IRES Reit Expands Portfolio with €34.9m Naas Apartment Deal
Irish Residential Properties Reit (IRES Reit) is set to expand its property portfolio with the acquisition of a block of 77 apartments in Naas, County Kildare, for €34.9 million. The deal, funded by proceeds from previous non-core apartment sales, marks a return to portfolio growth for IRES Reit after a pause since 2022.
Deal Details and Market Conditions
The acquisition is a “forward purchase” agreement for properties currently under construction by Westar Homes Limited, with practical completion expected in the final months of 2026. The property comprises a mix of apartment types: 20 one-bedroom, 33 two-bedroom, and 24 three-bedroom units, along with accompanying car parking.
Several factors are contributing to a more favorable market for landlords in Ireland. These include a recently reduced 9% Value Added Tax (VAT) rate on block purchases of apartments, updated rent rules allowing annual increases of up to 2% and market rent resets between tenancies, and anticipated declines in European Central Bank interest rates.
Financial Projections and IRES Reit’s Strategy
The investment is projected to generate a Net Initial Yield (NIY) of approximately 5.25% and is expected to enhance earnings following the lease-up period. IRES Reit CEO Eddie Byrne highlighted the strategic importance of the deal, stating it represents a significant portion of the firm’s capital recycling program.
“This off-market acquisition, generated internally as a result of our teams’ extensive connections and experience, represents a very attractive investment opportunity,” Byrne said. “Our asset recycling programme has, to date, generated sales proceeds 25%+ above our carrying values, thus giving us effective selling yields of approximately 4% which, through this acquisition, we are able to reinvest at 5.25% in recent A rated assets.”
IRES Reit is actively exploring further growth opportunities, with additional deals potentially in the works. Byrne emphasized the company’s role in addressing Ireland’s housing needs, stating, “This transaction demonstrates the role I-RES can play in funding much needed-new housing in Ireland.”
Understanding Ireland’s VAT Rates
Ireland operates a tiered VAT system. The standard VAT rate is 23%, applying to most goods and services. Reduced rates include 13.5% (for items like fuel, electricity, vet fees, construction, and certain services) and 9% (for newspapers and sporting facilities). A super-reduced rate of 4.8% applies to livestock, and some goods and services are zero-rated, such as exports and certain foodstuffs Revenue.ie.
The recent reduction to 9% VAT on block purchases of apartments is a key incentive for large landlords like IRES Reit, making such investments more financially attractive.