Sitting in the Museo Bar in Madrid’s Westin Palace hotel, Margaret Sweeney cuts a conspicuous figure among the sea of men in suits talking shop on the sidelines of the annual European Public Real Estate forum.
Irish Residential Properties, the real estate investment trust of which Sweeney has been chief executive for the past two years, also stands out from the crowd, trading at a premium to net asset value far beyond those of its Dublin-listed peers – a premium of about 15% at the time she speaks with EG.
Since taking the top job in November 2017, Sweeney has focused on moving the business beyond simply hoovering up assets from the National Asset Management Agency, which bought Irish banks’ boom-era property loans in 2010 after the crash. Ires is now targeting forward funding deals as well as new acquisitions, such as its €285m (£253m) purchase in June of an 815-unit portfolio from Bryant Park QIAIF ICAV. The firm does not have a development arm, but rather works with housebuilders to build out its portfolio.
During EG’s catch-up with Sweeney at EPRA, she spoke about her long-term aspirations for the business and the challenges of overseeing a purely residential portfolio.
How did you get into property?
I’m a chartered accountant by background and worked with KPMG for 15 years before moving to the Dublin Airport Authority. My brief there included technology and property, as well as overseas investments. DAA is the biggest real estate owner in Ireland. I was involved in leading the early development of Horizon Logistics business park near Dublin Airport and Cork Airport business park. I went in as company secretary, then became deputy chief executive and chief executive.
I joined the board of Ires REIT in April 2016. When the former CEO took up a senior position in Canada, I took over as CEO in November 2017. I’ve really enjoyed it. A key focus for me has been the development of a strategy for growth – how do you grow this business in a competitive market? We’ve had good momentum in that over the last 12 months. We have a lot of support from shareholders for growth. I’ve never done large-scale residential in this way before but nor have many in Ireland – it is a new asset class. I have enjoyed learning more about this sector and its current dynamics, and have tried to meet my counterparts and learn from other markets.
Where were you in 2008 when the Irish property market crashed?
I had set up a joint venture between [Dutch-Belgian banking group] Fortis and the Irish Post Office. We’d built Postbank [a community banking service], had half a billion of savings and 250,000 customers. Fortis was one of the first banks in Europe to be hit by the global financial crisis in late 2008. We did an orderly wind down of the business in 2010 and then I took some time out, including travel to Vietnam.
What keeps you up at night?
The risks for us are operational; we house close to 8,000 people and every night they sleep in beds in our properties. It is a bit like airports – you always hope [an emergency] doesn’t happen and you need to be prepared if it does. Residential is a bit like that. Offices are different, people don’t live in them.
Is the listed property sector in Ireland under pressure?
We are trading at a premium to NAV. We are not seeing the same dynamic as some of the other shares. I think part of it is because we own and operate assets in the private residential sector; we are showing a pipeline of growth and value wise, yields are compressing, every year we see rent increases and given our scale this is a lot of cash every month. It is rare we have an empty building – we are close to 100% occupancy all the time.
Who is your most similar competitor?
We are a pure residential play and the only other one that is listed in Ireland is the Kennedy Wilson fund, but they don’t have the same disclosure requirements as Ires, which is a listed stock on Euronext. In Europe, we are probably similar in context to Lar España but they are multisector; and Finland’s Kojamo, which is listed and residential focused, but they develop as well.
Will Ires remain a listed REIT long term?
Green REIT [which is in the process of being bought by Henderson Park] is unusual. REITs tend to be around a long time. CapREIT has been around for 20 years. I think we have a long-term commitment. The model for REITs is to be set up as long-term and sustainable businesses.
The rise of Ires
Launched with the backing of Toronto’s Canadian Apartment Properties REIT, which owns around 51,000 residential properties, Ires raised €200m when it floated on the Irish Stock Exchange in 2014. Over a two-year period, the company amassed more than 2,200 apartments, largely from Nama. The firm’s portfolio is now around 3,700 strong, and Sweeney expects this figure to swell to around 4,500 over the next couple of years. Ires is poised to become Ireland’s second largest REIT if the Green-Henderson Park deal goes ahead.
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