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Irish Residential Properties REIT has agreed to a €731M takeover by U.S. investment manager Barings, bringing an end to months of speculation over the future of Ireland’s largest private residential landlord.
The Dublin-listed REIT announced on Monday that it had reached an agreement on the terms of a recommended all-cash offer from Ireland Residential Holdings, a newly incorporated company wholly owned by funds and accounts managed or advised by Barings.
The offer represents a 31% premium to IRES' closing share price of €1.06 on 25 September, the last trading day before the takeover proposal was announced, and at par to its last stated net asset value.
Under the terms of the deal, IRES shareholders will receive total consideration of €1.386 per share, comprising an offer price of €1.3651 and a dividend of €0.0209 per share. The total transaction value is approximately €731M.
The deal remains subject to shareholder approval, sanction by the Irish High Court, and necessary regulatory approvals. Completion is anticipated in the first quarter, following publication of the scheme documentation and shareholder meetings.
The IRES board, led by Chair Hugh Scott-Barrett and CEO Eddie Byrne, has unanimously recommended that shareholders approve the transaction, having previously concluded that the €1.386 proposal was at a level it would be “minded to recommend.”
The agreement follows five approaches from Barings since early August, with the September proposal the first time the investment firm had publicly tabled its valuation.
IRES owns more than 3,600 rental homes, predominantly in Dublin, and has become one of the major beneficiaries of changes to Ireland's rent regulations introduced in March. The new rules have allowed landlords to reset rents to market levels between tenancies, while existing tenants remain protected by limits on annual increases.
“It's early days, but we are starting to see the benefits of the new residential rent regulations,” Byrne told Bisnow in August, noting that the changes had begun to feed into portfolio valuations.
The takeover comes after several years of pressure from shareholders over IRES' valuation and strategic direction, led by Canadian activist investor Vision Capital, which launched an ultimately unsuccessful campaign for the company to be sold, taken private or broken up.
Barings has indicated that it intends to continue operating IRES as a standalone residential real estate business, retaining its existing headquarters and working with the current management team.
However, it said it plans to undertake a detailed review of the portfolio, investment and development pipeline, disposals and business plan following completion. Its initial priorities include further investment in existing homes, refurbishment and asset management initiatives to improve rental performance, selective portfolio sales and reinvestment, and optimisation of the company's capital structure.
The review is also expected to consider activities outside IRES' core real estate operations. Barings said it anticipated that any impact on employment would be limited to a few roles, primarily within corporate functions, subject to the outcome of the review.
The acquisition will also bring an end to IRES' status as a publicly listed Irish REIT.
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