AGM Update - the I-RES Board unanimously recommends shareholders vote FOR all proposed resolutions at the 2023 AGM

17 April 2023

AGM Update - the I-RES Board unanimously recommends shareholders vote FOR all proposed resolutions at the 2023 AGM

The Board of Irish Residential Properties REIT plc (“I-RES” or the “Company”) has reviewed the open letter (“Open Letter”) from Vision Capital Corporation (“Vision Capital” or “Vision”) to shareholders dated 12 April 2023 concerning the 2023 AGM and is providing an update and reiteration of the recommendation to shareholders to vote FOR all proposed resolutions.

The Board has previously stated that it believes the current share price of I-RES does not reflect the value of the Company and is actively engaged in seeking ways to deliver value to shareholders. The I-RES share price and wider real estate sector has been impacted by a wide range of macro-economic factors including interest rate hikes, inflation, and geo-political issues. The Irish residential real estate sector has additionally been impacted by regulatory controls with the tightening of rental caps to 2% per annum introduced in December 2021. Against this challenging backdrop, I-RES has outperformed the listed European Real Estate sector (the STOXX Europe 600 Real Estate index) by 6.4% since 1 December 2021.

The I-RES strategy, as outlined in the 2022 Annual Report, is to focus on operational excellence, disciplined capital investment, prudent balance sheet management and engagement with government to support an effective housing and regulatory environment. The business has continued to evolve, and our integrated operating platform will provide additional avenues for future, capital-light, growth. The Company’s modern sustainable and diverse portfolio, the resilient performance of the business in 2022, with 6.5% revenue growth achieved, successful internalisation and strong operational and financial results all give the Board confidence in the strategy and in management.

In line with its focus on driving value for shareholders, the Company identified non-core assets for disposal. These non-core assets are expected to be in excess of €100 million in the short term, including the recent disposal of the Rockbrook development site. The Board will continue to review further disposals of non-core assets as part of its capital optimisation and shareholder value strategy, and will seek to return excess capital to shareholders, where appropriate in an efficient manner. The dividend continues to be an important part of the I-RES investment case and I-RES’ REIT status offers a predictable income stream which we recognise is attractive to many of our shareholders.

The Board regularly reviews all options with advisers, in line with its fiduciary duties, and reiterates that it remains open to considering all value maximising options including offers for assets or the business as a whole. The Board reviewed Vision’s written request in 2022 for a formal sales process alongside other value maximising options and has also reviewed this at the current time and concluded that a formal sales process, given the macro-economic challenges and regulatory backdrop, is highly unlikely to result in value maximisation for shareholders.

In addition, the Board notes that formal sales processes are uncertain, disruptive for the business and stakeholders and there is no external evidence that such a process would be successful in delivering significant upside at the current time. The future of I-RES is attractive, given the strong platform which has been created, alongside the underlying demand for housing and outlook for employment and the Irish economy, and the Board has confidence that its strategic focus and portfolio optimisation will deliver value for shareholders.

The Board has sought to engage constructively and been responsive to shareholder requests for non-executive Director and management meetings. Access has been proactively offered to shareholders in line with I-RES’ regular and extensive investor engagement programme. The Board has also responded constructively to shareholder suggestions as part of discussions on Board refreshment and included a potential independent candidate with relevant credentials identified by Vision Capital, as part of its selection process to appoint a new non-executive Director in 2022.

AGM resolutions and remuneration

As outlined in the 2022 Annual Report, including within the Remuneration and Nomination Reports, the Board has conducted extensive governance engagement in 2022, in particular around potential succession and remuneration issues The Board believes its implementation of the Remuneration Policy is strongly aligned to deliver the strategy of I-RES and aligns executives’ interests with those of the broader I-RES workforce and shareholders. I-RES’ Remuneration Policy received over 99.2% approval at the 2020 AGM and the Remuneration Report received 99.1% and 96.1% support from shareholders respectively at the 2021 and 2022 AGMs.

Feedback sought from institutional shareholders around managing the transition of the non-executive Chairman and the Senior Independent Director has to date indicated support for a limited one-year extension to the Chairman’s tenure beyond the UK Corporate Governance Code’s recommended 9 years, rather than seeing significant change of the two senior positions at the same time. The Board believes the current composition and experience of the Board are appropriate and will continue to review and seek over the next 12 months, as already stated, to replace the non-executive Chairman.

For the purposes of clarification, where Declan Moylan has been described externally as an Executive Chairman, the Board notes Declan Moylan’s position is a non-Executive Chairman role in line with best practice corporate governance standards.

In the Annual Report, the Board updated the market on its response to the 2022 AGM resolutions that received over 20% dissent, including those relating to equity issuance. The Board further notes that the equity issuance powers that it seeks at the forthcoming AGM are more limited than those endorsed by the applicable investor body guidelines and would provide the Board with an appropriately circumscribed flexibility to act in the interests of all shareholders if that were called for by market conditions and the prevailing share price.

EGM Requisition

No formal requisition notice for an EGM has been received at this time from Vision Capital or any other shareholder and no shareholder proposals for the agenda of the 2023 AGM were received by the statutory deadline. The Board will consider any requisition notice that it receives and will update the market as appropriate.

Recommendation

The I-RES Board is committed to delivering value for shareholders and seeking to address the existing undervaluation and discount to NAV. The Board does not believe a formal sales process is in the best interest of shareholders at this time and is mindful of its fiduciary duties in the event of a credible offer for all or parts of the business. I-RES will continue to engage constructively with Vision and other shareholders and welcomes all shareholders views. The Board unanimously recommends shareholders support all proposed resolutions at the AGM on 4 May 2023.

For further information please contact:

For Investor Relations:
Irish Residential Properties REIT plc     

Michelle Ang, Director Investor Relations [email protected]   Tel: +353 87 956 1138

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

For Media Requests:

Jonathan Neilan, FTI Consulting   [email protected]   Tel: +353 (0)86 231 4135 

Sam Moore, FTI Consulting      Tel: +353 (0)87 737 9089 

About Irish Residential Properties REIT plc

Irish Residential Properties REIT plc (I-RES) is a growth oriented Real Estate Investment Trust providing quality professionally managed homes in sustainable communities in Ireland. The Group currently owns 3,937 apartments and houses for private rental in Dublin and Cork. I-RES aims to be the provider of choice for the Irish living sector, known for excellent service and for operating responsibly, minimising its environmental impact, and maximising its contribution to the community. The Company's shares are listed on Euronext Dublin. Further information at www.i-res.ie .