March 2022”.
CEO 2022 LTIP Award
On 23 February 2022 the
Remuneration Committee awarded the
CEO, subject to certain conditions, a
conditional share award of 430,369
ordinary shares in the capital of the
Company as Restricted Shares under
the terms of the LTIP (the “2025
Restricted Shares”). In order for the
CEO to receive the 2025 Restricted
Shares, she must meet the applicable
performance conditions (as disclosed
on page 98 of the Report of the
Remuneration Committee). The 2025
Restricted Shares are to be held on
trust for the CEO for a further two-
year period from the vesting date in
2025. The 2025 Restricted Shares are
in addition to the interests reflected in
the table above for the CEO.
In accordance with the disclosure
requirements prescribed by
Euronext Dublin Listing Rule 6.1.82(1),
theinterests disclosed above
include both direct and indirect legal
and beneficial interests in shares.
Otherthan as noted above, there
were no movements in directors’
shareholdings or outstanding option
awards or Restricted Shares pursuant
to the LTIP between 31 December
2021 and the date of this Report.
The directors and the Company
Secretary have no beneficial interests
in any of the Group’s subsidiary or
associated undertakings.
The Company is not aware of any
other arrangements between its
shareholders which may result
in restrictions on the transfer of
securities or voting rights.
Name
Ordinary
Shares at
1 January
2021
Ordinary
shares at 31
December
2021
% of
Company
as at 31
December
2021
Outstanding
Option Awards
as at 1 January
2021
Outstanding
Option
Awards as at
31 December
2021
Outstanding
Restricted Shares
pursuant to the LTIP
at 31 December 2021
Ordinary
Shares
as at 23
March
2022
Phillip Burns — — — — — — —
Stefanie Frensch — — — — — — 30,000
Joan Garahy
34,850 34,850 0.01% — — — 34,850
Tom Kavanagh 81,129 81,129 0.02% — — — 81,129
Mark Kenney
— — — — —
500,000
—Declan Moylan 150,000 150,000 0.03% — — — 150,000
Aidan O’Hogan 186,774 186,774 0.04% — — — 186,774
Margaret Sweeney 247,073 266,413 0.05% 4,596,499 4,596,499 773,421 381,072
Elise Lenser — — — — —
250,000
—Anna-Marie Curry — — — — — 25,316 4,143
Total s
699,826
719,166 0.14% 5,346,499 4,596,499
798,737
867,968
I-RES
114
Employee Share Schemes
Options and Restricted Shares are
issuable pursuant to I-RES’ share-
based compensation plan, namely,
the LTIP. Eligible participants include
employees or executive directors of
the Company. Further details on the
LTIP are included in note 12 of the
Group financial statements.
Powers of the Board
The directors are responsible for the
management of the business of the
Company and may exercise all the
powers of the Company subject to
applicable legislation and regulation
and the Company’s Constitution.
The directors’ powers to allot, issue,
repurchase and reissue ordinary
shares are dependent on the terms
of the resolutions from time to time in
force so empowering the directors.
Atthe Company’s 2021 annual general
meeting, the directors were given
thepower:
↘
to call a general meeting on 14
clear days’ notice
↘
to consider the continuation in
office of KPMG as Auditor
↘
to fix the remuneration of
theAuditor
↘
to receive and consider the Report
of the Remuneration Committee
↘
to allot relevant securities up to
specified limits
↘
to disapply pre-emption rights
↘
to make awards under the
Company’s 2014 Long Term
Incentive Plan (“LTIP”)
↘
to disapply pre-emption rights for
the purpose of the LTIP
↘
to make market purchases of the
Company’s own shares
↘
to re-issue treasury shares at a
specified price range
The authorities described above are
due to expire at the conclusion of
the 2022 annual general meeting of
the Company or 15 months from the
passing of the resolution.
Details of the resolutions to be
considered at the next annual general
meeting of the Company will be sent
to shareholders in advance of the
2022 annual general meeting.
Rules concerning the appointment
and removal of directors of
theCompany
Directors are appointed on a
resolution of the shareholders at a
general meeting, usually the annual
general meeting, either to fill a
vacancy or as an additional director.
The directors have the power to
fill a casual vacancy or to appoint
an additional director (within the
maximum number of directors fixed
bythe Company in a general meeting),
and any director so appointed holds
office only until the conclusion of the
next annual general meeting following
his or her appointment, when the
director concerned shall retire, but
shall be eligible for reappointment at
that meeting.
No person other than a director
retiring at a general meeting may
be appointed a director at any
general meeting unless (i) he or she
is recommended by the directors or
(ii) not less than seven (7) nor more
than thirty (30) clear days before
the date appointed for the meeting,
notice executed by a shareholder
qualified to vote at the meeting has
been given to the Company of the
intention to propose that person for
appointment stating the particulars
which would be required, if he or she
were so appointed, to be included in
the Company’s register of directors
together with notice executed by that
person of his or her willingness to
beappointed.
Each director is obliged to retire at
each annual general meeting and, if
wishing to continue in office, may offer
himself or herself for re-election at the
annual general meeting.
The office of a director shall be
vacated ipso facto, in any of the
following circumstances, if the director:
↘
is restricted or disqualified from
acting as a director of any
company under the provisions of
Part 14 of the Companies Act, 2014;
↘
becomes bankrupt or makes any
arrangement or composition with
his or her creditors generally;
↘
in the opinion of a majority of his
co-directors, becomes incapable
by reason of mental disorder of
discharging his or her duties as
adirector;
↘
(not being a director holding for a
fixed term an executive office in his
or her capacity as a director) the
director resigns office by notice to
the Company;
↘
holds any executive office or
employment with the Company or
any subsidiary, and that office or
employment is terminated for any
reason and his or her co-directors
resolve that office as a director
bevacated;
↘
is convicted of an indictable
offence, unless the directors
otherwise determine;
↘
shall have been absent for more
than six (6) consecutive months
without permission of the directors
from meetings of the directors held
during that period and his or her
alternate director (if any) shall not
have attended any such meeting in
his or her place during such period,
and the directors pass a resolution
that by reason of such absence he
or she has vacated office; or
↘
is removed from office by notice
in writing (whether in electronic
form or otherwise) by all his or her
co-directors.
Notwithstanding anything in the
Company’s Constitution or in any
agreement between the Company
and a director, the Company may,
byordinary resolution of which
extended notice has been given in
accordance with the Companies Act,
2014, remove any director before the
expiry of his or her period of office.
Directors
As at the date of this Report, there
are seven (7) directors on the Board.
The CEO, Margaret Sweeney, is an
executive director. Declan Moylan
(theChairman), Phillip Burns, Joan
Garahy, Tom Kavanagh, Stefanie
Frensch and Aidan O’Hogan
(Senior Independent Director) are
non-executive directors. Ashort
biographical note on each director
appears on pages 64to66. Mark
Kenney, who was the Manager’s
nominee on the Board, resigned his
position as a Director on 2 July 2021.
In accordance with Provision 18 of
the UK Code and the Company’s
Constitution, all directors of the
Company are subject to election by
shareholders at the first annual general
meeting after their appointment,
and to annual re-election thereafter.
Inaccordance with this, each of
Phillip Burns, Stefanie Frensch, Joan
Garahy, Tom Kavanagh, Declan Moylan,
Aidan O’Hogan and Margaret Sweeney
will retire and, being eligible, will
offer himself/herself for re-election
at the Company’s 2022 annual
generalmeeting.
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
115
Non-Executive Directors
Agreements for Service
Other than Margaret Sweeney,
the directors do not have service
contracts but do have letters of
appointment which reflect their
responsibilities and commitments.
Margaret Sweeney entered into an
employment agreement with the
Company effective 1 November 2017
(as amended on 18 February 2020 and
27 March 2020). Each director has
the same general legal responsibilities
to the Company as any other
director and the Board as a whole is
collectively responsible for the overall
success of the Company.
The details of the non-executive
directors’ current terms and dates
of current service contracts are set
outbelow:
Name
Date of appointment
to Board
Date of most recent
letter of appointment
Year term expires
(on conclusion of the AGM)
Notice
period
Declan Moylan 31-Mar-14 19-Feb-20 On conclusion of 2023 AGM 3 months
Phillip Burns 23-Mar-16 21-Mar-19 On conclusion of 2022 AGM 3 months
Stefanie Frensch 01-Jul-21 15-Jun-21 On conclusion of 2024 AGM 3 months
Joan Garahy
18-Apr-17 19-Feb-20 On conclusion of 2023 AGM 3 months
Tom Kavanagh 01-Jun-18 03-Mar-21 On conclusion of 2024 AGM 3 months
Aidan O'Hogan 31-Mar-14 19-Feb-20 On conclusion of 2023 AGM 3 months
The letter of appointment for each
non-executive director provides that
the Company may terminate that
director’s appointment with immediate
effect in certain circumstances,
including where a director commits a
material breach of his or her obligations
under their letter of appointment
or otherwise at the discretion of
the director or the Company on
three months’ prior written notice.
No compensation is payable to any
director in the event of any such
termination. In addition to their general
legal responsibilities, the directors
have responsibility for the Company’s
strategy, performance, financial and risk
control, andpersonnel.
With effect from 1 November 2017,
Margaret Sweeney has served on the
Board of the Company as an executive
director. The terms of Ms.Sweeney’s
contract of employment are
summarised on page87to88 of
this Report.
Copies of the terms and conditions
of appointment for each director are
available for inspection by any person
at the offices of McCann FitzGerald,
Riverside One, Sir John Rogerson’s
Quay, Dublin 2, D02 X576 Ireland
during normal business hours and at
the Company’s annual general meeting
for 15 minutes prior to the meeting and
during the meeting.
There are no agreements between
the Company and its directors or
employees providing for compensation
for loss of office or employment,
whether through resignation,
purported redundancy or otherwise,
that occurs as a result of a takeover of
the Company, except under the terms
of the LTIP.
Key Management Personnel
On 31 January 2022 the Company
completed the acquisition of the
entire issued share capital in the
Manager. Since the completion of the
acquisition of the Manager and the
termination of the IMA on 31 January
2022, the Company is managed
by the CEO of the Company under
the supervision of the Board. The
Company appointed a new Finance
Director in April 2021 and Company
Secretary in July 2021 each of
whom are employed directly by the
Company and based in Dublin. At
present the Company continues to
have in place an alternative investment
fund manager’s agreement with the
Manager (which is authorised as an
alternative investment fund manager
by the Central Bank of Ireland under
the AIFM Regulations) to act as the
Company’s alternative investment fund
manager under the AIFM Regulations
and has delegated certain portfolio,
property management and other
functions to the Manager pursuant
to the alternative investment fund
manager’s agreement. It is proposed
that, Irish Residential Properties REIT
plc and the Manager will be integrated
in 2022, in accordance with the
terms of the Central Bank of Ireland
(CBI) approval for the acquisition of
the Manager, with an application to
be made to the CBI for IRES REIT to
be an internally managed Alternative
Investment Fund by 30 June 2022.
Management are in the process of
preparing for this integration and the
application to the Central Bank of
Ireland.
Conflicts of Interest – Directors
Section 231 of the Companies Act,
2014 requires each director who is in
any way, either directly or indirectly,
interested in a contract or proposed
contract with the Company to declare
the nature of his or her interest
at a meeting of the directors. The
Company keeps a register of all such
declarations, which may be inspected
by any director, secretary, auditor or
member of the Company at the offices
of McCann FitzGerald, Riverside One,
Sir John Rogerson’s Quay, Dublin 2,
D02 X576.
Subject to certain exceptions,
theArticles of Association generally
prohibit directors from voting at board
meetings or meetings of committees
of the Board on any resolution
I-RES
116
Except as disclosed above, the
Company has not been notified as at
21 March 2022 of any other interest
of 3% or more of the voting rights
in its share capital nor is it aware of
any person who directly or indirectly,
jointly or severally, exercises or could
exercise control over the Company.
The table above summarises the
various notifications that the Company
has received for shareholders with
3% or more of the voting rights. The
percentage ownership is based on the
number of shares outstanding at the
time the Company was notified. As the
total number of shares outstanding
as at 31 December 2021 and 21
March 2022 was 529,453,946 and
529,578,946 respectively, the actual
percentage ownership may differ
from above.
Information required to
be disclosed by LR 6.1.77,
EuronextDublin Listing Rules
For the purposes of LR 6.1.77,
theinformation required to be
disclosed by LR 6.1.77 can be found
inthe followinglocations:
concerning a matter in which they
have a direct or indirect interest which
is material to, or a duty which conflicts
or may conflict with the interests of,
the Company. Directors may not be
counted in the quorum in relation to
resolutions on which they are not
entitled to vote.
In November 2019 a committee
of theBoard was appointed to
conduct a scheduled review of the
Investment Management Agreement
and the Services Agreement along
with an evaluation of the strategic
options available to I-RES in relation
to these agreements. This Board
committee did not include either
Mark Kenney (up to his resignation)
or Phillip Burns given their respective
relationships to CAPREIT (as set
out in the Corporate Governance
Statement). In August 2020 the remit
of this committee was extended by
the Board to include any other matter
concerning the Company’s relationship
with CAPREIT and/or the Manager
and this committee was authorised
by the Board to make any such
decisions on behalf of the Company
in connection with such remit as it
deemsappropriate.
During 2021 the Related Party
Committee met at least once per
month with Management and all
advisers. In addition, Rothschild & Co
reported monthly to the whole Board
on progress on the internalisation
process.
Corporate Governance
The Company has complied, from
1January 2021 to 31 December 2021,
with the provisions set out in the UK
Code and in the Irish Annex, which
applied to the Company for the
financial period ended 31December
2021, except as disclosed on
page77 under Compliance with
RelevantCodes.
The Corporate Governance Statement
on pages 67 to 77 sets out the
Company’s application of the principles
and compliance with the provisions
of the UK Code and the Irish Annex
and the Company’s system of risk
management and internalcontrol.
Principal Risks and Uncertainties
A description of the principal risks and
uncertainties facing the Group is set
out on pages 54to62.
Substantial Shareholdings
The Company has been notified of the
following interests of 3% or more of
the voting rights over the share capital
of the Company as at 31 December
2021 and 21 March 2022:
Holder
31 December 2021 21 March 2022
Number of Shares % Number of Shares %
CAPREIT Limited Partnership 98,910,000 18.68% 98,910,000 18.68%
FMR LLC 48,281,877 9.14% 48,377,601 9.13%
Setanta Asset Management Limited 42,176,956 7.97% 36,719,012 6.93%
Aviva plc & its Subsidiaries 29,632,848 5.68% 29,632,848 5.68%
APG Asset Management N.V. 26,138,135 5.01% 26,138,135 5.01%
Vision Capital Corporation 26,387,625 5.00% 25,162,625 4.75%
Irish Life Investment Managers Limited 20,838,363 4.99% 20,838,363 4.99%
Blackrock, Inc. 15,799,200 3.03% 15,799,200 3.03%
Sumitomo Mitsui Trust Holdings, Inc 15,574,076 2.99% 15,574,076 2.99%
Lansdowne Partners International Limited 15,180,317 2.91% 15,180,317 2.91%
GLG Partners LP 13,207,986 3.17% 13,207,986 3.17%
Hazelview Investments Inc.
(formerly Timbercreek Equities Corp.)
13,041,488 2.48% 13,041,488 2.48%
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
117
All of the information cross-referenced
above is hereby incorporated
by reference into this Report of
theDirectors.
Principal Subsidiaries and
JointVentures
Details of the Company’s principal
subsidiaries as at 31 December
2021, which include IRES Residential
Properties Limited (acquired on 31
March 2015 in connection with the
acquisition of the Rockbrook Portfolio
and holds the Rockbrook Portfolio),
and certain owners’ management
companies in which the Company
holds a majority of the voting rights,
are set out in note 22 of the Group
financial statements on pages 162 to
165. All of the Company’s principal
subsidiaries are incorporated in Ireland.
Financial Instruments
Financial instruments are set out
in note 18 of the Group financial
statements on pages 151to157.
Financial Risk Management
The financial risks include market risk,
liquidity risk, credit risk and capital
management risk. The financial risk
management objectives and policies
of the Group are set out in note 18
of the Group financial statements on
pages 151to157 and are included in
this report by cross reference.
Subsequent Events
Information in respect of events since
the year end is contained in note 29
to the Group financial statements
onpage169 and are included in this
report by cross reference.
Political Contributions
There were no political contributions
which are required to be disclosed
under the Electoral Act, 1997 or the
Irish Companies Act, 2014.
Accounting Records
The directors are responsible for
ensuring accounting records, as
required by Sections 281 to 285 of
the Companies Act, 2014, are kept
by the Company. The directors
believe that they have complied
with this requirement by delegating
responsibility for ensuring that the
accounting records are maintained
to the Manager pursuant to the
Investment Management Agreement.
The accounting records of the
Company are maintained at its
registered office located at South
Dock House, Hanover Quay, Dublin 2,
Ireland.
Relevant Audit Information
The directors believe that they have
taken all steps necessary to make
themselves aware of any relevant
audit information and have established
that the Company’s statutory auditors
are aware of that information. Insofar
as they are aware, there is no
relevant audit information of which
the Company’s statutory auditors
areunaware.
Directors’ Compliance Statement
The directors, in accordance with
Section 225(2) of the Companies
Act, 2014, acknowledge that they
are responsible for securing the
Company’s “Relevant Obligations”
within the meaning of Section 225 of
the Companies Act, 2014 (described
below as “Relevant Obligations”).
The directors confirm that:
↘
a compliance policy statement
has been drawn up setting out the
Company’s policy (that is in the
opinion of the directors appropriate
to the Company) with regard to
compliance by the Company with
its Relevant Obligations;
↘
appropriate arrangements and
structures that, in the directors’
opinion, are designed to ensure
material compliance with the
Company’s Relevant Obligations,
have been put in place; and
↘
a review has been conducted
during the financial year of the
arrangements and structures that
have been put in place to secure
the Company’s compliance with its
Relevant Obligations.
Section
Topic
Location
(1) Interest capitalised Financial Statements, Note 5
(2) Publication of unaudited financial information
in a circular or prospectus
Not applicable
(3) Small related party transactions Report of the Directors
(4) Details of long-term incentive schemes Report of the
Remuneration Committee
(5) Waiver of emoluments by a director Not applicable
(6) Waiver of future emoluments by a director Not applicable
(7) Non-pre-emptive issues of equity for cash Not applicable
(8) Item (7) in relation to major subsidiary undertakings Not applicable
(9) Parent participation in a placing by a listed subsidiary Not applicable
(10) Contracts of significance Financial Statements, Note 22
(11) Provision of services by a controlling shareholder Not applicable
(12) Shareholder waivers of dividends Not applicable
(13) Shareholder waivers of future dividends Not applicable
(14) Agreement with controlling shareholders Not applicable
Holder
31 December 2021 21 March 2022
Number of Shares % Number of Shares %
CAPREIT Limited Partnership 98,910,000 18.68% 98,910,000 18.68%
FMR LLC 48,281,877 9.14% 48,377,601 9.13%
Setanta Asset Management Limited 42,176,956 7.97% 36,719,012 6.93%
Aviva plc & its Subsidiaries 29,632,848 5.68% 29,632,848 5.68%
APG Asset Management N.V. 26,138,135 5.01% 26,138,135 5.01%
Vision Capital Corporation 26,387,625 5.00% 25,162,625 4.75%
Irish Life Investment Managers Limited 20,838,363 4.99% 20,838,363 4.99%
Blackrock, Inc. 15,799,200 3.03% 15,799,200 3.03%
Sumitomo Mitsui Trust Holdings, Inc 15,574,076 2.99% 15,574,076 2.99%
Lansdowne Partners International Limited 15,180,317 2.91% 15,180,317 2.91%
GLG Partners LP 13,207,986 3.17% 13,207,986 3.17%
Hazelview Investments Inc.
(formerly Timbercreek Equities Corp.)
13,041,488 2.48% 13,041,488 2.48%
I-RES
118
Regulation 21 of SI 255/2006
European Communities
(TakeoverBids (Directive
(2004/25/EC)) Regulations 2006
Each of the Company and its
subsidiary, IRES Residential
Properties Limited, has certain
financial indebtedness arising under
a private placement of loan notes
and, in the case of the Company,
banking facilities, which may require
repayment and (in respect of the
banking facilities) cancellation of the
commitments thereunder in the event
that a change of control occurs with
respect to the Company (or, in the
case of IRES Residential Properties
Limited’s financial indebtedness, IRES
Residential Properties Limited), which
may have the effect of also terminating
(in whole or part) hedges transacted
under the International Swaps and
Derivatives Association, Inc. (“ISDA”)
documentation entered into by IRES
Residential Properties Limited. In
addition, the LTIP contains change of
control provisions which allow for the
acceleration of the exercisability of
share options or awards in the event
that a change of control occurs with
respect to the Company.
There are no other significant
agreements to which the Company
is a party that take effect, alter or
terminate upon a change of control of
the Company following a bid.
For the purposes of Regulation
21 of the European Communities
(TakeoverBids (Directive 2004/25/
EC)) Regulations 2006, the information
on directors on pages 64to66
and the disclosures on Directors’
Remuneration on page90 of this
Report cover the information required
and are deemed to be incorporated in
the Report of the Directors.
Auditor
KPMG, Chartered Accountants, were
appointed statutory auditor on 17 July
2018 and have been re-appointed
annually since that date, and pursuant
to section 383(2) will continue in
office. A resolution authorising the
directors to set their remuneration will
be proposed at the Company’s 2022
annual general meeting.
Audit Committee
The Board has established an Audit
Committee in compliance with
the Codes to assist with certain
responsibilities relating to internal
controls, risk management and
reporting. Refer to the Report of
the Audit Committee on page78 for
the procedures established by the
Audit Committee to discharge these
responsibilities.
General Meetings
The Company holds a general meeting
each year as its annual general
meeting in addition to any other
meeting in that year. Not more than
15 months shall elapse between the
date of one annual general meeting
and that of the next. The directors
are responsible for the convening
of general meetings. Information is
distributed to shareholders at least
20 working days prior to the annual
general meeting.
No business other than the
appointment of a chairman shall be
transacted at any general meeting
unless a quorum of members is
present at the time when the meeting
proceeds to business. Except as
provided in relation to an adjourned
meeting, two (2) persons entitled
to vote upon the business to be
transacted, each being a member
or proxy for a member or a duly
authorised representative of a
corporate member, shall be a quorum.
Votes may be given either personally
or by proxy or a duly authorised
representative of a corporate member.
Subject to rights or restrictions for the
time being attached to any class or
classes of shares, on a show of hands,
every member present in person
and every proxy or duly authorised
representative of a corporate body
shall have one vote. No individual shall
have more than one vote, and on a
poll, every member present in person
or by proxy or a duly authorised
representative of a corporate body
shall have one vote for every share
carrying voting rights of which the
individual is the holder.
Resolutions are categorised as either
ordinary or special resolutions. Abare
majority of more than 50% of the
votes cast by members voting on
the relevant resolution is required for
the passing of an ordinary resolution,
whereas a qualified majority of
more than 75% of the votes cast
by members voting on the relevant
resolution is required in order to pass a
special resolution. Matters requiring a
special resolution include, for example:
altering the objects of the Company;
altering the Articles of Association of
the Company; and approving a change
of the Company’s name.
Constitution
The Company’s Constitution sets
out the objects and powers of the
Company. The Articles of Association
detail the rights attaching to shares in
the Company, the method by which
such shares can be purchased or
re-issued, the provisions which apply
to the holding and voting at general
meetings and the rules relating to
directors, including their appointment,
retirement, re-election, duties and
powers. The Articles of Association
may be amended by special resolution
of the Company’s shareholders, being
a resolution proposed on not less than
21 days’ notice as a special resolution
and passed by more than 75% majority
of those voting on the resolution.
The Directors’ Report was approved
by the Board of Directors on 23 March
2022 and is signed on their behalf by:
Directors
Declan Moylan
Chairman
Margaret Sweeney
Executive Director
Strategic Report
Governance
Financial Statements
Supplementary Information
2021 Annual Report
119
The directors are
responsible for
preparing the
Report and the
financial statements
in accordance with
applicable laws and
regulations.
Company law requires the directors
to prepare financial statements
for each financial year. Under that
law the directors are required to
prepare the Group’s and Company’s
financial statements in accordance
with International Financial Reporting
Standards as adopted by the European
Union (“IFRS”) and applicable
law including Article 4 of the
IASregulation.
The directors have elected to prepare
the Company financial statements in
accordance with FRS 101 Reduced
Disclosure Framework as applied in
accordance with the provisions of
Companies Act 2014.
Under company law, the directors must
not approve the Group and Company
financial statements unless they are
satisfied that they give a true and
fair view of the assets, liabilities and
financial position of the Group and
Company and of the Group’s profit or
loss for that year.
In preparing the financial statements,
the directors are required to:
↘
select suitable accounting policies
and then apply them consistently;
↘
make judgements and estimates
that are reasonable and prudent;
↘
state whether applicable
Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the financial statements;
↘
assess the Group and Company’s
ability to continue as a going
concern, disclosing, as applicable,
matters related to going concern;
and
↘
use the going concern basis of
accounting unless they either
intend to liquidate the Group or
Company or to cease operations,
or have no realistic alternative but
to do so.
The directors are responsible for
keeping adequate accounting records
which disclose with reasonable
accuracy at any time the assets,
liabilities, financial position and profit
or loss of the Company and which
enable them to ensure that the
financial statements comply with the
provision of the Companies Act 2014.
The directors are also responsible
for taking all reasonable steps to
ensure such records are kept by its
subsidiaries which enable them to
ensure that the financial statements of
the Group comply with the provisions
of the CompaniesAct2014 including
Article 4 of the IAS Regulation.
Theyare responsible for such
internal controls as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whetherdue
to fraud or error, and have general
responsibility for safeguarding the
assets of the Group, and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities. Thedirectors
are also responsible for preparing
a directors’ report that complies
with the requirements of the
CompaniesAct2014.
In accordance with applicable law and
the Euronext Dublin Listing Rules, the
directors are also required to prepare
a Report of the Directors and reports
relating to directors’ remuneration and
corporate governance. The directors
are also required by the Transparency
(Directive 2004/109/EC) Regulations
2007 (the “Transparency Regulations”)
to include a management report
containing a fair review of the business
and a description of the principal risks
and uncertainties facing the Group.
The Report of the Directors, on pages
111 to 118, the Chairman’s Statement
on pages 12 to 14, the Chief Executive
Officer’s Statement on pages 15 to 19,
the Manager’s Statement on page 20,
the Business Review on pages 21 to 32
and the Risk Report on pages 50 to
62 are deemed to be the management
report as required by the Transparency
Regulations.
Statement
of Directors’
Responsibilities
_
I-RES
120
The directors confirm that they have
complied with the above requirements
in preparing the financial statements.
The directors have contracted with
the Manager to ensure that those
requirements are met. Thebooks and
accounting records of the Group and
the Company are maintained at the
Company’s registered office located
at South Dock House, Hanover Quay,
Dublin 2, Ireland. Thedirectors have
delegated investment management
and administration functions,
includingrisk management, to the
Manager without abrogating their
overall responsibility. The directors
have in place mechanisms for
monitoring the exercise of such
delegated functions, which are
always subject to the supervision
and direction of the Board.
Thesedelegations of functions and
the appointment of regulated third
party entities are set out in the
Corporate Governance Statement
onpages67to77.
Each of the directors, whose names
and functions are listed on pages
64to66, confirms that, to the best of
each director’s knowledge and belief:
As required by the Transparency
Regulations:
↘
the financial statements, prepared
in accordance with IFRS as
adopted by the EU, give a true and
fair view of the assets, liabilities
and financial position of the
Group and the Company as at 31
December 2021 and of the results
of the Group, taken as a whole,
for the period 1 January 2021 to 31
December 2021;
↘
the management report, comprising
the Report of the Directors, the
Chairman’s Statement, the Chief
Executive Officer’s Statement, the
Manager’s Statement, the Business
Review and the Risk Report, include
a fair review of the development
and performance of the business
and the position of the Company
and the Group taken as a whole
as at 31 December 2021, together
with a description of the principal
risks and uncertainties that the
Company and the Group faces;
and
↘
the financial statements use the
going concern basis of accounting
unless they either intend to
liquidate the Group or Company
or to cease operations, or have no
realistic alternative but to do so.
As required by the UK Corporate
Governance Code:
↘
the Report and financial statements
contained therein, taken as a
whole, are fair, balanced and
understandable and provide
the information necessary
for shareholders to assess
the Company’s position and
performance, business model
andstrategy.
Signed on behalf of the Board
Declan Moylan
Chairman
Margaret Sweeney
Executive Director
Dated this 23 day of March 2022
Financial
Statements
_
In this Section:
Independent Auditor’s Report to the Members
of Irish Residential Properties REIT plc
122
Consolidated Statement of Financial Position
127
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
128
Consolidated Statement of Changes in Equity
129
Consolidated Statement of Cash Flows
130
Notes to Consolidated Financial Statements
131
Company Statement of Financial Position
170
Company Statement of Profit or Loss and
Other Comprehensive Income
171
Company Statement of Changes in Equity
172
Company Statement of Cash Flows
173
Notes to Company Financial Statements
174
121
2021 Annual Report
Independent Auditor’s Report
to the Members of Irish Residential Properties Reit plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Irish Residential
Properties REIT plc (‘the Company’) and its consolidated
undertakings (‘the Group’) for the year ended 31 December
2021 set out on pages 127 to 184 and contained within
the reporting package 635400EOPACLULRENY18-2021-
12-31-en.zip, which comprise the Consolidated Statement
of Financial Position, the Company Statement of Financial
Position, the Consolidated Statement of Profit or Loss and
Other Comprehensive Income, the Company Statement
of Profit or Loss and Other Comprehensive Income, the
Consolidated Statement of Changes in Equity, the Company
Statement of Changes in Equity, the Consolidated Statement
of Cash Flows, and the Company Statement of Cash Flows
and related notes, including the summary of significant
accounting policies set out in notes 2 and 3 and note I of
the Company financial statements. The financial reporting
framework that has been applied in the preparation of
the Group financial statements is Irish Law, including the
Commission Delegated Regulation 2019/815 regarding the
single electronic reporting format (ESEF) and International
Financial Reporting Standards (IFRS) as adopted by the
European Union and, as regards the Company financial
statements, Irish Law and FRS
101 Reduced Disclosure
Framework
issued in the United Kingdom by the Financial
Reporting Council.
In our opinion:
»
the financial statements give a true and fair view of the
assets, liabilities and financial position of the Group and
Company as at 31 December 2021 and of the Group and
Company’s profit for the year then ended;
»
the Group financial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union;
»
the Company financial statements have been properly
prepared in accordance with FRS 101 Reduced Disclosure
Framework issued by the UK’s Financial Reporting
Council; and
»
the Group and Company financial statements have been
properly prepared in accordance with the requirements
of the Companies Act 2014 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable law. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities section
of our report. We believe that the audit evidence we
have obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report to
the audit committee.
We were appointed as auditor by the directors on 17 July
2018. The period of total uninterrupted engagement is the
4 years ended 31 December 2021. We have fulfilled our
ethical responsibilities under, and we remained independent
of the Group in accordance with, ethical requirements
applicable in Ireland, including the Ethical Standard issued
by the Irish Auditing and Accounting Supervisory Authority
(IAASA) as applied to public interest entities. No non-audit
services prohibited by that standard were provided.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the director's use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s
and Company’s ability to continue to adopt the going
concern basis of accounting included:
»
Using our knowledge of the Group, its industry, and the
general economic environment to identify the inherent
risks to its business model and analysing how those
risks might affect the Group’s and Company’s financial
resources or ability to continue operations over the
going concern period. The risks that we considered
were most likely to adversely affect the Group’s and
Company’s available financial resources over this period
were the impact of a significant decrease in occupancy
levels and decline in rental collection during the going
concern period.
»
Considering whether these risks could plausibly affect
the availability of financial resources in the going concern
period by comparing severe, but plausible, downside
scenarios that could arise from these risks individually
and collectively against the level of available financial
resources indicated by the Group’s and Company’s
financial forecasts.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group or the Company’s ability to
continue as a going concern for a period of at least twelve
months from the date when the financial statements are
authorised for issue.
In relation to the Group and the Company’s reporting on
how they have applied the UK Corporate Governance
Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial
statements about whether the directors considered
it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
I-RES
122
Independent Auditor’s Report
to the Members of Irish Residential Properties Reit plc
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows
(unchanged from prior years):
Valuation of Investment Property: Consolidated €1,493 million (2020 - €1,380 million),
Company €1,358m (2020 - €1,247 million)
Refer to page 80 (Audit and Risk Committee Report), page 132 to 133 (accounting policy) and pages 140 to 143
(financial disclosures)
The key audit matter How the matter was addressed in our audit
The Groups’ investment property portfolio
(including properties under development and
development land) comprises a portfolio of mainly
residential property assets, 99% of which are
located in Dublin. The investment property portfolio
is valued at €1,493 million at 31 December 2021
and represents 98% of the Group’s total assets and
91% of the Company’s total assets.
The valuation of the Group’s investment property
portfolio is inherently subjective, as it requires,
amongst other factors, consideration of the
specific characteristics of each property, the
location and nature of each property, consideration
of prevailing property market conditions and
in respect of income generating properties,
estimation of future rentals beyond the current
lease terms.
In respect of properties under development,
further factors include estimated costs to
completion and timing of practical completion
of each development.
The Directors engage external valuers to value
the Group’s investment property portfolio in
accordance with the Royal Institution of Chartered
Surveyors (‘RICS’) Valuation – Professional
Standards. The valuation experts used by
the Group have considerable experience of
the markets in which the Group operates.
In determining the valuation of the Group’s
investment properties, the valuers take into
account the above considerations and rely on
the accuracy of the underlying lease and related
information provided to the valuers by the Group.
We regard this area as a key audit matter due to
the significance of the estimates and judgements
involved in the valuation of the Group’s investment
property portfolio.
In this area our audit procedures included, among others, the
following:
»
We evaluated the design and implementation of the key control
over the investment property valuation process.
»
We performed testing over the accuracy and completeness of
lease information provided by the Group to the external valuers
for income generating properties.
»
We inspected the valuation reports and confirmed that the
valuation approach was in accordance with RICS standards and
suitable for the purposes of the Group’s financial statements.
»
We assessed the external valuers’ qualifications and expertise
and read their terms of engagement with the Group to determine
whether there were any matters that might have affected their
objectivity or may have imposed scope limitations upon their work.
»
We met with the external valuers to understand the valuation
of the portfolio. These discussions included gaining an
understanding of the external valuers’ process; the significant
assumptions employed in estimating future rental incomes and
future capital expenditure requirements for income generating
properties; and the judgements in the selection of appropriate
capitalisation rates for a sample of selected properties.
»
We considered the capitalisation rate assumptions for selected
properties used by the valuers in performing their valuations
and compared them to relevant market evidence, such as
benchmarking against specific property sales, and performing an
internal comparison across the Group’s property portfolio.
»
We agreed the value of all investment properties included in the
financial statements to the valuation reports prepared by the
external valuers.
»
We assessed the adequacy of the disclosures in relation to
the valuation of investment properties and found them to be
appropriate.
»
We compared the proceeds received from sales of investment
property with the reported fair value which provides an indicator
of the accuracy and reliability of historic revaluations.
We found no evidence to suggest that the objectivity of the valuers
in their performance of the valuations was compromised. On the
basis of the work performed, we found the significant assumptions
used in the valuations to be appropriate.
Strategic Report
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Supplementary InformationFinancial Statements
123
2021 Annual Report
Independent Auditor’s Report
to the Members of Irish Residential Properties Reit plc
Transactions with related parties
Refer to page 80 (Audit and Risk Committee Report) and pages 160 to 165 (financial disclosures)
The key audit matter How the matter was addressed in our audit
A number of related party relationships exist between the
Group and CAPREIT LP and its affiliates. The disclosures
regarding the Investment Management Agreement,
the related asset and property management fees, the
termination of this agreement and subsequent acquisition
of the Investment Manager post 31 December 2021 are
significant elements of the Group’s financial statements.
Due to the significance of these related party transactions
this warranted specific audit focus.
»
How the matter was addressed in our audit
»
We obtained an understanding of the process,
procedures and controls governing the identification
and management of its related party transactions with
CAPREIT LP and its affiliates.
»
We read the Board Minutes to consider the
completeness of related party transactions and relevant
agreements with related parties.
»
We recalculated the fees charged from IRES Fund
Management Limited, a wholly owned subsidiary of
CAPREIT LP, to the Investment Management Agreement.
»
We obtained an understanding of the termination of the
Investment Management Agreement and the planned
internalisation of the Manager.
»
We read the relevant Board subcommittee minutes and
inspected related announcements, communications and
legal documentation in respect of the termination of the
Investment Management Agreement and acquisition of
the Investment Manager subsequent to the year end.
»
We considered the disclosures included in the financial
statements for consistency with agreements and
other related party transactions during the year and
subsequent to the year end.
On the basis of the work performed, we found the
disclosures in the financial statements to be appropriate.
Our application of materiality and an overview of the
scope of our audit
The materiality for the Group financial statements as a
whole was set at €8.8 million (2020: €8.4 million). This
has been calculated with reference to a benchmark of
net assets which we consider to be one of the principal
considerations for members of the Group in assessing the
financial performance of the Group. Materiality represents
approximately 1% of this benchmark, consistent with the
prior year. In addition, we applied a materiality of €1.6 million
(2020: €1.7 million) for testing profit or loss items excluding
the net movement in fair value of investment properties. In
our judgement, the application of this specific materiality is
appropriate due to key performance indicators of the Group
driven by profit or loss items. We applied materiality to
assist us determine what risks were significant risks and the
procedures to be performed.
We reported to the Audit Committee all corrected and
uncorrected misstatements we identified through our audit
with a value in excess of €0.4 million (2020: €0.4 million).
Materiality for the company financial statements as a
whole was set at €8.5 million (2020: €8.1 million). This was
determined with reference to a benchmark of net assets.
We reported to the Audit Committee any corrected or
uncorrected identified misstatements exceeding €0.4 million
(2020: €0.4 million).
The Group team performed the audit of the Group as if it
was a single aggregated set of financial information. The
audit was performed using the materiality levels set out
above.
Other information
The directors are responsible for the preparation of the
other information presented in the Annual Report together
with the financial statements. The other information
comprises all the information included in the Chairman’s
Statement, Chief Executive Officer’s Statement, Investment
Manager’s Statement, Business Review, Market Update,
Business Objectives and Strategy, Investment Policy, Risk
Report, Corporate Governance Statement, Report of the
Audit Committee, Report of the Remuneration Committee,
Report of the Nomination Committee and Report of the
Directors.
The financial statements and our auditor’s report thereon
do not comprise part of the other information. Our opinion
on the financial statements does not cover the other
information and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
I-RES
124
Independent Auditor’s Report
to the Members of Irish Residential Properties Reit plc
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have not
identified material misstatements in the other information.
Based solely on our work on the other information
undertaken during the course of the audit, we report that,
in those parts of the directors’ report specified for our
consideration:
»
we have not identified material misstatements in the
directors’ report;
»
in our opinion, the information given in the directors’
report is consistent with the financial statements; and
»
in our opinion, the directors’ report has been prepared in
accordance with the Companies Act 2014.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
»
the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated;
»
the directors’ confirmation within the viability statement
pages 52 to 53 that they have carried out a robust
assessment of the principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency and liquidity; and
»
the directors’ explanation in the viability statement of how
they have assessed the prospects of the Group, over
what period they have done so and why they considered
that period to be appropriate, and their statement as to
whether they have a reasonable expectation that the
Group will be able to continue in operation and meet
its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Other corporate governance disclosures
We are required to address the following items and report
to you in the following circumstances:
»
Fair, balanced and understandable: if we have identified
material inconsistencies between the knowledge we
acquired during our financial statements audit and the
directors’ statement that they consider that the Annual
Report and financial statements taken as a whole is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Group’s position and performance, business model
and strategy.
»
Report of the Audit Committee: if the section of
the Annual Report describing the work of the Audit
Committee does not appropriately address matters
communicated by us to the Audit Committee.
»
Statement of compliance with UK Corporate Governance
Code: if the directors’ statement does not properly
disclose a departure from provisions of the UK Corporate
Governance Code specified by the Listing Rules of
Euronext Dublin for our review.
»
if the directors’ statement relating to Going Concern
required under the Listing Rules of Euronext Dublin set
out on pages 119 to 120 is materially inconsistent with
our audit knowledge.
We have nothing to report in these respects.
In addition as required by the Companies Act 2014, we
report, in relation to information given in the Corporate
Governance Statement on pages 67 to 77, that:
»
based on the work undertaken for our audit, in our
opinion, the description of the main features of internal
control and risk management systems in relation to the
financial reporting process and information relating to
voting rights and other matters required by the European
Communities (Takeover Bids (Directive 2004/EC)
Regulations 2006 and specified for our consideration,
is consistent with the financial statements and has been
prepared in accordance with the Act;
»
based on our knowledge and understanding of the
Company and its environment obtained in the course
of our audit, we have not identified any material
misstatements in that information; and
»
the Corporate Governance Statement contains the
information required by the European Union (Disclosure
of Non-Financial and Diversity Information by certain
large undertakings and groups) Regulations 2017.
We also report that, based on work undertaken for our
audit, the information required by the Act is contained in
the Corporate Governance Statement.
Our opinions on other matters prescribed by the
Companies Act 2014 are unmodified
We have obtained all the information and explanations
which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company
were sufficient to permit the financial statements to be
readily and properly audited and the financial statements
are in agreement with the accounting records.
We have nothing to report on other matters on which
we are required to report by exception
The Companies Act 2014 requires us to report to you if,
in our opinion:
»
the disclosures of directors’ remuneration and
transactions required by Sections 305 to 312 of the Act
are not made;
»
the Company has not provided the information required
by Section 1110N in relation to its remuneration report for
the financial year 31 December 2020;
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
125
Independent Auditor’s Report
to the Members of Irish Residential Properties Reit plc
»
the Company has not provided the information required
by section 5(2) to (7) of the European Union (Disclosure
of Non-Financial and Diversity Information by certain
large undertakings and groups) Regulations 2017 for
the year ended 31 December 2020 as required by
the European Union (Disclosure of Non-Financial and
Diversity Information by certain large undertakings and
groups) (amendment) Regulations 2018.
We have nothing to report in this regard.
The Listing Rules of Euronext Dublin require us to review:
»
the Directors’ Statement, set out on pages 119 to 120,
in relation to going concern and longer-term viability;
»
the part of the Corporate Governance Statement on
pages 67 to 77 relating to the Company’s compliance
with the provisions of the UK Corporate Governance
Code and the Irish Corporate Governance Annex
specified for our review; and
»
certain elements of disclosures in the report to
shareholders by the Board of Directors’ remuneration
committee.
We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on pages
119 to 120, the directors are responsible for: the preparation
of the financial statements including being satisfied that
they give a true and fair view; such internal control as
they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error; assessing
the Group and Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement
when it exists. Misstatements can arise from fraud, other
irregularities or error and are considered material if,
individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users
taken on the basis of the financial statements. The risk of
not detecting a material misstatement resulting from fraud
or other irregularities is higher than for one resulting from
error, as they may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control and may involve any area of law and regulation and
not just those directly affecting the financial statements.
A fuller description of our responsibilities is provided on
IAASA’s website at http://www.iaasa.ie/Publications/Auditing-
standards/International-Standards-on-Auditing-for-use-in-
Ire/Description-of-the-auditor-s-responsibilities-for.
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company’s members, as a
body, in accordance with Section 391 of the Companies Act
2014. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than
the Company and the Company’s members, as a body, for
our audit work, for our report, or for the opinions we have
formed.
23 March 2022
Sean O’Keefe
for and on behalf of KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
I-RES
126
Consolidated Statement of Financial Position
As at 31 December 2021
Note
31 December
2021
€’000
31 December
2020
€’000
Assets
Non-Current Assets
Investment properties 5 1,493,405 1,380,354
Property, plant and equipment 7 9,212 9,722
Current Assets
Other current assets 8 14,168 15,502
Derivative financial instruments 17 931 770
Cash and cash equivalents 10,347 11,193
Total Assets 1,528,063 1,417,541
Liabilities
Non-Current Liabilities
Bank indebtedness 10 416,622 350,049
Private placement note 11 193,740 189,002
Lease liability 21 9,090 9,486
Derivative financial instruments 17 3,961 8,075
Current Liabilities
Accounts payable and accrued liabilities 9 15,414 11,588
Derivative financial instruments 17 — 84
Security deposits 7,796 7,562
Total Liabilities 646,623 575,846
Shareholders’ Equity
Share capital 13 52,945 52,507
Share premium 504,470 500,440
Share-based payment reserve 1,093 1,169
Cashflow hedge reserve 17 77 )
(348 )
(Retained earnings 323,280 287,656
Total Shareholders’ Equity 881,440 841,695
Total Shareholders’ Equity and Liabilities 1,528,063 1,417,541
IFRS Basic NAV per share 160.3
26 166.5
The accompanying notes form an integral part of these consolidated financialstatements.
Declan Moylan Margaret Sweeney
Chairman Executive Director
Strategic Report
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Supplementary InformationFinancial Statements
2021 Annual Report
127
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2021
Note
31 December
2021
€’000
31 December
2020
€’000
Operating Revenue
Revenue from investment properties 74,744
14 79,744
Operating Expenses
Property taxes 754 )
(712 )
(Property operating costs
(15,992 )
(14,215 )
(16,704 )
(14,969 )
Net Rental Income (“NRI”) 63,040 59,775
General and administrative expenses 15 7,396 )
(11,665 )
(Asset management fee 22
(4,814 )
(4,444 )
Share-based compensation expense 12 322 )
(276 )
(Net movement in fair value of investment properties 5 34,934 19,092
Gain on disposal of investment property 5 905 4,432
Gain on derivative financial instruments 17 59 709
Depreciation of property, plant and equipment 7
(519 )
(526 )
Lease interest 6
(232 )
(241 )
Financing costs 16
(13,886 )
(12,816 )
Profit for the Year 67,546 58,263
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Cash flow hedges - effective portion of changes in fair value 17 4,737
(4,533 )
Cash flow hedges - cost of hedging deferred 17 378 163
Cash flow hedges - reclassified to profit or loss 17 4,293
(5,386 )
Other Comprehensive (loss) for the period (271 )
(77 )
Total Comprehensive Income for the Year Attributable to Shareholders 67,275 58,186
Basic Earnings per Share (cents) 12.8 11.2
25
Diluted Earnings per Share (cents) 12.8 11.1
25
The accompanying notes form an integral part of these consolidated financialstatements.
I-RES
128
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Note
Share
Capital
Share
Premium
Retained
Earnings
Share-
based
payments
Reserve
Cashflow
hedge
Reserve
Tot a l
€’000 €’000 €’000 €’000 €’000 €’000
Shareholders’ Equity at 1 January 2021 52,507 500,440 287,656 1,169 841,695
(77 )
Total comprehensive income for the year
Profit for the year — — 67,546 — — 67,546
Other comprehensive loss for the year — — — — (271 ) (271 )
Total comprehensive income for the year — — 67,546 — (271 ) 67,275
Transactions with owners,
recognised directly in equity
Long-term incentive plan 12 — — — 276 — 276
Share issuance 13 438 4,030 352 (352 ) — 4,468
Dividends paid — — — —
20
(32,274 )
(32,274 )
Transactions with owners,
recognised directly in equity 438 4,030 (31,922 ) (76 ) — (27,530 )
Shareholders’ Equity at 31 December 2021 52,945 504,470 323,280 1,093 (348 ) 881,440
For the year ended 31 December 2020
Note
Share
Capital
Share
Premium
Retained
Earnings
Share-
based
payments
Reserve
Cashflow
hedge
Reserve
Tot a l
€’000 €’000 €’000 €’000 €’000 €’000
Shareholders’ Equity at 1 January 2020 52,167 497,244 259,611 1,147 — 810,169
Total comprehensive income for the year
Profit for the period — — 58,263 — — 58,263
Other comprehensive loss for the year — — — — (77 ) (77 )
Total comprehensive income for the year — — 58,263 — (77 ) 58,186
Transactions with owners,
recognised directly in equity
Long-term incentive plan 12 — — — 322 — 322
Share issuance 13 340 3,196 300 (300 ) — 3,536
Dividends paid — — — —
20
(30,518 )
(30,518 )
Transactions with owners,
recognised directly in equity 340 3,196 (30,218 ) 22 — (26,660 )
Shareholders’ Equity at 31 December 2020 52,507 500,440 287,656 1,169 (77 ) 841,695
The accompanying notes form an integral part of these consolidated financialstatements.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
129
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Note
31 December
2021
31 December
2020
€’000 €’000
Cash Flows from Operating Activities:
Operating Activities
Profit for the Year 67,546 58,263
Adjustments for non-cash items:
Fair value adjustment - investment properties 5
(34,934 )
(19,092 )
Gain on disposal of investment property 5 4,432 )
(905 )
(Depreciation of property, plant and equipment 7 519 526
Amortisation of other financing costs 21 1,644 1,409
Share-based compensation expense 12 276 322
Gain on derivative financial instruments 17
(59 )
(709 )
Allowance for expected credit loss 18(b) 626 991
Straight-line rent adjustment 5 1,113 44
Interest accrual relating to derivatives — 5
Total adjustments for non-cash items 35,826 37,327
Net income items relating to financing and investing activities 21 12,474 11,648
Changes in operating assets and liabilities 21 4,785
(416 )
Net Cash Generated from Operating Activities 53,085 48,559
Cash Flows from Investing Activities
Net proceeds from disposal of investment property 5 4,359 47,895
Deposits on acquisitions
(5,470 )
(5,444 )
Acquisition of investment properties 17,470 )
(56,442 )
(Development of investment properties
(9,361 )
(15,799 )
Investment property enhancement expenditure
(11,002 )
(10,336 )
Direct leasing cost 150 )
(149 )
(Purchase of property, plant and equipment 7 160 )
(9 )
(Net Cash Used in Investing Activities
(78,074 )
(1,464 )
Cash Flows from Financing Activities
Financing fees 21 (2,595 )
(830 )
Interest paid 21 10,771 )
(12,825 )
(Credit Facility drawdown 21 89,500 17,000
Credit Facility repayment 21
(23,500 )
(218,000 )
Proceeds from private placement debt 21 — 196,342
Cash settlement on exchange of swap — 2,511
Lease payment 6 386 )
(396 )
(Proceeds on issuance of shares 21 4,468 3,536
Dividends paid to shareholders
20
(32,274 )
(30,518 )
Net Cash Generated from/(Used in) Financing Activities 24,143
(42,881 )
Changes in Cash and Cash Equivalents during the Year (846 ) 4,214
Cash and Cash Equivalents, Beginning of the Year 11,193 6,979
Cash and Cash Equivalents, End of the Year 10,347 11,193
The accompanying notes form an integral part of these consolidated financialstatements.
I-RES
130
Notes to Consolidated Financial Statements
1. General Information
“Company”) was incorporated in Ireland
Shoreglade Limited (formerly known as CAPREIT Ireland
Limited, Irish Residential Apartments REIT Limited and Irish
Residential Properties REIT Limited). On 16 April 2014, I-RES
obtained admission of its ordinary shares to the primary
listing segment of the Official List of Euronext Dublin
(formerly the Irish Stock Exchange) and to trading on the
main market for listed securities of Euronext Dublin. Its
registered office is South Dock House, Hanover Quay, Dublin
main market for listed securities of Euronext Dublin under
the symbol “IRES”.
IRES Residential Properties Limited of South Dock
House, Hanover Quay, Dublin 2, Ireland is a wholly-owned
consolidated subsidiary of I-RES, acquired on 31 March 2015,
and owns directly the beneficial interest of its properties.
I-RES and IRES Residential Properties Limited together are
referred to as the “Group” in this financial information. The
Group owns interests in residential rental accommodations,
as well as commercial and development sites, the majority
of which are located in and near major urban centres in
Dublin, Ireland. Specifically, IRES Residential Properties
Limited owns an interest in the “Rockbrook Portfolio”,
which consists of 81 apartments at Rockbrook Grande
Central and 189 apartments at Rockbrook South Central,
mixed-use commercial space of approximately 4,665 sq.
m., a development site of approximately 1.13 hectares and
associated basement carparking.
On 31 January 2022, IRES acquired IRES Fund Management
Limited (its Manager and a wholly owned subsidiary of
CAPREIT) and terminated the IMA. Under the Central Bank
approval for this acquisition, IRES must make an application
to fully internalize within 5months.
2. Significant Accounting Policies
a) Basis of preparation
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
2021 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 2021 and 31 December
2020 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
comprehensiveincome.
The consolidated financial statements of the Group are
prepared on a going concern basis ofaccounting.
The consolidated financial statements of the Group
have been presented in euros, which is the Company’s
functionalcurrency.
The consolidated financial statements of the Group
cover the 12-month period from 1 January 2021 to 31
December2021.
The Group has not early adopted any forthcoming
International Accounting Standards Board (“IASB”) standards.
Note 2(r) sets out details of such upcomingstandards.
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.
Post the Covid-19 pandemic declaration on 16 March
2020, the Group’s occupancy rate remained strong at
approximately 99%. The Group also has a strong statement
of financial position with sufficient liquidity and flexibility in
place to manage through this period of uncertainty. The
Group can draw an additional €115 million from its RCF (as
defined below in note 10) while maintaining a maximum 50%
Loan to value ratio as at 31 December 2021, as required by
REIT legislation, and is maintaining a minimum cash balance
of €10 million for liquidity purposes. As at 31 December
2021, the current undrawn RCF amount is €180 million. The
Group generated a positive cashflow from operations and
a profit for the year ended 31 December 2021. Accordingly,
the Directors have a reasonable expectation that the
Group have adequate resources to continue in operational
existence for 12 months from the date of approval of the
financial statements and consider it appropriate that they
continue to adopt the going concern basis of accounting in
the preparation of the consolidated financial statements.
b) Basis of consolidation
These consolidated financial statements incorporate
the financial statements of I-RES and its subsidiary,
IRES Residential Properties Limited. I-RES controls IRES
Residential Properties Limited by virtue of its 100%
shareholding in that company. All intragroup assets and
liabilities, equity, income, expenses and cash flows relating
to transactions between members of the Group are
eliminated in full onconsolidation.
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 note22.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
131
Notes to Consolidated Financial Statements
(continued)
2. Significant Accounting Policies
(continued)
c) Investment properties and investment properties
under development
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
measurementdate.
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
beencompleted.
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 ofbusiness.
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
comprehensiveincome.
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 independentvaluer.
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
incomeproperties.
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 ofborrowing.
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 remainingrisk.
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 andconfiguration.
I-RES
132
Notes to Consolidated Financial Statements
(continued)
2. Significant 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 methodsused.
d) Property asset acquisition
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
produceoutputs.
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 identifiableassets.
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 theproperty.
e) Property, plant and equipment
Property, plant and equipment are stated at historical cost
less accumulated depreciation, and mainly comprise of
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 three to
fiveyears.
f) IFRS 9, Financial Instruments (“IFRS 9”)
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 standards require 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 (“
FVOCI
”).Derecognition of financial assets and financial liabilities
The Group derecognises a financial assetwhen:
»
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 financialasset.
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. In these cases, the
transferred assets are notderecognised.
The Group derecognises a financial liability when its
contractual obligations are discharged or 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 fairvalue.
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 orloss.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
133
Notes to Consolidated Financial Statements
(continued)
2. Significant Accounting Policies
(continued)
f) IFRS 9, Financial Instruments (“IFRS 9”)
(continued)
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 liabilitysimultaneously.
Classification of financial instruments
The following summarises the classification and
measurement I-RES has elected to apply to each of its
significant categories of financialinstruments:
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 otherincome.
Loans and 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 amortisedcost.
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 designated to be accounted for at fair value
through profit and loss and at fair value through other
comprehensiveincome.
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
income and comprehensive income 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 ashedges.
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 aremet.
Derivatives are initially measured at fair value. Subsequent to
initial recognition, derivatives are remeasured at fair value,
with changes generally recognised through profit orloss.
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 interestrates.
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 eachother.
Type
Classification
Measurement
Financial assets
Cash and cash equivalents Held to Collect Amortised cost
Other receivables Held to Collect Amortised cost
Derivative financial instruments
FVPL
Fair value through profit or lossFinancial liabilities
Bank indebtedness Other financial liabilities Amortised cost
Private placement notes Other financial liabilities Amortised cost
Accounts payable and accrued liabilities Other financial liabilities Amortised cost
Security deposits Other financial liabilities Amortised cost
Derivative financial instruments FVTOCI Fair value through other comprehensive income
I-RES
134
Notes to Consolidated Financial Statements
(continued)
2. Significant Accounting Policies
(continued)
f) IFRS 9, Financial Instruments (“IFRS 9”)
(continued)
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 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 orloss.
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 orloss.
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
discontinuedprospectively.
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
orloss.
g) IFRS 16, Leases
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 IFRS16.
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-
aloneprices.
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 incentivesreceived.
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 leaseliability.
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 discountrate.
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 type of the assetleased.
Lease payments included in the measurement of the lease
liability comprise thefollowing:
»
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 terminateearly.
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 leasepayment.
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 tozero.
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 financialposition.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
135
Notes to Consolidated Financial Statements
(continued)
2. Significant Accounting Policies
(continued)
g) IFRS 16, Leases
(continued)
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 if
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 its leases are
operatingleases.
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 operatinglease.
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-aloneprices.
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 rentalrevenue.
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 paymentoccurred.
Expected credit loss
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-lookinginformation.
The Group assumes that the credit risk on a financial
asset has increased significantly if it is more than 30 days
pastdue.
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. For individual commercial
customers, the Group has a policy of writing off the gross
carrying amount when the financial asset is 60 days
past due based on historical experience of recoveries of
similarassets.
h) IFRS 15, Revenue from Contracts with Customers
(“IFRS 15”)
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 the adoption of 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 Revenue from Contracts
withCustomers.
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 similarservices.
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 ofrevenue.
Revenue from maintenance services represents the service
component of the REIT’s rental contracts and is accounted
for in accordance with IFRS 15, Revenue from Contracts
with Customers (“IFRS15”). These services consist primarily
of the recovery of utility, property and other common
area maintenance and amenity costs where I-RES has
determined it is acting as aprincipal.
I-RES
136
Notes to Consolidated Financial Statements
(continued)
2. Significant Accounting Policies
(continued)
h) IFRS 15, Revenue from Contracts with Customers
(“IFRS 15”)
(continued)
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 and consequently
revenue is recognised over time, typically on a monthly basis,
as the services areprovided.
i) Operating segments
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-RESBoard.
j) Statement of cash flows
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 financingactivities.
k) Income taxes
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
fromdividends.
Current tax assets and liabilities are offset only if certain
criteria aremet.
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 certainconditions.
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 normalway.
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 taxationpurposes.
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 andliabilities.
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
reportingdate.
l) Equity and share issue costs
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 sharepremium.
m) Net asset value (“NAV”)
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 byvaluers.
n) Share-based payments
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-Scholesmodel.
The grant-date fair value of restricted share units issued to
senior executives 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 actualoutcomes.
o) Property taxes
Property taxes are paid annually and recognised as an
expense evenly throughout theyear.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
137
Notes to Consolidated Financial Statements
(continued)
2. Significant Accounting Policies
(continued)
p) Security deposits
Security deposits are amounts received from tenants at
the beginning of a tenancy. When a tenant is no longer in
possession of the property, the Group will assess whether
there were damages 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 thetenant.
q) Pension
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
administeredfund.
r) Impact expected from new or amended standards
The following standards and amendments are not expected to
have a significant impact on reported results or disclosures of
the Group, and, were not effective at the financial year end 31
December 2021 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 underreview:
Onerous Contracts – Cost of Fulfilling a Contract
(Amendments to IAS 37), IASB effective date 1 January
2022.
The amendments clarify that the ‘costs of fulfilling a contract’
comprise both: the incremental costs – e.g. direct labour and
materials; and an allocation of other direct costs – e.g. an
allocation of the depreciation charge for an item of property,
plant and equipment used in fulfilling thecontract.
Rent Concessions – Lessee Relief Extended (Amendments
to IFRS 16), IASB effective date 1 April 2022.
Covid-19 related rent concessions amendments introduced
an optional practical expedient that simplifies how a lessee
accounts for rent concession that are a direct consequence
of Covid-19. The amendments are applied retrospectively with
the cumulative effect of initially applying it being recognised in
opening retainedearnings.
Annual Improvements to IFRS Standards 2018-2020, IASB
effective date 1 January 2022.
IFRS 1 First-time adoption of International Financial Reporting
Standards - the amendment simplifies the application of IFRS
1 for a subsidiary that becomes a first-time adopter of IFRS
Standards later than itsparent.
IFRS 3 Business Combinations - the amendment updates
the outdated reference in IFRS 3 in related to reference to
the conceptual framework without significantly changing
itsrequirement.
IFRS 9 Financial Instruments - This amendment clarifies that
for the purpose of performing the ‘’10 per cent test’ for
derecognition of financial liabilities – in determining those fees
paid net of fees received, a borrower includes only fees paid
or received between the borrower and the lender, including
fees paid or received by either the borrower or lender on the
other’sbehalf.
IFRS 16 Leases - The amendment removes the illustration of
payments from the lessor relating to leasehold improvements.
As currently drafted, this example is not clear as to why such
payments are not a leaseincentive.
Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16), IASB effective date 1 January 2022.
Under the amendments, proceeds from selling items before
the related item of Property Plant and Equipment is available
for use should be recognised in profit or loss, together
with the costs of producing those items. IAS 2 Inventories
should be applied in identifying and measuring these
productioncosts.
Classification of Liabilities as Current or Non-current
(Amendments to IAS 1), IASB effective date 1 January 2023.
Under existing IAS 1 requirements, companies classify a liability
as current when they do not have an unconditional right to defer
settlement of the liability for at least twelve months after the end
of the reporting period. As part of its amendments, the Board
has removed the requirement for a right to be unconditional and
instead, now requires that a right to defer settlement must have
substance and exist at the end of the reportingperiod.
Definition of Accounting Estimates (Amendments to IAS 8),
IASB effective date: 1 January 2023.
The amendments make a distinction between how an entity
should present and disclose different types of accounting
changes in its financial statements. Changes in accounting
policies much be applied retrospectively while changes in
accounting estimates are accounted forprospectively.
IFRS 17 Replaces IFRS 4 Insurance Contracts, IASB effective
date: 1 January 2023.
IFRS 17 provides consistent principles for all aspects of
accounting for insurance contracts. It removes existing
inconsistencies and enables investors, analysts and others to
meaningfully compare companies, contracts andindustries.
The Disclosure of Accounting Policies (Amendments to IAS
1 and IFRS Practice Statement 2), IASB effective date for
IAS 1: 1 January2023.
Under the amendments, an entity discloses its material
accounting policies, instead of its significant accounting policies.
To support the amendments, IASB has development guidance
and examples to illustrate how the ‘four-step materiality process’
should be applied in IFRS Practice Statement2.
Deferred Tax related to Assets and Liabilities arising from
a Single Transaction (Amendments to IAS 12), effective
date 1 January2023.
The amendments clarify how companies account
for deferred tax on transactions such as leases and
decommissioningobligations.
I-RES
138
Notes to Consolidated Financial Statements
(continued)
3. Critical Accounting Estimates, Assumptions and Judgements
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 andconditions.
The valuation estimate of investment properties is deemed to be significant. See note 18(a) and note 5 for a detailed
discussion of valuation methods and the significant assumptions and estimatesused.
4. Recent Investment Property Acquisitions, Developments and Disposals
For the year 1 January 2021 to 31 December 2021
Investment property acquisitions
Property
Acquisition Date
Apartment
Count
Region
Total
Acquisition
Costs
€’000
Phoenix Park 26 January 2021 61,559
146
West DublinRichmond Gardens 11 March 2021 1 City Centre
506
Bakers Yard
16 March 2021 1 City Centre
277
148 62,342
Properties under development
Property
Development
Contract Date
Apartment
Count
Region
Total Costs
Spent in
2020
€’000
Tot a l
Development
Cost spent
to date
€’000
Bakers Yard 10 January 2020 9,135 14,459
61
City CentreDisposals
Name
Apartment
Count
Other Land
and Property
Region
Net proceeds
from Disposition
€’000
Tallaght Cross West — Unit C4 and Food Court West Dublin 1,598
Elmpark 7 South Dublin 2,755
7
4,353
For the year 1 January 2020 to 31 December 2020
Investment property acquisitions
Property
Acquisition
Date
Apartment
Count
Region
Total Acquisition
Costs
€’000
Waterside
27 March 2020
55
North Dublin 19,330
55
19,330
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
139
Notes to Consolidated Financial Statements
(continued)
4. Recent Investment Property Acquisitions, Developments and Disposals
(continued)
Completed development
Property
Development
Completion date
Apartment
Count
Region
Total Costs Spent
in 2020
€’000
Total Development
Cost spent to date
€’000
Tallaght Cross West 7 February 2020 18 West Dublin
259
5,518Piper’s Court (Hansfield
Phase II) 31 July 2020 95 West Dublin
556
31,000Priorsgate 20 December 2020 5 West Dublin 1,816 1,816
118
2,631
38,334
Properties under development
Property
Development
Contract Date
Apartment
Count
Region
Total Costs
Spent in 2020
€’000
Total Development
Cost spent to date
€’000
Bakers Yard
10 January 2020 5,324 5,324
61
City CentreDisposals
Name
Apartment
Count
Other Land
and Property
Region
Net proceeds
from disposition
€’000
The Laurels 19 1 Commericial Unit, 190 Sq M West Dublin 4,125
Beacon South Quarter
(1)
12 South Dublin 4,761
Russell Court 7,197
29
North DublinBelville and the Mills 21 West Dublin 7,241
St Edmunds 18 1 Development site, 0.16 Ha West Dublin 6,628
The Oaks 4,328
14
West DublinSpencer House 12 City Centre 5,382
East Arran Street 12 City Centre 4,322
Coopers Court City Centre 3,911
14
2 Commercial Units, 126 Sq M151
47,895
(1) Of the 225 residential units at BSQ, only 12 were disposed in2020.
5. Investment Properties
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 theyear.
Approximately 60% of the fair values of all of the Group’s investment properties as at 31 December 2021 are determined
by CBRE Unlimited Company (“CBRE”) and the remaining by Savills, the Group’s external independent valuers. The valuers
employ qualified valuation professionals who have recent experience in the location and category of the respective
property. Valuations are prepared on a bi-annual basis at the interim reporting date and the annual reportingdate.
The information provided to the valuers, and the assumptions and valuation methodologies and models used by the
valuers, are reviewed by management. The valuers meet with the Audit Committee and discuss the valuation results as
at 31 December and 30 June directly. 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 aremaintained.
I-RES
140
Notes to Consolidated Financial Statements
(continued)
5. Investment Properties
(continued)
Valuation basis
(continued)
Investment property producing income
For investment property, 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 theproperty.
Investment property under development
In the case of investment property under development,
the approach applied is the “residual method” of valuation,
which is the valuation method as described above
with a deduction for the costs necessary to complete
the development, together with an allowance for the
remainingrisk.
During 2021, the Company incurred development costs of
€9.1 million (31 December 2020: €8.0 million) relating to the
properties under development. At the reporting date, the
only property under development is BakersYard.
The cumulated borrowing costs of €206,000 (€92,000
as at 31 December 2020) are included in capitalised
development expenditures. The weighted average interest
rate used to capitalise the borrowing costs was 1.80% (31
December 2020: 1.77%).
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 andconfiguration.
Information about fair value measurements using
unobservable inputs (Level 3)
At 31 December 2021, 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 beingvalued.
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
independent 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 and
bad debts, management fees, repairs and maintenance.
These cashflows are estimates for current and projected
future incomestreams.
Sensitivity analysis
Stabilised NRI and “Equivalent Yields” are key inputs
in the valuation modelused.
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 reversionaryyields.
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 fairvalue.
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
EquivalentYield.
For investment properties producing income and investment
properties under development, an increase of 1% in the
Equivalent Yield would have the impact of a €264.1 million
reduction in fair value while a decrease of 1% in the
Equivalent Yield would result in a fair value increase of
€417.4 million. An increase between 1% - 4% in Stabilised
NRI would result in a fair value increase from €14.5 million
to €58.0 million respectively in fair value, while a decrease
between 1% - 4% in Stabilised NRI would have the impact
ranging from €14.5 million to €58.0 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 rentalincome.
The direct operating expenses recognised in the
consolidated statement of profit or loss and other
comprehensive income for the Group is €16.7 million for the
year ended 31 December 2021 (31 December 2020: €15.0
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 property
managementfees.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
141
Notes to Consolidated Financial Statements
(continued)
5. Investment Properties
(continued)
Sensitivity analysis
(continued)
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 2021 and
31 December 2020 was notmaterial.
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 the components notedabove.
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 2021 is presentedbelow:
As at 31 December 2021
Type of Interest Fair Value
€’000
WA Stabilised
NRI
(1)
€’000
Rate Type
(2)
Max.
Min.
Weighted
Average
Income properties 1,450,635 2,875 Equivalent Yield 5.43% 3.90% 4.53%
Properties under development 18,000 1,113 Equivalent Yield 4.25% 4.25% 4.25%
Average Development
Cost (per sq ft.) €378.3 €378.3 €378.3
Development land
(3)
24,770
n/a
Market Comparable
(per sq ft.) €140.9 €27.5 €134.6
Total investment properties 1,493,405
(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 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 squarefoot.
As at 31 December 2020
Type of Interest Fair Value
€’000
WA Stabilised
NRI
(1)
€’000
Rate Type
(2)
Max.
Min.
Weighted
Average
Income properties 1,346,683 2,892 Equivalent Yield 5.62% 3.75% 4.66%
Properties under development 8,901 1,004 Equivalent Yield 4.25% 4.25% 4.25%
Average Development
Cost (per sq ft.) €361.8 €361.8 €361.8
Development land
(3)
24,770
n/a
Market Comparable
(per sq ft.) €140.9 €27.5 €134.6
Total investment properties
1,380,354
(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 squarefoot.
I-RES
142
Notes to Consolidated Financial Statements
(continued)
5. Investment Properties
(continued)
Quantitative information
(continued)
The following table summarises the changes in the investment properties portfolio during the periods:
Reconciliation of carrying amounts of investment properties
For the year ended 31 December 2021
Income
Properties
Properties
Under
Development
Development
Land
Tot a l
€’000 €’000 €’000 €’000
Balance at the beginning of the year
1,346,683
8,901
24,770
1,380,354
Acquisitions
62,342 — — 62,342
Development expenditures
— 9,191
9,135
56Property capital investments
11,002 — — 11,002
Capitalised leasing costs
(1)
(1,113) — — (1,113)
Direct leasing costs
(2)
149 — — 149
Disposition
(3)
(3,454) — — (3,454)
Unrealised fair value movements
35,026
(36) (56) 34,934
Balance at the end of the year 1,450,635 18,000
24,770
1,493,405For the year ended 31 December 2020
Income
Properties
Properties
Under
Development
Development
Land
Tot a l
€’000 €’000 €’000 €’000
Balance at the beginning of the year
1,293,241 36,000 29,960 1,359,201
Acquisitions 19,330 — — 19,330
Development expenditures 7,865 7,955
282
16,102Reclassification
(4)
38,631 (35,631) (3,000) —
Property capital investments 9,986 — — 9,986
Capitalised leasing costs
(1)
(44) — — (44)
Direct leasing costs
(2)
150
— —
150Disposition
(5)
(43,463) — — (43,463)
Unrealised fair value movements 20,987 19,092
577
(2,472)Balance at the end of the year
1,346,683 8,901 24,770 1,380,354
(1) Straight-line rent adjustment for commercial leasing.
(2) Includes cash outlays for leasing.
(3) Food court and unit C4 at Tallaght Cross West were disposed of for net proceeds of €1.6 million resulting in a gain of €870,000. Furthermore, 7 units
at Elm Park were disposed for net proceeds of €2.8 million resulting in a gain of €35,000.
(4) Reclassified Bakers Yard from development land to properties under development. Developments at Tallaght Cross West, Piper’s Court and Priorsgate
were reclassified from properties under development to income properties upon their completion in 2020.
(5) 151 residential units were disposed of for net proceeds of €47.9 million resulting in a gain of €4.4million.
Most of the residential leases are for one year or less.
The carrying value of the Group’s investment properties of €1,493.4 million at 31 December 2021 (€1,380.4 million at
31 December 2020) was based on an external valuation carried out as at that date. The valuations were prepared in
accordance with the RICS Valuation – Global Standards, 2020 (Red Book) and IFRS13.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
143
Notes to Consolidated Financial Statements
(continued)
6. Leases
Leases as lessee (IFRS 16)
The Group has used an incremental borrowing rate of 2.48% to determine the leaseliability.
Information about leases for which the Group is a lessee is presentedbelow.
Right-of-use assets
For the year ended 31 December 2021
Land and Buildings
(€’000)
Balance at the beginning of the year
9,576
Depreciation charge for the year (506)
Balance at the end of the year (Note 7)
9,070
For the year ended 31 December 2020
Land and Buildings
(€’000)
Balance at the beginning of the year
10,083
Depreciation charge for the year (507)
Balance at the end of the year (Note 7)
9,576
Amounts recognised in profit or loss
For the year ended 31 December 2021, I-RES recognised interest on lease liabilities of €232,000. (31 December
2020: €241,000)
Amounts recognised in statement of cash flows
For the year ended 31 December 2021, I-RES’s total cash outflow for leases was €396,000. (31 December 2020: €386,000)
Refer to note 21 for movements in the leaseliability.
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 14 for an
analysis of the Group’s rentalincome.
I-RES
144
Notes to Consolidated Financial Statements
(continued)
7. Property, Plant and Equipment
Land and
Buildings
(Note 6)
Furniture and
Fixtures
Tot a l
€’000 €’000 €’000
At cost
As at 1 January 2021 10,114 219 10,333
Additions — 9 9
As at 31 December 2021 10,114
228
10,342Accumulated amortisation
As at 1 January 2021 (538) (73) (611)
Change for the year (506) (13) (519)
As at 31 December 2021 (1,044) (86) (1,130)
As at 31 December 2021 9,212
9,070
142Land and
Buildings
Furniture and
Fixtures
Tot a l
€’000 €’000 €’000
At cost
As at 1 January 2020 10,114 59 10,173
Additions — 160 160
As at 31 December 2020 10,114 219 10,333
Accumulated amortisation
As at 1 January 2020 (31) (54) (85)
Change for the year (507) (19) (526)
As at 31 December 2020 (538) (73) (611)
As at 31 December 2020
9,576
1469,722
8. Other Assets
As at
31 December
2021
31 December
2020
€’000 €’000
Other Current Assets
Prepayments
(1)
2,242
2,651
Deposits on acquisitions
(2)
10,099
10,529
Other receivables
(3)
466
674
Trade receivables
1,361
1,648Tot a l
14,168
15,502
(1) Includes specific costs relating to preparing planning applications of development lands and costs associated with ongoing transactions.
(2) Includes deposit paid for the Merrion Road and Ashbrook properties.
(3) Relates to levies received in respect of services to beincurred.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
145
Notes to Consolidated Financial Statements
(continued)
9. Accounts Payable and Accrued Liabilities
As at
31 December
2021
31 December
2020
€’000 €’000
Accounts Payable and Accrued Liabilities
(1)
Rent - early payments
3,411
3,358
Trade creditors
726
645Accruals
(2)
10,799
7,494
Value Added Tax
478
91
Tot a l
15,414
11,588
(1) The carrying value of all accounts payable and accrued liabilities approximates their fair value.
(2) Includes property related accruals, development accruals, professional fee accruals, property management fees and asset management feesaccruals.
10. Credit Facility
As at
31 December
2021
31 December
2020
€’000 €’000
Bank Indebtedness
Loan drawn down
420,020
354,020Deferred loan costs
(3,398)
(3,971)
Tot a l
416,622
350,049
The Revolving Credit Facility of €600 million has a five-year term with an effective date of 18 April 2019 and is secured by a
floating charge over assets of the Company and IRES Residential Properties Limited, its subsidiary, and a fixed charge over
the shares held by the Company in IRES Residential Properties Limited on a pari passu basis. This facility is being provided
by Barclays Bank Ireland PLC, Ulster Bank Ireland DAC, The Governor and Company of the Bank of Ireland, Allied Irish Banks,
P.L.C. and HSBC BankPLC.
The interest on the RCF is set at the annual rate of 1.75%, plus the one-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 is 2.42%.
On 25 February 2021, the Company exercised an option for a one-year extension with three of the five banks (Ulster Bank
Ireland DAC, Bank of Ireland, and Allied Irish Banks) for €395 million of the Revolving Credit Facility with the new maturity
date of 18 April 2025. On 11 February 2022, the Company exercised an option for an extension with all five banks (Ulster
Bank Ireland DAC, Bank of Ireland, Allied Irish Bank, Barclays Bank plc and HSBC Bank plc) for the entire €600 million facility
with the new maturity date of 18 April2026.
On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to a notional amount of €160 million.
The agreements had an effective date of 23 March 2017 and matured on 14 January2021.
On 15 September 2017, I-RES entered into a new interest rate swap agreement totalling a notional amount of €44.8 million.
The new agreement had an effective date of 15 September 2017 and matured on 14 January 2021. I-RES has not entered into
a new interest rate swap since the maturity of thisarrangement.
The interest rate swap agreements effectively converted the hedged portion of the RCF (€204.8 million) from a variable rate
to a fixed rate facility up to 14 January 2021 (see note 17 for furtherdetails).
I-RES has complied with all its debt financial covenants to which it was subject during the year and post year-end.
I-RES
146
Notes to Consolidated Financial Statements
(continued)
11. Private Placement Debt
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 10September.
The Notes have been placed in fourtranches:
As at Maturity
Contractual
interest rate
Derivative
Rates
31 December
2021
31 December
2020
€’000 €’000
EUR Series A Senior Secured Notes 10 March 2030 1.83%
n/a
90,000
90,000
EUR Series B Senior Secured Notes 10 March 2032 1.98%
n/a
40,000
40,000
USD Series A Senior Secured Notes 10 March 2027 3.44% 1.87%
43,922
40,923(1)
USD Series B Senior Secured Notes 10 March 2030 3.63% 2.25%
21,960
20,462(2)
195,882
191,385
Deferred financing costs, net
(2,142)
(2,383)
Total
193,740
189,002
(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 $25million.
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 passubasis.
12. Share-based Compensation
a) Options
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 2020. As at 31 December 2021, the maximum number of additional options, or Restricted Share Units (“RSU”)
issuable under the LTIP is 21,325,010 (31 December 2020: 21,444,849).
LTIP
For the year ended 2021 WA
exercise price
(1)
31 December
2021
31 December
2020
Share Options outstanding as at 1 January 1.32
9,096,499
12,496,499
Issued, cancelled or granted during the period:
Exercised or settled 1.02
(4,375,000)
(3,400,000)
(3)
Share Options outstanding as at 31 December
(2)
1.59
4,721,499
9,096,499(1) Weighted average exercise price for share options outstanding as at 1 January 2020 was 1.24, 1.04 for options exercised or settled in 2020 and
1.32 for share options outstanding at 31 December 2020.
(2) Of the Share Options outstanding above, 3,855,999 were exercisable at 31 December 2021 (31 December 2020: 7,365,499).
(3) See note 22 for moredetails.
The fair value of options has been determined as at the grant date using the Black-Scholesmodel.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
147
Notes to Consolidated Financial Statements
(continued)
12. Share-based Compensation
(continued)
b) Restricted Stock Unit Awards
On 5 March 2021, I-RES granted the Chief Executive Officer 335,820 RSU awards. These awards have a vesting period
of three years from 5 March 2021 and a holding period of two years from the vesting date. The share price as at 5 March
2021 was €1.61. The ultimate settlement of the RSU award is dependent on market and other conditions, which are mutually
exclusive of each other, as illustrated below:
Restricted Shares Conditions
Weighting
Performance condition type
Total Shareholder Return (“
TSR
”)50 %
Market
Earning Per Shares (“
EPS
”) Return50 %
Non-marketPerformance level Vesting level
EPS portion (50% weighting)
Percentage growth in EPS:
2023 compared to base
year of 2020
(1)
TSR portion (50% weighting)
TSR relative to constituents
of the FTSE EPRA/NAREIT
Europe Developed Index
Below Threshold 0% Below 2% p.a. Below Median
Threshold Median
25%
2% p.a.Stretch (or above) 100% 3% p.a. Upper Quartile (or above)
Between Threshold
and Stretch
Pro-rata between
25% and 100% Between 2% and 3% p.a. Between Median and Upper Quartile
(1) EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and
exceptionalitems.
On 5 August 2021, I-RES granted employees 221,519 RSU awards. These awards have a vesting period of three years from
5 August 2021 and a holding period of five years and one month from the vesting date. The share price as at 5 August
2021 was €1.58. The ultimate settlement of the RSU award is dependent on market and other conditions, which are mutually
exclusive of each other, as illustratedbelow:
Restricted Shares Conditions
Weighting
Performance condition type
Total Shareholder Return (“
TSR
”)50 %
Market
Earning Per Shares (“
EPS
”) Return50 %
Non-marketPerformance level Vesting level
EPS portion (50% weighting)
Percentage growth in EPS:
2023 compared to base
year of 2020
(1)
TSR portion (50% weighting)
TSR relative to constituents of
the FTSE EPRA/NAREIT Europe
Developed Index
Below Threshold 0% Below 2% p.a. Below Median
Threshold Median
25%
2% p.a.Stretch (or above) 100% 3% p.a. Upper Quartile (or above)
Between Threshold and
Stretch
Pro-rata between
25% and 100% Between 2% and 3% p.a. Between Median and Upper Quartile
(1) EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and
exceptionalitems.
On 27 March 2020, I-RES granted the Chief Executive Officer 437,601RSU awards. These awards have a vesting period of
three years from 27 March 2020 and a holding period of two years from the vesting date. The share price as at 27 March
2020 was €1.23. The ultimate settlement of the RSU award is dependent on market and other conditions, which are mutually
exclusive of each other, as illustratedbelow:
Restricted Shares Conditions
Weighting
Performance condition type
Total Shareholder Return (“
TSR
”)50 %
Market
Earning Per Shares (“
EPS
”) Return50 %
Non-marketI-RES
148
Notes to Consolidated Financial Statements
(continued)
12. Share-based Compensation
(continued)
b) Restricted Stock Unit Awards
(continued)
Performance level Vesting level
EPS portion (50% weighting)
Percentage growth in EPS:
2022 compared to base year
of 2019
(1)
TSR portion (50% weighting)
TSR relative to constituents of
the FTSE EPRA/NAREIT Europe
Developed Index
Below Threshold 0% Below 3% p.a. Below Median
Threshold Median
25%
3% p.a.Stretch (or above) 100% 6% p.a. Upper Quartile (or above)
Between Threshold
and Stretch
Pro-rata between
25% and 100% Between 3% and 6% p.a. Between Median and Upper Quartile
(1) EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and
exceptionalitems.
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
throughreserves.
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 orperformance.
50% of the award is subject to an EPS measure and 50% is subject to a TSR measure relative to constituents of the FTSE
EPRA/NAREIT Europe Developed Index. Results and inputs are summarised in the table below:
2021 RSU Award
2020 RSU Award
Fair value per award (TSR tranche) (per share) €0.70 to €0.75
€0.57
Inputs
Source
Three year Risk free interest rate (%) European Central Bank (0.69%) to (0.85%) (0.70%)
Three year Historical volatility 25.68% to 25.80% 22.21%
Fair value per award (EPS tranche) (per share) €1.22 to €1.33 €1.05
Inputs
Source
Two year Risk free interest rate (%) European Central Bank
(-0.70%) to
(-0.79%) (0.71%)
Two year Expected volatility 22.45% to 29.77% 24.06%
The expected volatility is based on historic market volatility prior to theissuance.
The total share-based compensation expense relating to options for the year ended 31 December 2021 was €87,000 (31
December 2020: €232,000) and total share-based compensation expense relating to restricted stock unit awards for the
year ended 31 December 2021 was €189,000 (31 December 2020: €90,000).
13. Shareholders’ Equity
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 be issued in registered form and
aretransferable.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
149
Notes to Consolidated Financial Statements
(continued)
13. Shareholders’ Equity
(continued)
The number of shares authorised is asfollows:
For the year ended 31 December
2021
31 December
2020
Authorised Share Capital
1,000,000,000
1,000,000,000
Ordinary shares of €0.10 each
The number of issued and outstanding ordinary shares is asfollows:
For the year ended 31 December
2021
31 December
2020
Ordinary shares outstanding, beginning of year
525,078,946
521,678,946New shares issued
(1)
4,375,000
3,400,000
Ordinary shares outstanding, end of year
529,453,946
525,078,946
(1) In 2021, 4,375,000 shares were issued for options under theLTIP.
14. Revenue from Investment Properties
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 RentalIncome.
31 December
2021
€’000
31 December
2020
€’000
Rental Income
68,966
66,055
Revenue from services
9,626
7,962Car park income
1,152
727
Revenue from contracts with customers
10,778
8,689Total Revenue
79,744
74,744
15. General and Administrative Costs
31 December
2021
€’000
31 December
2020
€’000
Recurring general and administrative expenses
6,235
5,062Non-recurring costs
5,430
2,334General and administrative expenses 11,665
7,396
Recurring general and administrative expenses include costs such as director fees, executives’ and employees’ salaries,
professional fees for audit, legal and advisory services, depository fees, property valuation fees, insurance costs and other general
and administrative expenses. Non-recurring G&A are primarily legal, consulting and advisory expenses that relate to the termination
of the Investment Management Agreement, Internalisation of the Manager and other one off third party advisoryservices.
Of the costs incurred in 2021; (i) €0.4 million relate to an aborted transaction due to Covid-19; (ii) €0.8 million for legal, IT
and business feasibility studies associated with the termination notice issued by the Manager and the decision of the Group
to acquire the Manager; and (iii) €4.2 million associated with the internalisation of the Manager comprising the transition of
corporate support functions, the complex and extensive process of implementing company-wide IT systems and necessary
data transfers, and legal costs associated with the preparation for the acquisition of theManager.
The non-recurring costs in 2020 related to costs associated with transactions that could not be closed due to the Covid-19
pandemic and other third party advisoryservices.
I-RES
150
Notes to Consolidated Financial Statements
(continued)
16. Financing costs
31 December
2021
31 December
2020
€’000
€’000
Financing costs on RCF
9,963
9,910Financing costs on private placement debt
4,926
4,003Foreign exchange loss/ (gain) on private placement debt
4,497
(4,956)Reclassed from OCI
(5,386)
4,293Gross financing costs
14,000
13,250Less: Capitalised interest
(114)
(434)Financing costs
13,886
12,816
17. Realised and Unrealised Gains and Losses on Derivative Financial Instruments
Interest rate swap
In 2021, a fair value gain of €59,000 (31 December 2020: gain of €709,000) has been recorded in the consolidated
statement of profit or loss and other comprehensive income. The fair value of the interest rate swaps entered into in 2017
which expired in January 2021 had a liability of €nil at 31 December 2021 (31 December 2020: liability of €84,000).
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
€68.8 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 financingcosts.
In 2021, the ineffective portion that has been recorded in the consolidated statement of profit or loss and other
comprehensive income was €nil and the effective portion of €4,737,000 (31 December 2020: effective portion of
€4,533,000) was included in the cash flow hedge reserve along with a cost of hedging of €378,000 (31 December 2020:
cost of hedging of €163,000). The fair value of the cash flow hedge was an asset of €931,000 and a liability of €3,961,000
at 31 December 2021(31 December 2020: asset of €770,000; liability of €8,075,000).
18. Financial Instruments, Investment Properties and Risk Management
a) Fair Value of Financial Instruments and Investment Properties
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 definedbelow:
Level 1 - Inputs based on quoted prices in active markets for identical assets orliabilities;
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 marketactivity.
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 orliability.
The following table presents the Group’s estimates of fair value on a recurring basis based on information available as at 31
December 2021, aggregated by the level in the fair value hierarchy within which those measurementsfall.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
151
Notes to Consolidated Financial Statements
(continued)
18. Financial Instruments, Investment Properties and Risk Management
(continued)
a) Fair Value of Financial Instruments and Investment Properties
(continued)
As at 31 December 2021, the fair value of the Group’s private placement debt is estimated to be €203.7 million (31
December 2020: €197.4 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 €193.7 million (31 December 2020: €189.0million).
As at 31 December 2021, the fair value of the Group’s RCF approximates the carrying value as the interest rate of the RCF is
on a 1 month or 3 monthbasis.
As at 31 December 2021
Level 1 Level 2 Level 3
Quoted prices in active
markets for identical
assets and liabilities
Significant other
observable
inputs
Significant
unobservable
inputs
(1)
Tot a l
€’000 €’000 €’000 €’000
Recurring Measurements – Assets
Investment properties
— — 1,493,405 1,493,405
Derivative financial instruments
—
931
—931
— 1,494,336
931
1,493,405Recurring Measurements – Liability
Derivative financial instruments
(2)
— (3,961) — (3,961)
Total
— (3,030) 1,493,405 1,490,375
As at 31 December 2020
Level 1 Level 2 Level 3
Quoted prices in active
markets for identical
assets and liabilities
Significant other
observable
inputs
Significant
unobservable
inputs
(1)
Tot a l
€’000 €’000 €’000 €’000
Recurring Measurements – Assets
Investment properties — — 1,380,354 1,380,354
—
770
—770
— 1,381,124
770
1,380,354Recurring Measurements – Liability
Derivative financial instruments
(2)(3)
— (8,159) — (8,159)
Total
— (7,389) 1,380,354 1,372,965
(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
valuationcurrency.
I-RES
152
Notes to Consolidated Financial Statements
(continued)
18. Financial Instruments, Investment Properties and Risk Management
(continued)
b) Risk Management
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 asfollows:
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 pricerisks.
The Group’s financial assets currently comprise short-term bank deposits, trade receivables, deposits on acquisition
andderivatives.
Short-term bank deposits are held while awaiting suitable investment properties for investment. These are denominated in
euros. Therefore, exposure to market risk in relation to these is limited to interest raterisk.
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 a portion of 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 financingcosts.
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 hedgeaccounting.
On 12 February 2020, I-RES entered into cross-currency swaps to (i) exchange the USD loan of USD $75 million into €68.8
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 March2030.
At the inception of the hedging relationship the Company has identified the following potential sources of
hedgeineffectiveness:
1. Movements in the Company’s and hedging counterparty’s credit spread that would result in movements in fair value of
the Hedging Instrument that would not be reflected in the movements in the value of the HedgedTransactions.
2. The possibility of changes to the critical terms (e.g. reset dates, index mismatches, payment dates) of the Hedged
Transaction due to a refinancing or debt renegotiation such that they no longer match those of the Hedging Instrument.
The company would reflect such mismatch when modelling the hypothetical derivative and this could be a potential
source of hedgeineffectiveness.
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 IFRS9.
Cash flow hedges
At 31 December 2021, the Group held the following instruments to hedge exposures to changes in foreigncurrency:
As at
31 December
2021
31 December
2027
31 December
2030
Cross Currency Swaps
Net exposure (€’000) 68,852 22,951 —
Average fixed interest rate 2.00% 2.25% —
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Governance
Supplementary InformationFinancial Statements
2021 Annual Report
153
Notes to Consolidated Financial Statements
(continued)
18. Financial Instruments, Investment Properties and Risk Management
(continued)
b) Risk Management
(continued)
Cash flow hedges
(continued)
The amounts at the reporting date relating to items designated as hedged items were asfollows:
Change in value used
for calculating hedge
ineffectiveness
Cashflow hedge
reserve
(€’000) (€’000)
Private placement debt
4,737 4,737
The amounts relating to items designated as hedging instruments and hedge ineffectiveness were asfollows:
Carrying amount Changes in
the value
of hedging
instrument
recognized
in OCI
Hedge
ineffectiveness
recognized in
profit or loss
Line items in
profit or loss
that includes
hedge
ineffectiveness
Amount
reclassed
from
hedging
reserve
to profit
or loss
Line items in
profit or loss
affected by
reclassification
Nominal
amount
Assets
Liability
(€’000) (€’000) (€’000) (€’000) (€’000) (€’000)
Cross Currency
Swaps
68,852 (5,115) —
931
(3,961)Gain on
derivative
financial
instruments (5,386) Financing costs
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
futureevents.
The following table sets out the carrying amounts of recognised financial instruments that are subject to the
aboveagreements.
Gross amounts of
financial instruments
in the statement of
financial position
Related financial
instruments that
are not offset
Net amount
31 December 2021
Note
(€’000) (€’000) (€’000)
Financial assets
Derivative financial instruments 17 —
931
(931)Financial liabilities
Derivative financial instruments 17 (3,961)
931
(3,030)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 benchmarkreform.
I-RES
154
Notes to Consolidated Financial Statements
(continued)
18. Financial Instruments, Investment Properties and Risk Management
(continued)
b) Risk Management
(continued)
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 raterisk.
As at 31 December 2021, I-RES’ RCF was drawn for €420.0 million. The interest on the RCF is paid at a rate of 1.75% per
annum plus the higher of the one-month EURIBOR rate (at the option of I-RES) or at a floor of zero if EURIBOR is negative.
The Company’s private placement debt has a fixed rate of 1.92%. The Group does not currently expect EURIBOR to go above
zero in the short term and is monitoring the medium term outlook to determine whether additional interest rate hedging is
required. For the year ended 31 December 2021, a 100-basis point change in interest rates would have the followingeffect:
As at 31 December 2021
Change in
interest rates
Increase (decrease)
in net income
Basis Points €’000
EURIBOR rate debt
(1)
+100
(1,789)
EURIBOR rate debt
(2)
-100
—
(1) Based on the fixed margin of 1.75% plus the one-month EURIBOR rate as at 31 December 2021 of -0.574% on the RCF.
(2) Based on the fixed margin of 1.75% plus the floor of zero on theRCF.
As at 31 December2020
Change in
interest rates
Increase (decrease)
in net income
Basis Points €’000
EURIBOR rate debt
(1)
+100 (782)
EURIBOR rate debt
(2)
-100 —
(1) Based on the fixed margin of 1.75% plus the one-month EURIBOR rate as at 31 December 2020 of -0.578% on the RCF.
(2) Based on the fixed margin of 1.75% plus the floor of zero on theRCF.
Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulties in accessing capital markets and refinancing its financial
obligations as they comedue.
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 capitalcommitments.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
155
Notes to Consolidated Financial Statements
(continued)
18. Financial Instruments, Investment Properties and Risk Management
(continued)
b) Risk Management
(continued)
Liquidity risk
(continued)
The following tables show the Group’s contractual undiscounted maturities for its financialliabilities:
As at 31 December 2021
Total
6 months
or less
(1)
6 to 12
months
(1)
1 to 2
years
(1)
2 to 5
years
(1)
More than
5 years
(1)
€’000 €’000 €’000 €’000 €’000 €’000
Non-derivative financial liabilities
Loan drawn down — — 420,020 —
420,020
—Bank indebtedness interest
(2)
21,734
3,645 3,705 7,350 7,034 —
Private placement debt
(3)
195,882
— — — — 195,882
Private placement debt interest
(3)
32,203
2,374 2,374 4,748 14,244 8,463
Lease liability 8,315
11,454
314 314
1,883628
Other liabilities — — — —
11,525
11,525Security deposits — — — —
7,796
7,796700,614
25,654 6,393 12,726 443,181 212,660
Derivative financial liabilities
Forward exchange rate used for
hedging:
Outflow
(77,961)
(687) (687) (1,374) (4,122) (71,091)
Inflow
(3)
80,970
1,154 1,154 2,308 6,924 69,430
3,009
467 467
934
2,802 (1,661)
(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 December2021.
As at 31 December 2020
Total
6 months or
less
(1)
6 to 12
months
(1)
1 to 2
years
(1)
2 to 5
years
(1)
More than 5
years
(1)
€’000 €’000 €’000 €’000 €’000 €’000
Loan drawn down 354,020 — — — 354,020 —
Bank indebtedness interest
(2)
21,352 3,072 3,123 6,195 8,962 —
Private placement debt
(3)
191,385 — — — — 191,385
Private placement debt interest 40,965 2,295 2,295 4,590 13,770 18,015
Lease liability 12,082 8,943
314 314
1,883628
Other liabilities 8,139 8,139 — — — —
Security deposits 7,562 7,562 — — — —
635,505 21,382 5,732 11,413 378,635 218,343
Derivative financial liabilities
Interest rate swaps used for hedging 84 84 — — — —
Forward exchange rate used for
hedging:
Outflow (79,733) (687) (687) (1,381) (4,114) (72,864)
Inflow 77,586 1,075 1,075 2,150 6,450 66,836
(2,063) (6,028)
472
388769
2,336(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 December2020.
I-RES
156
Notes to Consolidated Financial Statements
(continued)
18. Financial Instruments, Investment Properties and
Risk Management
(continued)
b) Risk Management
(continued)
The carrying value of bank indebtedness and trade and
other payables (other liabilities) approximates their fairvalue.
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 rentalobligations.
The Group monitors its risk exposure regarding obligations
with counterparties through the regular assessment of
counterparties’ creditpositions.
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
bylegislation.
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 €626,000
for the year ended 31 December 2021 and is recorded
as part of property operating costs in the consolidated
statement of profit or loss and other comprehensive income
(31 December 2020: €991,000).
Cash and cash equivalents are held with major Irish and
European institutions which have credit ratings of A and AAA
respectively. 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 cashassets.
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+ toBBB.
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 ofcapital.
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 thefuture.
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
2021, capital consists of equity and debt, and Group Total
Gearing was 40.7%. I-RES seeks to use gearing to enhance
shareholder returns over the long term. The level of gearing
is monitored carefully by theBoard.
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
REITlegislation.
19. Taxation
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
certainconditions.
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 normalway.
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 residualbusiness.
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 distributiondividend.
The Directors confirm that the Group has remained in
compliance with the Irish REIT Regime up to and including
the date of this Report and that there has been no profit
arising from residual businessactivities.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
157
Notes to Consolidated Financial Statements
(continued)
20. Dividends
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, provided it has sufficient
distributablereserves.
On 6 August 2021, the Directors resolved to pay an additional dividend of €15.4 million for the six months ended 30 June
2021. The dividend of 2.91 cents per share was paid on 10 September 2021 to shareholders on record as at 20 August2021.
On 19 February 2021, the Directors resolved to pay an additional dividend of €16.9 million for the year ended 31 December
2020. The dividend of 3.22 cents per share was paid on 20 April 2021 to shareholders on record as at 26 March2021.
On 07 August 2020, the Directors resolved to pay an additional dividend of €14.3 million for the six months ended 30 June
2020. The dividend of 2.75 cents per share was paid on 11 September 2020 to shareholders on record as at 21 August2020.
On 20 February 2020, the Directors resolved to pay an additional dividend of €16.2 million for the year ended 31 December
2019. The dividend of 3.1 cents per share was paid on 23 March 2020 to shareholders on record as at 28 February2020.
Distributable reserves in accordance with the Irish REIT Regime were calculated asfollows:
31 December
2021
31 December
2020
€’000 €’000
Profit for the year
67,546
58,263
Less: unrealized gain on net movement in fair value of investment properties
(34,934)
(19,092)
Property Income of the Property Rental Business
32,612
39,171
Add back:
Share-based compensation expense
276
322Unrealised change in fair value of derivatives
(59)
(709)Distributable Reserves
32,829
38,784
21. Supplemental Cash Flow Information
Breakdown of operating income items related to financing and investing activities
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Financing costs as per the consolidated statement of profit or loss and other
comprehensive income
13,886
12,816
Interest expense accrual
237
(1,311)
Capitalised interest
114 434
Lease interest
232
241
Less: amortisation of financing fees
(1,644) (1,409)
Interest Paid on Loan Drawn Down 12,825 10,771
Net income items relating to financing and investing activities
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Financing Costs on Credit Facility
13,886
12,816Amortisation of other financing costs
(1,644)
(1,409)Lease interest
232
241
Net income items relating to financing and investing activities 12,474
11,648
I-RES
158
Notes to Consolidated Financial Statements
(continued)
21. Supplemental Cash Flow Information
(continued)
Changes in operating assets and liabilities
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Prepayments
409
(350)
Trade receivables
(339)
(676)Other receivables
208
(97)Accounts payable and other liabilities
4,273
303Security deposits
234
404Changes in operating assets and liabilities
4,785
(416)
Issuance of Shares
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Issuance of shares
4,468
3,536Issuance costs
—
—Net proceeds
4,468
3,536
Changes in liabilities due to financing cash flows
Changes from Financing Cash Flows Non-cash Changes
Liabilities
1 January 2021
Proceeds from private
placement debt
Revolving
Credit Facility
drawdown
Revolving Credit
Facility repayment
Lease payments
Financing fees
Amortisation of other
financing costs
Foreign exchange
Gain on derivatives
Change in fair value of
hedging instruments
31 December 2021
Bank indebtedness 354,020 — 89,500 (23,500) — — — — — — 420,020
Deferred loan
costs, net (3,971) — — — — (800) 1,373 — — — (3,398)
Private
placement debt 191,385 — — — — — — 4,497 — — 195,882
Deferred loan
costs, net (2,383) — — — — (30) — — (2,142)
271
—Derivative financial
instruments 8,159 — — — — — — — — (4,114) 4,045
Lease liability 9,486 — — — (396) — — — — — 9,090
Total liabilities from
financing activities (396) 4,497 — (4,114) 623,497
556,696
—89,500
(23,500)(830)
1,644Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
159
Notes to Consolidated Financial Statements
(continued)
21. Supplemental Cash Flow Information
(continued)
Changes from Financing Cash Flows Non-cash Changes
Liabilities
1 January 2020
Proceeds from private
placement debt
Revolving Credit
Facility drawdown
Revolving Credit
Facility repayment
Lease payments
Financing fees on
private placement debt
Amortisation of other
financing costs
Foreign exchange
Gain on derivatives
Interest accrual
relating to derivatives
New hedging
instrument
31 December 2020
Bank
indebtedness
555,020
— 17,000 (218,000) — — — — — — — 354,020
Deferred loan
costs, net (5,169) — — — — — 1,198 — — — — (3,971)
Private
placement debt — 196,342 — — — — — (4,956) — — — 191,386
Deferred loan
costs, net — — — — — (2,595) 211 — — — — (2,384)
Derivative
financial
instruments — — — — — — (709) 5 8,075 8,159
788
—Lease liability 9,872 — — — (386) — — — — — — 9,486
Total liabilities
from financing
activities
560,511 196,342 17,000 (218,000) (386) (2,595) 1,409 (4,956) (709) 5
8,075
556,696
22. Related Party Transactions
CAPREIT LP has an indirect 18.7% beneficial interest in I-RES and has determined that it has significant influence over I-RES.
The beneficial interest is held through a qualifying investor alternative investment fund, Irish Residential Properties Fund,
CAPREIT LP’s wholly-ownedsubsidiary.
Effective 1 November 2015, CAPREIT LP’s wholly-owned subsidiary, IRES Fund Management Limited (“the Manager” or
“IRES Fund Management”) entered into the investment management agreement with I-RES (the “Investment Management
Agreement”), as amended or restated or as may be amended or restated from time to time, pursuant to which I-RES pays
3.0% per annum of its gross rental income as property management fees and 0.5% per annum of its net asset value
together with relevant reimbursements as asset management fees to the Manager. The Investment Management Agreement
governs the provision of portfolio management, risk management and other related services to the Company by the
Manager on a day-to-day basis. The Investment Management agreement had an initial term of five years and thereafter
continues in force for consecutive five-yearperiods.
On 31 March 2021, the Company received a 12- months’ notice of termination from the Manager. The notice stated that the
termination of the Investment Management Agreement will take effect on 31 March2022.
As previously disclosed, the Investment Management Agreement provides that if I-RES determines that it is in its best
interests to internalise the management of the Company that the Company will purchase the issued shares of the Manager
on a liability free (other than liabilities in the ordinary course of business)/cash free basis for €1.
On 29 January 2022, the Company and CAPREIT entered into binding legal agreements pursuant to which the Company
exercised its right under the IMA and purchased the issued shares of the Investment Manager on a liability free (other than
liabilities in the ordinary course of business)/cash free basis for €1, effective from 31 January 2022 (“Completion”). As the
Investment Manager serves as the Company’s alternative investment fund manager (“AIFM”) under the Alternative Investment
Fund Managers Regulations 2013 (“AIFM Regulations”), the Company has also received the necessary approvals from the
CBI to acquire the shares in the Investment Manager, subject to a requirement that all aspects of the Investment Manager’s
business be transferred to the Company and an application be submitted to the CBI for the Company to become authorised
as an internally managed AIF within five months after the date of Completion of the acquisition of the InvestmentManager.
I-RES
160
Notes to Consolidated Financial Statements
(continued)
22. Related Party Transactions
(continued)
The Company has agreed to enter into a transitional
services agreement with CAPREIT (the “Transitional Services
Agreement”) with effect from Completion, pursuant to
which CAPREIT will continue to provide certain transitional
assistance to the Company for a period of three months to
facilitate the migration of data and implementation of new
IT systems in the company. The service charges for the
transitional services will be calculated in the same manner
as such charges were calculated for the equivalent services
prior to the date of the Transitional Services Agreement
(being 3.0% per annum equivalent of the Company’s gross
rental income as property management fees and 0.5% per
annum equivalent of its net asset value, net of employee
costs relating to staff of the Investment Manager who will
transition with the AIFM on completion of its acquisition).
The Company estimates that such charges will equate to
approximately €360,000 per month for the duration of the
Transitional Services Agreement and are separate to the
once-off costs incurred by the Company todate.
For the year ended 31 December 2021, I-RES incurred €4.8
million in asset management fees. In addition, €2.4 million
in property management fees were incurred and recorded
under operating expenses. For the year ended 31 December
2020, €4.4 million in asset management fees and €2.2
million in property management fees were recorded. For the
year ended 31 December 2021, CAPREIT LP charged back
€2.5 million (31 December 2020: €2.3 million) relating to
salaries and €0.5 million (31 December 2020: € nil) relating
toInternalisation.
The amount payable to CAPREIT LP (including IRES Fund
Management) totalled €2.2 million as at 31 December 2021
(€1.4 million as at 31 December 2020) related to asset
management fees, property management fees, and payroll-
related costs. The amount receivable from CAPREIT LP
(including IRES Fund Management) totalled €0.2 million as
at 31 December 2021 (€0.2 million as at 31 December 2020)
related to the leasing of officespace.
The rental income for the office spaces leased by IRES
Fund Management for the year ended 31 December 2021
was €135,000 (€145,000 for the year ended 31 December
2020). The leases expired on 1 December 2021 and then
operates on a month to monthbasis.
Purchase of I-RES Shares
On 20 November 2020, certain employees of CAPREIT
and CAPREIT LP, including Mark Kenney, (the “Participants”)
assigned I-RES options granted to them under the LTIP
to a subsidiary of CAPREIT LP, Irish Residential Properties
Fund (the “QIAIF”). Immediately following the assignment
of these I-RES options, the QIAIF exercised these options
and acquired an additional 3,400,000 Ordinary Shares in
I-RES. The QIAIF paid each of the Participants the amount
of €0.4770 per option, representing the difference between
the exercise price (of €1.04 each) and the volume weighted
average price of the underlying Ordinary Shares for the five
business day period to close of business on 19 November
2020, being the business day immediately prior to the date
of assignment. As CAPREIT is a related party of the Company
under the Euronext Dublin Listing Rules, the allotment of
the 3,400,000 shares to CAPREIT (through the QIAIF)
immediately following the assignment constituted a smaller
Related Party Transaction under LR 11.1.15 of the Listing
Rules. As at 31 December 2021, CAPREIT LP’s beneficial
interest in I-RES is 18.7% (31 December 2020: 18.8%).
As part of these assignments on 20 November 2020,
Mark Kenney assigned 1,000,000 of his I-RES options
to theQIAIF.
Options
On 4 June 2021, Mark Kenney exercised his option to
acquire 500,000 Ordinary Shares in I-RES for an exercise
price of €1.005 with a gain of €287,500.
Remuneration
Total remuneration is comprised of remuneration of the
non-executive directors of €€505,000 for the year ended
31 December 2021 and €433,000 for the year ended
31 December 2020, excluding remuneration related to
the Chief ExecutiveOfficer.
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 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 owners’ management companies’
boards of directors. However, as each of those owners’
management companies 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. For these reasons,
I-RES does not consider these owners’ management
companies to be material for consolidation as the total
asset of the owner’s management companies is less than
0.3% of the Group’s consolidated total assets, either
individually or collectively. I-RES has considered the latest
available financial statements of these owners’ management
companies in making thisassessment.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
161
Notes to Consolidated Financial Statements
(continued)
22. Related Party Transactions
(continued)
Details of the owners’ management companies in which the Group had an interest during the year ended 31 December
2021, along with the relevant service fees paid by the Group to them, are asfollows:
Owners’ Management Entity
Registered
Official Address
Development
Managed
Percentage
of Voting
Rights Held
% of total
(1)
Service
Fees
Incurred in
the Period
€’000
Payable
by I-RES
€’000
Prepaid
by I-RES
€’000
Majority voting rights held
Priorsgate Estate Owners’
Management Company
Limited by Guarantee Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
Priorsgate 52.4 191.8 — —
GC Square (Residential) Owners’
Management Company
Limited by Guarantee Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
The Marker
Residences
81.0 301.3 — —
Lansdowne Valley Owners’
Management Company
Limited by Guarantee
(5)
Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
Lansdowne
Gate
78.6 700.7 — 213.8
Charlestown Apartments Owners’
Management Company
Limited by Guarantee
(3)
Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
Charlestown
82.5 478.9 — 39.9
Bakers Yard Owners’ Management
Company
Limited By Guarantee Ulysses House
Foley Street Dublin
1
Bakers Yard
66.2 191.6 — —
Rockbrook Grande Central Owners’
Management Company
Limited by Guarantee Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
Grande Central 73.5 363.9 — —
Rockbrook South Central Owners’
Management Company
Limited by Guarantee Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
South Central 80.0 —
555.2
—Rockbrook Estate
Management Company
Limited by Guarantee Unit 4B Lazer
Lane, Grand Canal
Square, Dublin 2
Rockbrook
Commercial
92.9
(2)
23.7 — —
I-RES
162
Notes to Consolidated Financial Statements
(continued)
Owners’ Management Entity
Registered
Official Address
Development
Managed
Percentage
of Voting
Rights Held
% of total
(1)
Service
Fees
Incurred in
the Period
€’000
Payable
by I-RES
€’000
Prepaid
by I-RES
€’000
TC West Estate Management
Company
Limited by Guarantee Charter House, 5
Pembroke Row,
Dublin 2 D02 FW61
Tallaght
Commercial
75.0 636.7 — —
TC West Residential Owners’
Management Company
Limited by Guarantee
(4)
Charter House, 5
Pembroke Row,
Dublin 2 D02
FW62
Tallaght
Residential
87.2 1,133.7 — —
Gloucester Maple Owners’
Management Company
Limited By Guarantee Ti Phuirseil
Freeport, Barna,
Galway H91 W90P
City Square 89.3 86.6 — —
Elmpark Green Residential Owners’
Management Company
Limited By Guarantee 2 Lansdowne,
Shelbourne
Ballsbridge Dublin
4
Elmpark Green 60.5 508.3 — 127.8
Coldcut Owners’
Management Company
Limited By Guarantee c/o Brehan Capital
Partners Limited,
2nd Floor, Guild
House, Guild
Street Dublin 1
Coldcut Park 97.7 256.6 — —
Time Place Property
Management Company
Limited By Guarantee RF Property
Management
Ground Floor
Ulusses House
23/24 Foley Street,
Dublin 1, D01 W2T2
Time Place
Dublin 18
74.4 150.5 — —
Burnell Green
Management Company
Limited By Guarantee City Junction
Business Park,
Northern Cross,
Malahide Road
Dublin 17
Burnell Green
Northern Cross
Dublin 17
93.2 164.4 — —
22. Related Party Transactions
(continued)
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
163
Notes to Consolidated Financial Statements
(continued)
Owners’ Management Entity
Registered
Official Address
Development
Managed
Percentage
of Voting
Rights Held
% of total
(1)
Service
Fees
Incurred in
the Period
€’000
Payable
by I-RES
€’000
Prepaid
by I-RES
€’000
Minority voting rights held
BSQ Owners’ Management
Company
Limited by Guarantee
(6)
5th Floor, St
Stephen’s Green
House, Earlsfort
Terrace St
Stephens Green,
Dublin 2
Beacon South
Quarter
12.7 1,041.5 — —
GC Square Management Company
Limited by Guarantee 2nd Floor, Guild
House Guild
Street, Dublin 1
The Marker
Commercial
48.0 3.2 3.2 —
Sandyford Forum Management
Company Company
Limited by Guarantee 28/30 Burlington
Road Dublin 4
The Forum
6.3 15.3 — 6.1
Stapolin Management Company
Limited By Guarantee 15 Adelaide Street
Dun Laoghaire Co
Dublin A96 D8Y9
Staploin 11.4 49.8 — 12.8
Red Arches Management Company
Limited by Guarantee 16 Adelaide Street
Dun Laoghaire Co
Dublin A96 D8Y9
Red Arches 4.7 28.6 — 7.9
Stillbeach Management Company
Company Limited By Guarantee Wyse 9 Lower
Baggot Street
Dublin 2 D02 XN82
Beechwood
Court Stillorgan
Co Dublin
32.0 276.2 — —
Burnell Court Management
Company
Company Limited By Guarantee City Junction
Business Park,
Northern Cross,
Malahide Road
Dublin 17
Burnell Court
Northern Cross
Dublin 17
25.8 90.3 — —
Carrington Park Residential
Property Management Company
Limited By Guarantee Rfpm Ulysses
House Foley Street
Dublin 1, D01 W2T2
Carrington Park
Dublin 9
40.8 287.8 — —
22. Related Party Transactions
(continued)
22. Related Party Transactions
(continued)
I-RES
164
Notes to Consolidated Financial Statements
(continued)
Owners’ Management Entity
Registered
Official Address
Development
Managed
Percentage
of Voting
Rights Held
% of total
(1)
Service
Fees
Incurred in
the Period
€’000
Payable
by I-RES
€’000
Prepaid
by I-RES
€’000
Heywood Court Management
Company (Dublin)
Company Limited By Guarantee Lansdowne
Partnership, 69
Mespil Road,
Dublin 4
Heywood Court
Dublin 9
43.3 84.7 22.1 —
Hartys Quay Management
Company Limited By Guarantee David O’Suillivan &
Co 1st Floor Red
Abbey Bld, Unit
20 South Link
Industrial Estate
Cork
Hartys Quay Co
Cork
29.4 105.0 — —
Belville Court
Management Company
Company Limited By Guarantee 1/2 Windsor
Terrace, Dun
Laoghaire, Co
Dublin
Belville Dublin 18 47.5 55.1 22.9 —
Malahide Waterside Management
Company
Limited By Guarantee Office 3 The Eden
Business Centre,
Grange Road,
Rathfarnham,
Dublin 16, D16 T293
Waterside
9.6 15.5 — 5.2
PPRD Management Company
CLG
Wyse Property
Management Ltd.,
94 Baggot Street
Lower, Dublin
2,Dublin, D02 XN82
Phoenix Park 1 21.8 211.3 94.8 —
PPRD 2 Management Company
CLG
21 Pembroke Road,
Dublin 2, Dublin,
D04k225, Ireland,
D04 K225
Phoenix Park 2 30.2 41.7 18.7 —
Tot a l
8,049.9
161.7
413.5
(1) For residential apartments the voting rights are calculated based on one vote per apartment regardless of the size of that apartment. For commercial,
it is based on square footage of the units or the memorandum and articles of the particular management company.
(2) Includes voting rights controlled directly and indirectly.
(3) Formerly known as Charlestown Apartments Management Company Company Limited By Guarantee.
(4) Formerly known as TC West Residential Owners Management Company Company Limited by Guarantee.
(5) Formerly known as Lansdowne Valley Management Company Company Limited by Guarantee.
(6) Formerly known as BSQ Management Company Company Limited byGuarantee.
All of the owners’ management companies are incorporated in Ireland and are property management companies. As noted above,
as at 31 December 2021, €161,700 is payable and €413,500 is prepaid by the Group to the owners’ management companies. As at
31 December 2020, €111,500 was payable and €823,600 was prepaid by I-RES to the owners’ managementcompanies.
22. Related Party Transactions
(continued)
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
165
Notes to Consolidated Financial Statements
(continued)
23. Contingencies
At Beacon South Quarter, in addition to the capital expenditure work that has already been completed, water ingress and
fire remediation works were identified in 2016, and I-RES is working with the Beacon South Quarter owners’ management
company to resolve these matters. In 2017, in relation to these water ingress and fire remedial works, fire remedial levies
were approved by the members of the Beacon South Quarter owners’ management company. I-RES’ portion of these fire
remedial levies as at 31 December 2021 is circa €0.5 million. There is also an active insurance claim with respect to the
water ingress and related damage. The amount of potential costs relating to these structural remediation works cannot be
currently measured with sufficientreliability.
24. Commitments
In November 2018, the Company entered into a share purchase agreement to acquire 69 residential units for a total
consideration of €47.16 million (including VAT but excluding other transaction costs). Practical completion of the units is
expected to be on or around the first quarter of 2022 and the remaining consideration as at 31 December 2021 is circa
€43.5million.
In January 2020, the Company entered into a development contract to develop 61 units for a total consideration of circa
€16 million and the amount outstanding as at 31 December 2021 is circa €3.8million.
In June 2020, the Company entered into a contract for fire remedial works at 17 properties in its portfolio for a total of circa
€4.5 million and the remaining amount as at 31 December 2021 is circa €0.4million.
In October 2021, the Company entered into a contract for fire remedial works at one property for a total of circa €1.0 million
and the remaining amount as at 31 December 2021 is circa €0.7million.
25. Earnings/(loss) per Share
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 reportingperiod.
For the year ended
31 December
2021
31 December
2020
Profit attributable to shareholders of I-RES (€’000)
67,546
58,263
Basic weighted average number of shares
527,412,302
522,069,110
Diluted weighted average number of shares
(1)(2)
528,130,822
524,130,528
Basic Earnings/(loss) per share (cents)
12.8
11.2Diluted Earnings/(loss) per share (cents)
12.8
11.1(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 2021, 4,596,499 options (31 December 2020: 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
reportingperiod.
I-RES
166
Notes to Consolidated Financial Statements
(continued)
25. Earnings/(loss) per Share
(continued)
EPRA Earnings per Share
For the year ended
31 December
2021
31 December
2020
Profit for the year (€’000) 67,546
58,263
Adjustments to calculate EPRA Earnings exclude:
Changes in fair value on investment properties (€’000)
(34,934)
(19,092)
Profit or losses on disposal of investment property
(905)
(4,432)Changes in fair value of derivative financial instruments (€’000)
(59)
(709)EPRA Earnings (€’000) 31,648
34,030
Basic weighted average number of shares
527,412,302
522,069,110
Diluted weighted average number of shares
528,130,822
524,130,528
EPRA Earnings per share (cents)
6.0
6.5
EPRA Diluted Earnings per share (cents)
6.0
6.5
26. Net Asset Value per Share
EPRA issued Best Practices Recommendations most recently in October 2019, which gives guidelines for
performancematters.
In October 2019, 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. 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 financial statements and the various EPRANAV.
EPRA NAV per Share
As at 31 December 2021
EPRA NRV EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€’000) 881,440 881,440 881,440
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000)
— — —
Fair value of fixed interest rate debt (€’000)
— — (10,008)
Real estate transfer cost (€’000)
(3)
75,372
— —
EPRA net assets (€’000) 956,812 881,440 871,432
Number of shares outstanding
529,453,946 529,453,946 529,453,946
Diluted number of shares outstanding
529,498,519 529,498,519 529,498,519
Basic Net Asset Value per share (cents)
166.5 166.5 166.5
EPRA Net Asset Value per share (cents)
180.7
166.5
164.6
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Supplementary InformationFinancial Statements
2021 Annual Report
167
Notes to Consolidated Financial Statements
(continued)
26. Net Asset Value per Share
(continued)
As at 31 December 2020
EPRA NRV EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€’000)
841,695 841,695 841,695
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000) 84 84 —
Fair value of fixed interest rate debt (€’000) — — 36,219
Real estate transfer cost (€’000)
(3)
62,138 — —
EPRA net assets (€’000)
903,917 841,779 877,914
Number of shares outstanding 525,078,946 525,078,946 525,078,946
Diluted number of shares outstanding 526,289,910 526,289,910 526,289,910
Basic Net Asset Value per share (cents) 160.3 160.3 160.3
EPRA Net Asset Value per share (cents) 171.8 159.9 166.8
(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 2021 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.
27. Directors’ Remuneration, Employee Costs and Auditor Remuneration
Key Management personnel of the Group consist of the Board of directors. The remuneration of the key management
personnel paid during the period were as follows:
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Directors’ remuneration
Short-term employee benefits
1,503
962Pension costs
60
60Other benefits
(1)
83
139
Share-based payments
(2)
276
322
Tot a l
1,922
1,483
(1) Included in this amount is pay-related social insurance and benefits paid for the Directors.
(2) Included in share-based payments are 4,596,499 stock options that were anti-dilutive as at 31 December 2021.
I-RES
168
Notes to Consolidated Financial Statements
(continued)
27. Directors’ Remuneration, Employee Costs and Auditor Remuneration
(continued)
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Employees costs
Salaries, benefits and bonus
1,600
678
Social insurance costs
126
112Pension costs
66
65Share-based payments
276
322Tot a l
2,068
1,177
For the year ended
31 December
2021
31 December
2020
€’000 €’000
Auditor remuneration (including expenses)
(1)
Audit of the Group accounts
135
135Other assurance services
(2)
15
15
Non-assurance services
(3)
37
100
Tot a l
187
250
(1) Included in the auditor remuneration for the Group is an amount of €125,000 (31 December 2020: €125,000) that relates to the audit of the
Company’s financial statements.
(2) Non-audit remuneration for 31 December 2021 and 31 December 2020 relates to review of interim financial statements
(3) Non-assurance services advisory fee for Sustainability Advisory Services (31 December 2020: for transaction that did not close due to Covid-19).
28. Holding Company Details
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.
29. Subsequent Events
On 5 January 2022, I-RES announced that it has executed two contracts for the acquisition of 152 residential units
at Ashbrook, Clontarf for a purchase price of €66 million (including VAT but excluding other transaction costs). I-RES
completed the handover of 86 units on 20 January 2022 and a further 22 units will complete in H1 2022. The second
is a forward purchase contract where I-RES has further committed to acquire 44 new build apartments on an adjoining
development site with delivery anticipated for H2 2023. The acquisition will be funded from the Company’s existing
creditfacilities.
On 11 February 2022, the Company exercised an option for an extension with all five banks (Ulster Bank Ireland DAC, Bank of
Ireland, Allied Irish Bank, Barclays Bank plc and HSBC Bank plc) for the entire €600 million facility with the new maturity date
of 18 April2026.
On 29 January 2022, the Company and CAPREIT entered into binding legal agreements pursuant to which the Company
exercised its right under the IMA and purchased the issued shares of the Investment Manager on a liability free (other than
liabilities in the ordinary course of business)/cash free basis for €1, effective from 31 January 2022 (“Completion”). The
consideration is subject to adjustment pursuant to a completion accounts process. This includes an initial payment by the
Company on completion of approximately €1.1 million in respect of the net cash acquired and a working capital adjustment,
based on 31 January 2022 closed accounts 60 business days postCompletion. An initial assignment of fair values to
identifiable net assets acquired has not been completed given it is impractical due to the timing of the closure of this
transaction.
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Governance
Supplementary InformationFinancial Statements
2021 Annual Report
169
Company Statement of Financial Position
As at 31 December 2021
31 December
2021
31 December
2020
Assets
Non-Current Assets
Investment properties III
1,358,245
1,247,332Investment in subsidiary
VI
873
873
Property, plant and equipment V
9,213
9,7221,368,331
1,257,927
Current Assets
Loan advances to the subsidiary
VI
97,51398,558
Other current assets VIII
14,006
15,229Cash and cash equivalents
9,394
10,847121,958
123,589
Total Assets
1,490,289
1,381,516
Liabilities
Non-Current Liabilities
Bank indebtedness X
416,623
350,049
Private placement debt
XI
128,421128,572
Loan advances from the subsidiary
VII
68,85268,852
Lease liability IV
9,090
9,486623,137
556,808
Current Liabilities
Accounts payable and accrued liabilities IX
14,157
10,996
Derivative financial instruments 84
XVI
—Security deposits
7,225
6,980
21,382
18,060
Total Liabilities 644,519
574,868
Shareholders’ Equity
Share capital XIII
52,945
52,507
Share premium XIII
504,471
500,440
Other reserve
1,093
1,169
Retained earnings
287,261
252,532Total Shareholders' Equity 845,770
806,648
Total Shareholders' Equity and Liabilities 1,490,289
1,381,516
Company profit after tax for the financial year ended 31 December 2021 was €66.7 million (31 December 2020:
€60.1million).
The accompanying notes form an integral part of these financialstatements.
Declan Moylan Margaret Sweeney
Chairman Executive Director
I-RES
170
Company Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2021
Note
31 December
2021
€'000
31 December
2020
€'000
Operating Revenue
Revenue from investment properties
XIV
73,549
67,744Operating Expenses
Property taxes
(633)
(687)Property operating costs
(14,654)
(12,137)
(15,287)
(12,824)
Net Rental Income ("NRI") 58,262
54,920
General and administrative expenses
(11,554)
(7,349)Asset management fee
XXI
(4,814)
(4,444)
Share-based compensation expense
XII
(276)
(322)Net movement in fair value of investment properties III
34,046
20,920Gain on disposal of investment properties
905
4,432Gain on derivative financial instruments
59
709
Depreciation of property, plant and equipment
(519)
(526)
Lease interest
(232)
(241)Operating Profit
75,877
68,099
Finance costs XV
(13,902)
(12,667)
Interest from intercompany loan
VI
4,6734,676
Profit for the Year
66,651
60,105
Total Comprehensive Income for the Year Attributable to
Shareholders
66,651
60,105
Basic Earnings per Share (cents)
XXIII
12.611.5
Diluted Earnings per Share (cents)
XXIII
12.611.5
The accompanying notes form an integral part of these financialstatements.
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171
Company Statement of Changes in Equity
For the year ended 31 December 2021
Note
Share
Capital
Share
Premium
Retained
Earnings
Other
Reserve
Tot a l
€'000 €'000 €'000 €'000 €'000
Shareholders' Equity at 1 January 2021 806,648
52,507
500,440252,532
1,169Total comprehensive income for the year
Profit for the year — — 66,651 — 66,651
Total comprehensive income for the year
— — 66,651 — 66,651
Transactions with owners, recognised directly in equity
Long-term incentive plan — —
XII
—276 276
Share issuance 4,031 4,469
XII
438352
(352)Dividends paid — (32,274) — (32,274)
XIX
—Transactions with owners, recognised directly in equity
438 4,031 (31,922) (76) (27,529)
Shareholders' Equity at 31 December 2021 52,945 504,471 845,770
287,261
1,093Note
Share
Capital
Share
Premium
Retained
Earnings
Other
Reserve
Tot a l
€'000 €'000 €'000 €'000 €'000
Shareholders' Equity at 1 January 2020 52,167 497,244 222,645 1,147 773,203
Total comprehensive income for the year
Profit for the year — — 60,105 — 60,105
Total comprehensive income for the year
— — 60,105 — 60,105
Transactions with owners, recognised directly in equity
Long-term incentive plan — — 322 322
XII
—Share issuance 3,196 3,536
XII
340300
(300)Dividends paid — (30,518) — (30,518)
XIX
—Transactions with owners, recognised directly in equity
340 3,196 (30,218) 22 (26,660)
Shareholders' Equity at 31 December 2020 806,648
52,507
500,440252,532
1,169The accompanying notes form an integral part of these financialstatements.
I-RES
172
Company Statement of Cash Flows
For the year ended 31 December 2021
31 December
2021
31 December
2020
Note
€'000 €'000
Cash Flows from Operating Activities
Operating Activities
Total Comprehensive Income/ (Loss) for the Period Attributable to Shareholders
66,651
60,105
Adjustments for non-cash items:
Fair value adjustment - investment properties
(34,227)
(20,919)Gain on disposal of investment property
(905)
(4,432)Depreciation of property, plant and equipment
519
526
Amortisation of other financing costs
1,555
1,337Share-based compensation expense
276
322Gain on derivative financial instruments
(59)
(709)Allowance for ECL
545
842Straight-line rent adjustment III
1,106
37
Interest accrual relating to derivatives
—
535,642
37,114
Financing costs and interest received
7,903
6,898Changes in operating assets and liabilities XX
4,108
(1,618)Net Cash Generated from Operating Activities 46,654
42,394
Cash Flows from Investing Activities
Net proceeds from disposal of investment property
4,359
47,895Deposit on acquisitions
(5,470)
(5,444)
Acquisition of investment properties
(56,442)
(17,470)Development of investment properties
(9,305)
(15,759)
Investment property enhancement expenditure
(9,642)
(8,483)
Direct leasing cost III
(127)
(150)Purchase of property, plant and equipment V
(10)
(160)Interest receivable from subsidiary
VI
4,6733,893
Advances to subsidiary
VI
(262)
(501)Net Cash Used in Investing Activities (73,187)
4,601
Cash Flows from Financing Activities
Financing fees on Credit Facility
(830)
(1,718)Interest paid XX
(12,888)
(10,732)Credit Facility drawdown XX
89,500
17,000Credit Facility repayment XX
(23,500)
(218,000)Proceeds from private placement debt XX
—
130,000Loan advances from the subsidiary XX
—
68,852Lease payment XX
(386)
(386)Proceeds on issuance of shares XX
4,469
3,536Dividends paid to shareholders
(32,274)
(30,518)
Net Cash (Used in)/Generated from Financing Activities (24,327)
(41,966)
Changes in Cash and Cash Equivalents during the Year (1,453)
5,029
Cash and Cash Equivalents, Beginning of the Year 10,847
5,818
Cash and Cash Equivalents, End of the Year
9,394
10,847
The accompanying notes form an integral part of these financialstatements.
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Governance
Supplementary InformationFinancial Statements
2021 Annual Report
173
Notes to Company Financial Statements
(I) Significant Accounting Policies
These Company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“
FRS101
”).In preparing these financial statements, the company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU (“
EU IFRS
”) but makes amendments where necessary in order to comply with the Companies Act 2014 and has set out below where advantage of the FRS 101 disclosure exemptions
has beentaken.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the
followingdisclosures:
»
Disclosures in respect of capital management;
»
The effects of new but not yet effectiveIFRSs;
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in
these financialstatements.
The financial statements of the Company are prepared on a going concern basis and under the historical cost convention,
as modified by the revaluation of investment properties and derivatives at fair value through profit or loss and the
measurement of share options at fair value at the date of grant. The financial statements of the Company have been
presented in euros, which is the Company’s functionalcurrency.
For Company details, refer to note 27 of the consolidated financialstatements.
The significant accounting policies of the Company are the same as those of the Group, which are set out in note 2 of the
consolidated financialstatements.
»
Investment in subsidiaries
Investment in subsidiaries is shown at cost less provision for any impairment or diminution invalue.
»
Intercompany loan
An intercompany loan was recognised at amortised cost using the effective interest rate method. Under the effective
interest rate method, any transaction fees, costs and discounts directly related to the intercompany loan were recognised
within interest expense on intercompany loan in the statement of profit or loss and other comprehensive income over the
expected term of the intercompanyloan.
(II) Critical Accounting Estimates, Assumptions and Judgements
For further information on critical accounting estimates, assumptions and judgements, refer to note 3 of the consolidated
financialstatements.
(III) Investment Properties
For further information on investment properties, refer to note 5 of the consolidated financialstatements.
For the Company, an increase of 1% in the Equivalent Capitalisation Rate would have the impact of a
€241.5 million reduction in fair value while a decrease of 1% in the Equivalent Capitalisation Rate would result in a fair
value increase of €380.7 million. An increase between 1% and 4% in Stabilised NRI would have an impact ranging from
€53.3 million to €13.3 million respectively in fair value, while a decrease between 1% and 4% in Stabilised NRI would have
the impact ranging from €53.3 million to €13.3 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 StabilisedNRI.
I-RES
174
Notes to Consolidated Financial Statements
(continued)
(III) Investment Properties
(continued)
A summary of the Equivalent Capitalisation Rates and ranges along with the fair value of the total portfolio of the Company
as at 31 December 2021 and 2021 is presentedbelow:
As at 31 December 2021
Type of Interest Fair Value
€'000
WA NRI
(1)
€'000
Rate Type
(2)
Max.
Min.
Weighted
Average
Investment properties 1,332,595 2,883 Equivalent Yield 5.43 % 3.90 % 4.55 %
Properties under development 18,000 1,113 Equivalent Yield 4.25 % 4.25 % 4.25 %
Average Development
n/a
Cost (per sq ft.) €378.3 €378.3 €378.3
Development land
(3)
7,650
n/a
Market Comparable
(per sq ft.) €133.5 €27.5 €120.7
Total fair value 1,358,245
(1) WA 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 calculated
by multiplying the Equivalent Yield for each property by its respective fair value.
(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 squarefoot.
As at 31 December 2020
Type of Interest Fair Value
€'000
WA NRI
(1)
€'000
Rate Type
(2)
Max.
Min.
Weighted
Average
Investment properties 1,230,781 2,906 Equivalent Yield 5.62 % 3.75 % 4.70 %
Properties under development 8,901 1,004 Equivalent Yield 4.25 % 4.25 % 4.25 %
Average Development
n/a
Cost (per sq ft.) €361.8 €361.8 €361.8
Development land
(3)
7,650
n/a
Market Comparable (per
sq ft.) €133.5 €27.5 €120.7
Total fair value 1,247,332
(1) WA 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 calculated
by multiplying the Equivalent Yield for each property by its respective fair value.
(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 squarefoot.
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Governance
Supplementary InformationFinancial Statements
2021 Annual Report
175
Notes to Consolidated Financial Statements
(continued)
(III) Investment Properties
(continued)
The following table summarises the changes in the investment properties portfolio during theyears:
For the year ended 31 December 2021
Income
Properties
Properties
Under
Development
Development
Land
Tot a l
€'000 €'000 €'000 €'000
Balance at the beginning of the year 1,230,781
8,901
1,247,3327,650
Additions:
Acquisitions
62,342 — — 62,342
Development expenditures
—
9,135
—9,135
Reclassification
— i. — —
Property capital investments and intensification
9,642
— —
9,823
Capitalised leasing costs
(1)
(1,106) — — (1,106)
Direct leasing costs
(2)
127
— —
127Disposals
(3)
(3,454) — — (3,454)
Unrealised fair value gain adjustments
34,263 (36) — 34,046
Balance at the end of the year 1,332,595 18,000
7,650
1,358,245For the year ended 31 December 2019
Income
Properties
Properties
Under
Development
Development
Land
Tot a l
€'000 €'000 €'000 €'000
Balance at the beginning of the year
1,178,087 36,000 10,700 1,224,787
Additions:
Acquisitions 19,330 — — 19,330
Development expenditures 7,865 — —
Reclassification
(4)
38,631 (35,631) (3,000) —
Property capital investments and intensification 9,639 — — 9,639
Capitalised leasing costs (37) — — (37)
Direct leasing costs —
150
—150
Disposals
(5)
(43,463) — — (43,463)
Unrealised fair value gain adjustments 20,579 20,919
577
(237)Balance at the end of the year
1,230,781 8,901 7,650 1,247,332
(1) Straight-line rent adjustment.
(2) Includes cash outlays for new tenants.
(3) Disposed of unit C4 and the food court at Tallaght Cross West for net proceeds of €1.6 million resulting in a gain of €870,000. Furthermore, 7 units at
Elm Park were disposed for net proceeds of €2.8 million resulting in a gain of €35,000.
(4) Reclassified Bakers Yard from development land to properties under development. Developments at Tallaght Cross West, Piper’s Court and Priorsgate
were reclassified from properties under development to income properties upon their completion in 2020.
(5) 151 residential units were disposed of for net proceeds of €47.9 million resulting in a gain of €4.4million.
The carrying value for the Company of €1,358.2 million for the investment properties at 31 December 2021 (€1,247.3 million
at 31 December 2020) was based on an external valuation carried out as at that date. The valuations were prepared in
accordance with the RICS Valuation – Global Standards, 2017 (Red Book) and IFRS13.
(IV) Leases
For further information on the Leases, refer to note 6 of the consolidated financialstatements.
I-RES
176
Notes to Consolidated Financial Statements
(continued)
(V) Property, Plant and Equipment
For further information on the Property, plant and equipment, refer to note 7 of the consolidated financialstatements.
(VI) Loan Advances to the Subsidiary
As at
31 December
2021
€'000
31 December
2020
€'000
Balance at the beginning of the year
97,513
97,012
Interest income
4,676
4,673Interest received
(3,893)
(5,012)Advances to (repayments from) subsidiary
262
840Balance at the end of the year
98,558
97,513
On 31 March 2015, the Company acquired the entire issued share capital of IRES Residential Properties Limited for €873,000
and provided financing to IRES Residential Properties Limited to repay the loan on the Rockbrook Portfolio to CAPREIT LP.
The total amount in aggregate receivable from its subsidiary amounted to €98.6 million as at 31 December 2021 (€97.5
million as at 31 December 2020), net of repayments. This receivable is interest bearing at 4.94% per annum fixed and
repayable on demand. As this receivable is repayable on demand, its carrying value is considered to be materially in line with
its fairvalue.
(VII) Loan Advances from the Subsidiary
On 10 March 2020, IRES Residential Properties Limited provided the following facilities to the Company. Interest is paid semi-
annually on 9 March and 9 September of each year.
As at 31 December 2021
Maturity
Contractual
interest rate
€’000
Series A Facility
9 March 2027
1.866 %
45,901
Series B Facility 9 March 2030 2.254 %
22,951
68,852
(VIII) Other Assets
As at
31 December
2021
31 December
2020
€'000 €'000
Prepayments
(1)
2,230
2,417
Deposits on acquisitions
(2)
10,099
10,529
Other receivables
(3)
467
674
Trade receivables
1,211
1,609Tot a l
14,007
15,229
(1) Includes specific costs relating to preparing planning applications of development lands and costs associated with ongoing transactions.
(2) Includes deposits paid for the Merrion Road and Ashbrook properties.
(3) Relates to levies received in respect of services to beincurred.
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Governance
Supplementary InformationFinancial Statements
2021 Annual Report
177
Notes to Consolidated Financial Statements
(continued)
(IX) Accounts Payable and Accrued Liabilities
As at
31 December
2021
€'000
31 December
2020
€'000
Accounts Payable and Accrued Liabilities
(1)
Rent - early payments
3,126
3,133Trade creditors
584
624
Accruals
(2)
9,980
7,158
Value added tax
467
81
Tot a l
14,157
10,996
(1) The carrying value of all accounts payable and accrued liabilities approximates the fair value.
(2) Includes property related accruals, development accruals, property management fees and asset management feesaccruals.
(X) Credit Facility
For further information on the Credit Facility, refer to note 10 of the consolidated financialstatements.
(XI) Private Placement Debt
On 11 March 2020, I-RES successfully closed the issue of €130 million notes on a private placement basis (collectively, the
“
Notes
”). Interest is paid semi-annually on 10 March and 10September.The Notes have been placed in two tranches:
As at 31 December 2021
Maturity
Contractual
interest
rate
€’000
EUR Series A Senior Secured Notes 10 March 2030 1.83 %
90,000
EUR Series B Senior Secured Notes 10 March 2032 1.98 %
40,000
130,000
Deferred financing costs, net
(1,428)
Total
128,572
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 PropertiesLimited.
(XII) Share-based Compensation
For further information on share-based compensation, refer to note 12 of the consolidated financialstatements.
(XIII) Shareholders’ Equity
For further information on shareholders’ equity, refer to note 13 of the consolidated financialstatements.
I-RES
178
Notes to Consolidated Financial Statements
(continued)
(XIV) Revenue From Investment Properties
The Company 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. The Company 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 RentalIncome.
31 December
2021
31 December
2020
€’000 €’000
Rental Income
63,800
59,508
Revenue from services
8,644
7,577
Car park income
1,085
659Revenue from contracts with customers
9,749
8,236Total Revenue
73,549
67,744
(XV) Finance cost
31 December
2021
31 December
2020
€’000 €’000
Financing costs on RCF
9,963
9,910Financing costs on private placement debt
2,612
2,111
Financing costs on Loans from advances from subsidiary
1,441
1,080
Gross financing costs
14,016
13,101
Less: Capitalised interest
(114)
(434)Financing costs
13,902
12,667
(XVI) Realised and Unrealised Gains and Loss on Derivative
On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to €160 million. The agreements have
an effective date of 23 March 2017 and a maturity date of January 2021. On 15 September 2017, I-RES entered into a new
interest rate swap agreement totalling €44.8 million. The new agreement has an effective date of 15 September 2017 and a
maturity date of 14 January 2021. The interest rate swap agreements effectively convert the hedged portion of the Credit
Facility (€204.8 million) from a variable rate to a fixed rate facility to 14 January 2021 (see note 10 of the consolidated
financial statements for further details), the fixed interest rate is at 1.66% (1.75% less 0.09%) on the total €204.8 million
interest rateswap.
(XVII) Financial Instruments, Investment Properties and Risk Management
a) Fair value of financial instruments and investment properties
For further information on the fair value of financial instruments and investment properties, refer to note 17(a) of
the consolidated financialstatements.
The following table presents the Company’s estimates of the fair value on a recurring basis based on information available
as at 31 December 2021, and aggregated by the level in the fair value hierarchy within which those measurementsfall.
As at 31 December 2021, the fair value of the Company’s private placement debt is estimated to be €132.4 million.
(31 December 2020: €101.3 million). The fair value of the Company’s loan advances from subsidiary is estimated to be
€71.3 million. (31 December 2020: €57.8 million). The change in fair value is 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 rate for similar
financial instruments with similar duration, terms and conditions, which are considered Level 2inputs.
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
179
Notes to Consolidated Financial Statements
(continued)
(XVII) Financial Instruments, Investment Properties and Risk Management
(continued)
a) Fair value of financial instruments and investment properties
(continued)
As at 31 December 2021
Level 1 Level 2 Level 3
Quoted prices in active
markets for identical
assets and liabilities
Significant other
observable inputs
Significant
unobservable
inputs
(1)
Tot a l
€'000 €'000 €'000 €'000
Recurring Measurements - Assets
Investment properties
— — 1,358,245 1,358,245
Recurring Measurements - Liability
Derivative financial instruments
(2)
— — — —
Tot a l
— — 1,358,245 1,358,245
As at 31 December 2020
Level 1 Level 2 Level 3
Quoted prices in active
markets for identical
assets and liabilities
Significant other
observable inputs
Significant
unobservable
inputs
(1)
Tot a l
€'000 €'000 €'000 €'000
Recurring Measurements - Assets
Investment properties — — 1,247,332 1,247,332
Recurring Measurements - Liability
Derivative financial instruments
(2)
— 84 — 84
Tot a l
— 84 1,247,332 1,247,416
(1) See note 5 of the consolidated financial statements 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 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 consider 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 consider a current value adjustment to reflect I-RES’ own
credit risk in the fair value measurement of the interest rate swapagreements.
b) Risk management
For further information on risk management, refer to note 17(b) of the consolidated financialstatements.
As at 31 December 2021
Total
6 months
or less
(1)
6 to 12
months
(1)
1 to 2
years
(1)
2 to 5
years
(1)
More than
5 years
(1)
€'000 €'000 €'000 €'000 €'000 €'000
Loan drawn down
420,020
— — —
420,020
—Bank indebtedness interest
(2)
21,734 3,645
3,705
—7,350 7,034
Private Placement Debt
130,000
— — — —
130,000
Private Placement Debt interest
22,324 1,220 1,220 2,440
7,320
10,124Loan advance from the subsidiary
68,852
— — — —
68,852
Interest payable for loan advance from the subsidiary
8,709
657 657
1,314
3,942
2,139
Lease liability
11,140
314
—628
8,3151,883
Derivative financial instruments
— — — — — —
Other liabilities
10,567 10,567 — — — —
Security deposits
7,225 7,225 — — — —
702,448 12,987 446,631 212,992
23,628
6,210I-RES
180
Notes to Consolidated Financial Statements
(continued)
(XVII) Financial Instruments, Investment Properties and Risk Management
(continued)
b) Risk management
(continued)
As at 31 December 2020
Tot a l
6 months
or
less
(1)
6 to 12
months
(1)
1 to 2
years
(1)
2 to 5
years
(1)
More
than 5
years
(1)
€'000 €'000 €'000 €'000 €'000 €'000
Loan drawn down 354,020 — — — 354,020 —
Bank indebtedness interest
(2)
21,352 3,072 3,123 6,195 8,962 —
Private Placement Debt 130,000 — — — — 130,000
Private Placement Debt interest 24,764 1,220 1,220 2,440 7,320 12,564
Loan advance from the subsidiary 68,852 — — — — 68,852
Interest payable for loan advance from the subsidiary 9,349 3,678 3,219
613 613
1,226Lease liability 12,082 8,943
314 314
1,883628
Derivative financial instruments 84 84 — — — —
Other liabilities 10,915 10,915 — — — —
Security deposits 6,980 6,980 — — — —
638,398 23,198 5,270 10,489 375,863 223,578
(1) Based on carrying value at maturity dates.
(2) Based on current in-place interest rate for the remaining term tomaturity.
(XVIII) Taxation
For further information on taxation, refer to note 18 of the consolidated financialstatements.
(XIX) Dividends
For further information on dividends, refer to note 19 of the consolidated financialstatements.
(XX) Supplemental Cash Flow Information
Breakdown of operating income items related to financing and investing activities
For the year ended
31 December
2021
31 December
2020
€'000 €'000
Financing costs on credit facility
13,902
12,667
Interest expense accrual
195 (1,273)
Lease interest
232
241
Capitalised interest
114 434
Less: amortisation of arrangement fee
(1,554) (1,337)
Interest paid
12,889
10,732Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
181
Notes to Consolidated Financial Statements
(continued)
(XX) Supplemental Cash Flow Information
(continued)
Breakdown of operating income items related to financing and investing activities
(continued)
Changes in operating assets and liabilities
For the year ended
31 December
2020
31 December
2020
€'000 €'000
Prepayments
187
(131)
Trade receivables
(147) (628)
Other receivables
207
(97)
Accounts payable and other liabilities
3,615
(1,192)
Security deposits
245
430
Changes in operating assets and liabilities 4,107 (1,618)
Issuance of Shares
For the year ended
31 December
2021
31 December
2019
€’000 €’000
Issuance of shares
4,469
3,536
Issuance costs
—
—Net proceeds
4,469
3,536
Changes in liabilities due to financing cash flows
Changes from Financing Cash Flows Non-cash Changes
Liabilities
1 January 2021
Credit Facility drawdown
Credit Facility repayment
Lease payments made
Financing fees on
credit facility
Amortisation of other
financing costs
Interest accrual relating
to derivatives
Gain on derivative
financial instruments
31 December 2021
Bank indebtedness 354,020 89,500 (23,500) — — — — — 420,020
Deferred loan costs, net (3,971) — — — (800) 1,374 — — (3,397)
Private placement debt 130,000 — — — — — — — 130,000
Deferred loan costs, net (1,579) — — — (30) — (1,428)
181
—Loan advances from the subsidiary 68,852 — — — — — — — 68,852
Derivative financial instruments 84 — — — — — (25) (59) —
Lease liability 9,486 — — (396) — — — — 9,090
Total liabilities from financing activities 556,892 89,500 (23,500) (386) (830) (59) 623,147
1,555
(25)(XXI) Related Party Transactions
During 2015 the Company financed the purchase of the Rockbrook Portfolio on behalf of its subsidiary, IRES Residential
Properties Limited. The total amount in aggregate receivable from its subsidiary amounted to €98.6 million as at 31
December 2021 (€97.5 million as at 31 December 2020), net of repayments. This receivable is interest bearing and repayable
on demand. The total amount in aggregate payable from the subsidiary amounted to €68.9 million as at 31 December 2021
(€68.9 million as at 31 December2020).
For further information on related party transactions, refer to note 21 of the consolidated financialstatements.
I-RES
182
Notes to Consolidated Financial Statements
(continued)
(XXII) Contingencies
For further information on contingent liabilities of the Company, refer to note 22 of the consolidated financialstatements.
(XXIII) Earnings per Share
For further information on earnings per share, refer to note 24 of the consolidated financialstatements.
For the year ended
31 December
2021
31 December
2020
Profit attributable to shareholders of I-RES (€'000)
66,651
60,105
Basic weighted average number of shares
527,412,302
522,069,110
Diluted weighted average number of shares
528,130,822
524,130,528
Basic Earnings per share (cents) 12.6
11.5
Diluted Earnings per share (cents) 12.6
11.5
For further information on EPRA Earnings per share, refer to note 24 of the consolidated financialstatements.
For the year ended
31 December
2021
31 December
2020
Earnings per IFRS statement of profit or loss
and other comprehensive income (€'000)
66,651
60,105
Adjustments to calculate EPRA Earnings exclude:
Costs associated with early close out of debt instrument (€'000)
—
—Changes in fair value on investment properties (€'000)
(34,046)
(20,920)Profit or losses on disposal of investment property
(905)
(4,432)Changes in fair value of derivative financial instruments (€'000)
(59)
(709)EPRA Earnings (€'000) 31,641
34,044
Basic weighted average number of shares
527,412,302
522,069,110
EPRA Earnings per share (cents)
6.0
6.5
(XXIV) Net Asset Value per Share
For further information on net asset value per share, refer to note 25 of the consolidated financialstatements.
EPRA NAV per Share
As at 31 December 2021
EPRA NRV
EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€'000) 845,770 845,770 845,770
Adjustments to calculate EPRA net assets exclude:
Fair value of fixed interest rate debt (€'000) (6,322)
—
—Real estate transfer tax (€'000)
(3)
69,889
— —
EPRA net assets (€'000) 915,659 845,790 839,448
Number of shares outstanding
529,453,946 529,453,946 529,453,946
Diluted number of shares outstanding
529,498,519 529,498,519 529,498,519
Basic Net Asset Value per share (cents)
159.7 159.7 159.7
EPRA Net Asset Value per share (cents)
172.9
159.7
158.5
Strategic Report
Governance
Supplementary InformationFinancial Statements
2021 Annual Report
183
Notes to Consolidated Financial Statements
(continued)
(XXIV) Net Asset Value per Share
(continued)
EPRA NAV per Share
As at 31 December
EPRA NRV
2020 EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€'000) 806,648 806,648 806,648
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€'000)
84 84 —
Fair value of fixed interest rate debt (€'000) 38,227
—
—Real estate transfer tax (€'000)
(3)
56,785
— —
EPRA net assets (€'000)
863,517
844,875806,732
Number of shares outstanding
525,078,946 525,078,946 525,078,946
Diluted number of shares outstanding
526,289,910 526,289,910 526,289,910
Basic Net Asset Value per share (cents)
153.6 153.6 153.6
EPRA Net Asset Value per share (cents)
164.1
153.3
160.5(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, enchance 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 Company have assumed any such
sales proceeds are reinvested within the required three yearwindow.
(2) Deferred tax is assumed as per the IFRS statement of financial position. To the extent that an orderly sale of the Group’s asset 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 2021 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 theGroup.
(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% forresidential.
(XXV) Directors’ Remuneration, Employee Costs and Auditor Remuneration
For further information on Directors’ remuneration and employee costs, refer to note 26 of the consolidated
financialstatements.
(XXVI) Commitments
For further information on Commitments, refer to note 23 of the consolidated financialstatements.
(XXVII) Subsequent Events
For further information on subsequent events, refer to note 28 of the consolidated financialstatements.
I-RES
184
In this Section:
Supplementary Information 186
IRES REIT, IRES Fund Management Limited
and CAPREIT Senior Management
189
Glossary of Terms
190
Forward-Looking Statements
192
Shareholder Information
193
2021 Annual Report
185
Supplementary
Information
_
EPRA Performance Measures and Disclosures (Unaudited)
The following EPRA performance measures are presented to improve transparency, comparability and relevance across the
European listed real estateindustry.
EPRA Earnings per Share (EPS)
EPRA Earnings represents the earnings from the core operational activities (recurring items for the Company). 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 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 performance of the Group’soperations.
EPRA Diluted Earnings per Share
EPRA Diluted EPS is 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. It has been
presented as the Company believes this measure is indicative of the performance of the Group’soperations.
EPRA NAV per Share
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. No deferred tax liability is calculated for I-RES as it is a REIT, and taxes are paid at the
shareholder level on the distributions. 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. To optimise these measures, I-RES focuses on growing asset value and maximising
shareholder value through active and efficient asset and property management. They have been presented as the Company
believes these measures are indicative of the Group’s operating performance and valuegrowth.
EPRA Net Initial Yield (EPRA NIY)
EPRA NIY is calculated as the annualised rental income based on the cash rents passing at the balance sheet date, less non-
recoverable property operating expenses, divided by the gross market value of the property. It has been presented by the
Company to improve comparability of yield measures across the European real estatemarket.
EPRA “topped-up” Net Initial Yield (EPRA “topped-up” NIY)
EPRA “topped-up” NIY is calculated by making an adjustment to the EPRA NIY in respect of the expiration of rent-free
periods or other unexpired lease incentives such as discounted rent periods and step rents. It has been presented by the
Company to improve comparability of yield measures across the European real estatemarket.
EPRA Vacancy Rate
EPRA Vacancy Rate is calculated as the percentage of estimated residential rental value of vacant space divided by the
estimated residential rental value of the whole portfolio as at the reporting date. The estimated rental value excludes
properties under development, commercial properties and development land. It has been presented by the Company to
improve comparability of the vacancy measure across the European residential real estatemarket.
EPRA Performance Measure
Unit
31 December
2021
31 December
2020
EPRA Earnings
€’000
31,648
34,030
EPRA EPS € cents/share
6.0
6.5Diluted EPRA EPS € cents/share
6.0
6.5EPRA NRV
€’000
956,812
903,917EPRA NRV per share € cents/share
180.7
171.8EPRA NTA
€’000
881,440
841,779EPRA NTA per share € cents/share
166.5
159.9EPRA NDV
€’000
871,432
877,914
EPRA NDV per share € cents/share
164.6
166.8EPRA NIY %
4.2%
4.2%EPRA “topped up” NIY %
4.2%
4.2%EPRA vacancy rate %
1.0%
1.7%
Supplementary Information
I-RES
186
Supplementary Information
EPRA Earnings per Share
For the year ended
31 December
2021
31 December
2020
Profit for the year (€’000) 67,546
58,263
Adjustments to calculate EPRA Earnings exclude:
Costs associated with early close out of debt instrument (€’000)
—
—Changes in fair value on investment properties (€’000)
(34,934)
(19,092)
Profit or losses on disposal of investment property
(905)
(4,432)Changes in fair value of derivative financial instruments (€’000)
(59)
(709)EPRA Earnings (€’000) 31,648
34,030
Basic weighted average number of shares
527,412,302
522,069,110
Diluted weighted average number of shares
528,130,822
524,130,528
EPRA Earnings per share (cents)
6.0
6.5
EPRA Diluted Earnings per share (cents)
6.0
6.5
EPRA NAV per Share
As at 31 December 2021
EPRA NRV EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€’000) 881,440 881,440 881,440
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000)
— — —
Fair value of fixed interest rate debt (€’000)
— — (10,008)
Real estate transfer tax (€’000)
(3)
75,372
— —
EPRA net assets (€’000) 956,812 881,440 871,432
Number of shares outstanding
529,453,946 529,453,946 529,453,946
Diluted number of shares outstanding
529,498,519 529,498,519 529,498,519
Basic Net Asset Value per share (cents)
166.5 166.5 166.5
EPRA Net Asset Value per share (cents)
180.7
166.5
164.6
As at 31 December 2020
EPRA NRV EPRA NTA
(1)
EPRA NDV
(2)
Net assets (€’000)
841,695 841,695 841,695
Adjustments to calculate EPRA net assets exclude:
Fair value of derivative financial instruments (€’000) 84 84 —
Fair value of fixed interest rate debt (€’000) — — 36,219
Real estate transfer tax (€’000)
(3)
62,138 — —
EPRA net assets (€’000)
903,917 841,779 877,914
Number of shares outstanding 525,078,946 525,078,946 525,078,946
Diluted number of shares outstanding 526,289,910 526,289,910 526,289,910
Basic Net Asset Value per share (cents) 160.3 160.3 160.3
EPRA Net Asset Value per share (cents) 171.8 159.9 166.8
(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 Company have 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 asset 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 2021 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 andduplexes.
2021 Annual Report
187
Strategic Report
Governance
Financial Statements
Supplementary Information
EPRA Net Initial Yield (NIY)
As at
31 December
2021
31 December
2020
(€’000) (€’000)
Annualised passing rent
81,393
74,249Less: Operating expenses
(1)
(property outgoings)
(17,093)
(14,850)
Annualised net rent
64,300
59,399Notional rent expiration of rent-free periods
(2)
—
21
Topped-up net annualised rent
64,300
59,420Completed investment properties
1,450,635
1,346,683
Add: Allowance for estimated purchaser’s cost
75,372
62,138Gross up completed portfolio valuation
1,526,007
1,408,821
EPRA Net Initial Yield
4.2%
4.2%EPRA topped-up Net Initial Yield
4.2%
4.2%(1) Calculated based on the net rental income to operating revenue ratio of 79.1%.
(2) For the year ended 31 December2021.
EPRA Vacancy Rate
(3)
As at
31 December
2021
31 December
2020
(€’000) (€’000)
Estimated rental value of vacant space
820
1,203Estimated rental value of the portfolio
78,635
72,762EPRA Vacancy Rate
1.0%
1.7%(3) Based on the residentialportfolio
EPRA Capital Expenditure Disclosure
EPRA recommends that capital expenditures, as stated on the financial statements, be split into four components based
on the nature of the assets the expenditures were on to allow for enhanced comparability. Namely, the categories are
acquisitions, development, like-for-like portfolio, and otheritems.
For the year ended
31 December
2021
31 December
2020
(€’000) (€’000)
Acquisitions
461
336Development 9,191 16,102
Like-for-like
(4)
10,541 9,650
Total Capital Expenditure 20,193 26,088
(4) For 2021, Like-for-like is defined as properties held as of 31 December 2020.
Supplementary Information
I-RES
188
IRES REIT, IRES Fund
Management and CAPREIT
Senior Management
IRES REIT
Brian Fagan
Finance Director of I-RES
Brian Fagan joined the Company as Finance Director
with effect from 26 April 2021. Brian is a Chartered
Accountant with extensive experience in the property
industry. He joined IRES REIT from his role as Chief Financial
Officer with Island Capital. Brian previously held roles with
Ballymore Properties and DCC plc.
Anna-Marie Curry
Company Secretary and General Counsel of I-RES
Anna-Marie Curry joined IRES REIT as Company Secretary
& General Counsel with effect from 1 July 2021. Anna-Marie
is a Solicitor, and previously worked with Arthur Cox and
joined the Company from her role as Company Secretary
and General Counsel with Bord na Móna plc.
IRES Fund Management and CAPREIT
Mark Kenney
President, Chief Executive Officer
and a trustee of CAPREIT
Mark Kenney joined the Board of
I-RES as IRES Fund Nominee in
2019 and resigned in July 2021.
Mr Kenney is a trustee on the board
of CAPREIT and the President and
Chief Executive Officer of CAPREIT.
Mr Kenney oversees the strategy and
the allocation of CAPREIT’s capital in
Canada and Europe.
Jodi Lieberman
Chief People, Culture and
Brand Officer of CAPREIT
Jodi Lieberman joined CAPREIT
in 2009 and has been instrumental
in developing the human resources
function at the company as well as
at I-RES.
Scott Cryer
Chief Financial Officer of CAPREIT
Scott Cryer joined CAPREIT in
September 2009 and was appointed
as the Chief Financial Officer of
CAPREIT in 2011. Mr. Cryer was also
a director of IRES Fund Management
Limited and supported I- RES in all
financial and reporting decisions.
Charles Coyle
Vice President, Acquisitions of
IRES Fund Management
With over 20 years of property
investment and development
experience, Charles Coyle was
appointed by IRES Fund Management
as Vice President, Acquisitions in
December 2014. He supports I-RES
with all acquisition and development
decisions.
Priyanka Taneja
Senior Vice President Finance
at CAPREIT LP
Priyanka Taneja was CFO of I-RES
until internalisation on 31 January
2022 and joined CAPREIT in May
2008 and is currently the Senior Vice
President of Finance, and is responsible
for overseeing Financial Reporting,
Taxation, Valuations, Treasury and
Financings. She also assists with
Investor Relations and led the finance
and financial reporting functions
for I-RES.
Corinne Pruzanski
General Counsel and Corporate
Secretary of CAPREIT
Corinne Pruzanski joined CAPREIT
as General Counsel and Corporate
Secretary in 2011 with responsibility
for all legal and governance matters
relating to CAPREIT, including
CAPREIT’s acquisitions, dispositions,
financing arrangements and
compliance with laws. Ms. Pruzanski
was also company secretary to IRES
Fund Management Limited.
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Financial Statements
Supplementary Information
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 thisreport.
“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 monthlyrent;
“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 theproperty;
“Basic Earnings per share (Basic EPS)”
Calculated by dividing the profit 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 reportingperiod;
“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
perioddate;
“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 to show the underlying operating
performance of theGroup.
“EPRA”
The European Public Real EstateAssociation;
“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 ofproperties;
“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 ofproperties;
“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
theirliabilities.
“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 reportingperiod;
“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
reversionaryyields;
“Group Total Gearing”
Calculated by dividing the Group’s aggregate borrowings
(net of cash) by the market value of the Group’s portfolio
value consistent with the financial covenant of the Group’s
Revolving Credit Facility and theNotes;
I-RES
190
“Gross Yield”
Calculated as the Annualised Passing Rent as at the stated
date, divided by the fair value of the investment properties,
excluding fair value of development land and investment
properties under development as at the reportingdate;
“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 totime;
“Market Capitalisation”
Calculated as the closing share price multiplied by the
number of sharesoutstanding;
“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
withIFRS;
“Net Asset Value per share”
Calculated by dividing NAV by the basic number of ordinary
shares outstanding as at the end of the reportingperiod;
“Net Rental Income (NRI)”
Measured as property revenue less property
operatingexpenses;
“Net Rental Income Margin”
Calculated as the NRI over the revenue from
investmentproperties;
“Occupancy Rate”
Calculated as the total number of apartments occupied
over the total number of apartments owned as at the
reportingdate;
“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
Lossesarise;
“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.”
Squarefeet;
“Sq. m.”
Squaremetres;
“Stabilised NRI”
Measured as property revenue less property operating
expenses adjusted for market-based assumptions such
as long-term vacancy rates, management fees, repairs
andmaintenance;
“Vacancy Costs”
Defined as the value of the rent on unoccupied residential
apartments and commercial units for the specifiedperiod.
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Financial Statements
Supplementary Information
I-RES Disclaimer
This Report includes statements that are, or may deemed
to be, forward-looking statements. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms “anticipates”, “believes”,
“estimates”, “expects”, “intends”, “plans”, “projects”, “may”
or “should”, or, in each case, their negative or other
comparable terminology, or by discussions of strategy,
plans, objectives, trends, goals, projections, future
events or intentions. These forward-looking statements
include all matters that are not historical facts. They
appear in a number of places throughout this Report
and include, but are not limited to, statements regarding
the intentions, beliefs or current expectations of I-RES
concerning, amongst other things, its results of operations,
financial position, liquidity, prospects, growth, strategies
and expectations for its industry. Such forward-looking
statements are not guarantees of future performance and
involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance
or achievements of I-RES and/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. As a result, you are cautioned
not to place any reliance on such forward-looking
statements and neither I-RES nor any other person accepts
responsibility for the accuracy of suchstatements.
Nothing in this Report should be construed as a profit
forecast or a profitestimate.
The forward-looking statements referred to in this report
speak only as at the date hereof. Except as required
by law or any appropriate regulatory authority, I-RES
expressly disclaims any obligation or undertaking to release
publicly any revision or updates to these forward-looking
statements to reflect any change in (or any future) events,
circumstances, conditions, unanticipated events, new
information, any change in I-RES’ expectations or otherwise
including in respect of the Covid-19 pandemic, the
uncertainty of its duration and impact, and any government
regulations or legislation related toit.
Forward-Looking Statements
I-RES
192
Shareholder Information
Head Office
South Dock House
Hanover Quay
Dublin 2, Ireland
Tel: +353 (0)1 557 0974
Website: www.iresreit.ie
Directors
Phillip Burns
Stefanie Frensch
Joan Garahy
TomKavanagh
Declan Moylan
Aidan O’Hogan
Margaret Sweeney
Investor Information
Analysts, shareholders and others seeking
financial data should visit I-RES’ website at
www.iresreit.ie orcontact:
Chief Executive Officer
Margaret Sweeney
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
Registrar And Transfer Agent
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24, Ireland
Tel: +353 (0)1 4475566
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 X576Ireland
Stock Exchange Listing
Shares of I-RES are listed on Euronext Dublin under
the trading symbol “IRES”.
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Irish Residential Properties REIT plc Annual Report
2021
TEMP RD VERSION TEMP RD VERSION
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