Ireland's largest private landlord, Ires REIT, has confirmed it is the preferred bidder for the Marathon XVI portfolio, a collection of 815 apartments situated across Ireland, at a reported €285 mln.
The sale would mark the largest single private rental sector (PRS) transaction in the Irish market for several years, and comes after the recent disposal by Marathon Asset Management of the Heston South Quarter scheme for €222 mln.
The portfolio, which is named after the vendor and the number of developments it comprises, is being marketed by Savills and Eastdil Secured. Final bids were submitted on the apartments last Wednesday, with competition believed to have come from Avestus Capital Partners, Urbeo and Orange Capital Partners.
New-York headquartered Marathon acquired the majority of the properties from Ireland's bad bank NAMA in 2015, paying €120 mln for a 588-unit tranche.
The portfolio was launched at a guide price of €240 mln, with the Irish Times reporting that Ires is set to pay €285 mln, due to persisting demand among investors for exposure to the Irish rental market.
In a release, Ires confirmed the speculation and noted that the deal is subject to completion of due diligence, board approval, and exchange of binding contracts.
The Marathon portfolio has a current annual rent roll of €14.7 mln, meaning that the price reflects a net initial yield of 4%, with the prospect of this rising further to around 4.8-5% as the 2% vacancy in the portfolio is let and rent reviews are progressed, according to analyst Goodbody.
'Ires can also bring considerable cost efficiencies to the management of these assets and we expect this to provide a significant boost to the net yield', noted Goodbody, adding that 'Ires currently achieves a gross to net on its portfolio of 19% versus 25% in the wider market'.
The analyst said that Ires 'just about has the financial capacity under its current credit facilities' to make the acquisition with existing funding facilities, 'however medium and longer-term projects (like its agreed forward purchases and its own developments like Rockbrook) will require further consideration of funding in the future'.
