THE 3,700 OR so apartments owned by Ireland’s biggest landlord could soon be put up for sale, along with the rest of the company.

Dissatisfied investors, led by Canadian firm and 5% shareholder Vision Capital, are pushing for an overhaul at Ires REIT (Real Estate Investment Trust) which could result in the firm being taken private or selling off its assets.

In December, Vision publicly called for a strategic review examining how Ires might offload its properties or de-list from the stock exchange, as well as a proposal to replace five of the company’s directors with five of its own picks.

Ires will now hold an emergency general meeting in February to allow investors to vote on the plans. 

After months of resisting calls for a sale, earlier this week Ires announced plans for its own strategic review. All options would be on the table, which means selling the business would also likely at least be considered by Ires, which has said it is focused on ‘creating value for shareholders’. Other options could include selling part of the firm, mergers, acquisitions, or business as usual, although this could be hard to maintain with Vision snapping at the company’s heels.

All this agitation might seem odd to an outside observer.

Earrings at Ires rose in its most recent trading period. Average rents at its properties are about €1,800 per month, with a backdrop of Irish rents at a record high and going higher. Occupancy rates at the company’s rental properties are consistently around 99%. 

With all that said, why wouldn’t investors want Ires to expand its position in the Irish rental market? Why is there such a hard push for a sale?

The heart of the issue is the company’s share price, which languished despite a general market rally last year.

Ires shares fell from almost €2 near the end of 2019 to a record low of €0.87 as of October 2023.

Despite a jump in recent weeks to €1.13 at the time of writing, analysts say the company’s share price still far undervalues its assets. These primarily consist of its 3,700 rented apartments, almost all of which are located in Dublin.

This underperforming share price is at the heart of the row with Vision – simply, Vision thinks investors could get more money if Ires sells off its assets and gives the money raised from the deals back to shareholders.

So why has Ires’s share price been lagging? 

This was covered by The Journal previously - in brief, rising interest rates are generally bad news for property companies.

They make borrowing more expensive, which tends to make buying property more difficult, which tends to dampen property values.

This happened at Ires, forcing the company to write down the value of its assets. Management has been quick to point out that European property companies generally had a poor year amid a backdrop of rising rates.

This has likely been the main issue hitting the share price. But investors including Vision have also highlighted a range of other problems.

These include the fact that Ires was slow to react to rising interest rates, dragging its heels when securing a new €275 million credit facility or selling off assets to avoid breaching lending rules.

In both cases, investors said the slow response by Ires led to the company getting poorer deals.

Vision also claims that Ires’s status as a public company on the relatively small Irish stock exchange limits its ability to raise new funds and find new investors, putting further downward pressure on its share price.

For its part, Ires has rejected virtually all of Vision’s claims and maintains the firm is on the right path as is.

The contradicting views have left the two parties at loggerheads for months – Vision pushing for a change or sale of the business, with Ires resisting.

With Vision holding just 5% of shares, its calls would be relatively easy to ignore in isolation.

But there is evidence of significant discontent among Ires investors.

Brian Fagan, the company’s chief financial officer, and chief executive Margaret Sweeney were both only narrowly held onto their positions at the firm’s annual general meeting in June, with about 40% of investors opposing their re-election to the board.

While Vision was relatively quiet for a few months afterwards, the call in December for the strategic review gives investors another opportunity to decide on the future of Ires.

On February 23, Ires is due to publish full year results, after which it has said it will start its own strategic review. Chief executive Margaret Sweeney is due to step down from the firm in April, with her successor yet to be chosen.

But before all that – investors will be able to decide on Vision’s plan at the emergency general meeting on February.16. The meeting will give investors the opportunity to vote on who’s right on what to do with Ires – management, or Vision.

By extension, the vote could also essentially determine what to do with 3,700 apartments in Dublin.

Despite its status as Ireland’s biggest private landlord and a business taking in almost €6 million in rental income per month, the right decision is far from clear.