Irish Residential Properties REIT Plc (IRES) Earnings Call Transcript & Summary

Hello, and welcome to the Irish Residential Properties REIT Plc Financial Year 2022 Results Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions]. I will now hand you over to your host, Michelle Ang, Director of Investor Relations and Sustainability, to begin. Michelle, please go ahead.

Thank you all for joining IRES results call this morning. My name is Michelle Ang, Director of Investor Relations and Sustainability. And I am joined today by our CEO, Margaret Sweeney; and our CFO, Brian Fagan, to present to you our 2022 full year results. The presentation we are making today is available to download on the Investor Relations section of our website, iresreit.ie. And our 2022 results press release, which we published this morning is also available on our website. Before we begin, I would like to remind everyone that certain statements we make today may be considered forward-looking and are subject to various risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. I direct you to our results press release for a discussion of these risks and uncertainties. I will now hand over to Margaret to take you through IRES 2022 highlights.

Thank you, Michelle. Thanks to everyone for joining our results call this morning. So turning to Slide 4 on our 2022 performance. 2022 was another successful year for IRES. Today, we are reporting a strong set of results, notwithstanding various macroeconomic challenges and pressures along with the internalization of the investment manager this year. This demonstrates the continued underlying strength of our business. We reached record levels of revenue, growing by 6.5% to EUR 84.9 million, which was driven by our high occupancy levels and new additions to the portfolio. Our net rental income grew by 4.3%, totaling EUR 65.7 million for the year, with our NRI margin outturn for the full year remaining stable at 77.5% that we previously reported at the time of our half year results, a very satisfactory outcome in the context of wider inflationary and cost pressures. We intend to declare a final dividend of EUR 0.0281 per share, in line with our normal payout ratio. This brings total dividends per share for 2022 to EUR 0.0511. We continued to grow our portfolio during 2022 through accretive investment in acquisitions and new developments, while also recycling capital through selective disposals. This year, we added 238 homes to our portfolio through acquisition development and forward purchase. 92% of our new homes are already leased and income-producing. And with the continued focus on active portfolio and capital management, we disposed of 128 units at Hampton Wood at a net initial yield of 3.5%, a strong return on investment and demonstrates the value we can create from the selective recycling of assets. We actively review our assets and the opportunities in the market to ensure that we are optimizing our portfolio with proactive capital management, ensuring we continue to deliver value for our shareholders. We have the 5 townhouses at Tara View, which are noncore for sale after the strategic sale of the Rockbrook site in Sandyford. We have a robust balance sheet and strong liquidity levels. We have a quality portfolio of assets with strong cash generation, which is well positioned uncompetitive vis-a-vis competitors. Brian will touch on this in greater detail. But to note, we have strengthened our capital position by entering into hedging arrangements, fixing nearly 3/4 of our credit facilities against interest rate volatility until maturity. And given the current macroeconomic market backdrop and with interest rates continuing to rise, the proactive steps we have taken provide us with increased certainty on our borrowing costs and greater visibility on our capital expenditure over the medium term. Like the rest of the real estate sector due to increasing interest rates and inflationary pressures, we are seeing some yield expansion from the year-end valuation of the assets portfolio. The gross yield has moved from 5.6% at end June to 5.9% at December 2022 with a 3.4% impact on values. This yield comprise with the current Irish 10-year government bond yield of 2.95%. Despite making new investments in 2022 and the valuation adjustment, we have maintained our LTV within our target range and well below the maximum level of 50% under the Irish REIT regime, which is now standing at 43.3%. Our strategy continues to be supported by a robust balance sheet and strong liquidity levels with manageable commitments. We have facilities of EUR 800 million of which EUR 657 million are drawn and have no debt maturing until April 2026 with our debt repayment staggered from 2026 to 2032. Additionally, to note, the weighted average cost of our debt for the year was 2.61%. This year, we continue to make strides in our sustainability and ESG efforts, our young modern portfolio, both strong sustainability credentials with 86% of our properties holding BER Certificate C and above. Combined, these factors translate to lower capital expenditure commitments for the business, enhancing our shareholder returns and also benefit our tenants in the recent period of heightened energy costs. And given the company's significant transformation over the last 18 months, we undertook a complete review of our sustainability strategy, tying together a comprehensive review of the current market backdrop with a detailed analysis of the company's preexisting strategy. This review highlights a number of key areas where we can improve and where we can look to maximize opportunities, and we will provide further information on this in our upcoming annual sustainability report. We have set ambitious targets to reduce our Scope 1 carbon emissions by 30% to net zero in the near term and Scope 2 carbon emissions by 10% in 2023 and believe we are well positioned to achieve this target. We continue to work towards our goal to reduce our carbon emissions in line with the ambition and commitment of the Paris Climate Agreement and Ireland's Climate Act. As always, we continue to operate transparently, and investors and key stakeholders can find further disclosures on our ESG efforts and our ESG report on our website and via independent third-party assessors such as GRESB, where we saw an increase of 6 percentage points in our score for 2022. We will cover sustainability in greater detail in the presentation. Moving now to Slide 5. In addition to the strong operational performance, I'm also pleased to note the meaningful progress achieved on certain strategic priorities during 2022. On 31st of January '22, IRES successfully completed the acquisition of the shares of the Investment Manager after exercising its right to do so under the IMA agreement in late 2021. The Board made the decision to internalize as it believe this was an important strategic and financial objective at this point in IRES' evolution and is in the best interest of our shareholders. IRES' business is now fully integrated in Ireland following the acquisition of the management company and the transition of services from Canada during 2022. This business has been further strengthened by senior appointments in key roles and investment in new technology. This has created a unique proposition in the Irish market and further strengthens our position as the leading rental provider of choice. This strategic change affords the business, many benefits, including the removal of asset management fees, the adoption of a new scalable ERP platform, a more simplified structure, allowing us to streamline our operations and efficiently scale the portfolio cost effectively and enhanced resident service and risk management. With a vertically integrated platform, this affords IRES flexibility and the opportunity to introduce additional revenue streams without additional management fees. I will now hand over to our CFO, Brian Fagan, who will take you through the financial results for FY 2022.

Thank you, Margaret. Turning now to Slide 7, where I will discuss our financial performance for the year in greater detail. We are pleased to report an excellent operating performance for 2022 achieved against a background of macroeconomic volatility and in the year of significant organizational change for the business. The key drivers for this strong financial performance were portfolio growth, organic rental growth and our occupancy levels. We have delivered another year of growth and have seen a strong 2022 across our most important operational KPIs. Revenue from investment properties increased by 6.5% to EUR 85 million, and our net rental income grew by 4.3% to EUR 66 million. Occupancy of the portfolio was 99.4% at December 2022 versus 99.1% in 2021. Total rent collections were excellent at 99.1% for 2022. This strong occupancy and rental collection performance further underlines the resilient characteristics of the business. Despite inflation and cost pressures in the second half of 2022, we managed to maintain the NRI margin at the 77.5% level seen in H1 2022 compared to 79.1% for the full 12 months of 2021. The decrease in margin is attributable to increased property taxes and also increases in employee utilities and repairs and maintenance costs when compared against 2021. Adjusted EBITDA grew by 4.8% in 2022 to EUR 54 million, while adjusted EPRA earnings remained strong at EUR 36.6 million. Nonrecurring costs of EUR 5.7 million were incurred in the first half of 2022 and as previously reported related to the internalization and associated IT expenses. As in prior years and in accordance with international financial reporting standards, the company's profits are stated after taking account of movements in the valuation of investment properties. At 31st of December 2022, this valuation process resulted in a reduction of EUR 45 million in the value of these assets. This charge results in the company reporting an EUR 11.9 million loss for the year despite strong revenue and NRI performance. The revaluation reflects an upward pressure on yields impacted mainly by higher interest costs following ECB rate hikes, inflationary cost pressures impacting on NRI and the regulated rent cap of 2%. The EUR 45 million valuation loss is a noncash item. Adjusted EPRA earnings per share amounted to EUR 0.069 versus EUR 0.07 per share in 2021. We have a strong record of delivering dividends to shareholders. Keeping with this approach, it is proposed that the 2022 final dividend per share of EUR 0.0281 will be paid. This brings the total for the year to EUR 0.0511. This is a decrease on prior year and reflects the reduction in the dividend announced at our interim results due to the nonrecurring costs incurred as part of the internalization. Turning to Slide 8. During 2022, the total value of our property increased marginally by 0.4% to EUR 1.5 billion, driven by the introduction of new assets. This was offset by a noncash revaluation loss of EUR 45.6 million, which is a reflection of the upward pressure on yields, which is being experienced by the entire real estate industry, impacted by higher interest rates and inflationary cost pressures. Our gross yield has moved to 5.9%, an expansion of 0.3% on 2021. In light of this valuation decrease, our net asset value moderated down 3.8% to EUR 847 million, with NAV per share moving to EUR 1.60. In summary, the valuation decrease is in the most part, a result of externalities within the broader macroeconomic environment. We remain confident in our high-quality portfolio and its proven ability to produce strong and recurring cash flows. Moving to Slide 9. We have a strong balance sheet and capital structure. We take a proactive approach to managing capital to ensure IRES' debt maturities are staggered and that our leverage and interest cover ratios are maintained at sustainable levels. The company has total credit facilities of EUR 800 million with a weighted average debt maturity of 4.3 years and no debt maturities before April 2026. The weighted average cost of debt during the period ended 31st of December 2022 was 2.61%. The overall facilities of EUR 800 million can be split into 2 tranches, an RCF of EUR 600 million and private placement notes of EUR 200 million. The company has a revolving credit facility of EUR 600 million with the consortium of 4 Irish and international banks. During the period, the term of this facility was extended out to 2026 on the same terms. In December 2022, we entered into hedging arrangements in respect of our RCF, specifically, interest rate swap agreements aggregating to EUR 275 million, converting this portion of the facility into a fixed interest rate of 2.5% plus a margin of 1.75%. The company's existing EUR 200 million of private placement notes are fully fixed with a weighted average interest cost of 1.92%. The first repayment on the notes becomes June March 2027, with the remaining payments staggered out to 2032. As of year-end, approximately 72% of the company's drawn debt is now fixed against interest rate volatility, providing us with increased certainty on our borrowing costs over the medium term. Gearing increased during the year with the LTV reaching 43.3% at 31st of December 2022, up from 40.7% at December '21. The increase was primarily due to making additional investments during 2022, which will support our income growth in 2023 and in subsequent years. This reflects our ability to add growth while also recycling capital throughout our portfolio. If we can move now to the next slide, please, Slide 11. On this slide, we outlined the strong operating performance of the portfolio during the period. Our portfolio is a modern and hard to replicate collection of properties located in areas of high demand, comprising 38 buildings with a total unit count of 3,938 at year-end. We are focused on providing a value offering to residents. Our average rents are EUR 1,750 per month, which are competitively priced in the Irish market. The majority of the portfolio is 2-bed. Our attractive offering provides fully served at homes, and we provide dedicated property management and local maintenance teams supported by a 24/7 help desk. Our rents are approximately 11% reversion rate, representing an opportunity for us to continue to achieve rent increases over the medium term whilst also representing downside protection. Our modern portfolio is second to none in the Irish market with 86% of our properties rated above C and BER ratings. This decreases our operating costs and also our tenants reduces CapEx commitments and contributes to our consistently high occupancy rates. Our per residential unit valuation is [ EUR 363,000 ] which is well below estimated replacement costs. Moving to Slide 12. We have successfully executed on our strategy through disciplined capital allocation. In 2022, we continue to execute against our growth strategy by adding incremental and sustainable value to our portfolio. We grew our unit count by 2.8% in 2022 through accretive investments in acquisitions and new developments, whilst also recycling capital through selective disposals that generated returns on investment for the business. Through acquisitions and development, we added 238 homes to the portfolio, and we disposed of 128 units in the same period. We took delivery of 108 units in Ashbrook at the beginning of 2022 with a further 44 due for delivery in Q4 2023 under a fixed price contract. We successfully recycled capital through the disposal of 128 homes at Hampton Wood for EUR 54.5 million at a net initial yield of 3.5%, demonstrating the value we can create from the selective recycling of assets. This disposal brings our portfolio of assets across 38 properties to just under 4,000 homes. We have demonstrated a track record of effective strategy execution and balance sheet management with accretive returns for shareholders. We can now move to the next slide, please. We were delighted to deliver 130 new high-quality and sustainable units to the Irish rental market at 2 locations. At the School Yard, we delivered 61 LEED Gold to accredited apartments on a site adjacent to our existing development Baker's Yard for a total cost of circa EUR 22 million. All units were leased at market rents and income producing at a gross yield on cost of 6.9%, just 5 weeks after we took delivery and launched the property, further underlining the market demand for high-quality rental accommodation. We introduced 69 highly sustainable A-rated apartments and townhouses at Tara View for a total investment of EUR 47 million. 85% of the apartments are now leased and income producing at market rents, generating a gross yield of 5.6%. We are undertaking a sales process of the 5 non-core townhouses at Tara View, 2 sales are legally completed for a total value of EUR 2.3 million and contracts have been exchanged on a further 2 units. Rockbrook. In 2015, IRES acquired a development site at Rockbrook, Sandyford. The original intention was to seek planning permission and develop the site. Significant delays were experienced during the planning process. And planning permission was eventually received for 428 residential units and ancillary commercial space in 2019. Due to COVID-19 associated delays, subsequent supply chain pressures and cost inflation, the yield metrics have continued to move unfavorably hindering the underwrite of the development. We recently made the decision based on the considered assessment of options to seek alternative uses for the capital invested in this site. We have a proven record of making astute asset management decisions and in the positioning of our portfolio. This has once again been evidenced in 2022 by the introduction of 2 new assets at 6.9% and 5.6% gross yield on cost, respectively, while recycling an asset at a 3.5% net initial yield and maintaining LTV at a healthy level. I will now hand back to Margaret, who will take you through sustainability and ESG.

Thank you, Brian. Turning to Slide 15. Climate and ESG considerations continue to take priority across our business, underpinning our investment decision-making and how we operate. We are committed to playing our part in supporting the transition to a low-carbon economy while continuing to positively influence the communities we operate in, delivering sustainable living solutions and creating long-term value for all of our stakeholders. We have taken the critical steps towards decarbonizing our portfolio. We have less than 0.5% Scope 1 CO2 emissions and will aim to reduce as soon as possible to net zero with a target reduction of 30% for 2023. We reduced our Scope 2 greenhouse gas emissions by 25.8% in 2022, and we have a range of initiatives in place to continue progress here. Based on a science-based assessment of our portfolio, we have set the target to reduce the Scope 2 operational carbon emissions by 10% by 2030. We continue to work towards our goal to reduce our carbon emissions in line with the ambition and commitment of Paris Climate Agreement and Climate Act. In 2022, we were delighted to deliver our new development, the School Yard to LEED Gold sustainability standard, the first residential building in Ireland to receive this certification. Tara View was also delivered with exceptionally high sustainability credentials with all units rated Building Energy Rating A. Moving to Slide 16. The Board has overall responsibility for ESG matters with the Board Sustainability Committee providing oversight, and we have in place an executive ESG steering committee led by myself as the CEO. This year, Tom Kavanagh, one of our Non-Executive Board Member was appointed as Director with direct responsibility for workforce engagement. He has met with all employees across the business in person to listen to their views. He engaged with management on the annual employee satisfaction survey, which we are delighted to say we significantly exceeded all comparator benchmarks, achieving a satisfaction score of 91%. We report under several ESG ratings to provide an overview of our ESG progress and activities and to allow comparison with our peers and other companies. We continue to review our engagement with rating agencies. And in 2022, we made our inaugural CDP submission. We have made significant progress across several key rating criteria, receiving sBPR Gold Award from EPRA in 2022. We have also progressed on our best score this year, achieving a 6 percentage point increase on the previous year's score. Given the company's significant transformation over the last 18 months, we undertook a complete review of our sustainability strategy, tying together a comprehensive review of the current market backdrop with the detailed analysis of the company's preexisting strategy, ensuring that we keep pace with best practice and the expectations of our stakeholders. This review highlights a number of key areas where we can improve and where we can look to maximize opportunities. We plan to publish our annual sustainability report for 2022 next month. Moving to Slide 17. We continue to invest in our people and the communities where we operate. I am very proud to say that the IRES team has fully embraced sustainability and ESG right across the business. We were delighted to receive the Diversity and Inclusion Silver Award from Investors in Diversity last year. We were also recognized in a review of stock 600 listed companies across Europe to reach the highest standard and only 1 of 2 Irish companies awarded Best Practice Leader in the European Women on Boards index, which we are particularly proud of. We placed strong focus on employee training and development, with employees receiving an average of 41 hours training in 2022. This year, we placed particular emphasis on sustainability training for all employees, rolling out sustainability workshops to almost every employee in the company. I am very pleased to see a strong positive culture and commitment in IRES with high employee satisfaction. We also actively engaged with residents to improve our service standards and take their feedback annually, including their views on sustainability. And we are particularly proud of our active engagement with the local communities in which we operate as well as volunteering donation sponsorships and in-person events from the employees and our risk supporting everyone. And moving to Slide 19. The macroeconomic fundamentals underpinning our business are strong and continue to be supportive of long-term sustainable income and growth. Ireland's population exceeded estimates reaching 5.12 million people in 2022. This is an 8% increase from the last census in 2016. The UN forecasts that Ireland's population will grow by 7.4% by 2040 to 5.5 million people due to a high birth rate and inward migration supported by strong FDI and jobs inflow. Ireland also has one of the youngest populations in the EU, a highly educated workforce, and it's the last remaining English-speaking country in EU, all helping to attract international companies and expansion across many sectors, including pharma, IT, financial services and professional services. It's welcome to see that almost 30,000 new homes were completed in 2022, a 45% increase year-on-year. However, this is still well below the government's housing for all targets and significantly below alternative estimates of demand. The Housing Commission has recently provided a report to government showing that in order to meet demand of 262,000 new homes need to be delivered per year. It is clear that there's been a significant undersupply in the average housing market for a number of years when one contrasts between population growth and types of formation and housing delivery. Housing supply shortage is continuing to increase and has been impacted further over the last few years by supply chain issues due to the Ukraine war and pandemic as well as inflation and cost challenges. These demographic trends and the difficulties in supply meeting the demand for new homes creates a structural demand for our rest of properties as evidenced in our extremely high occupancy rates and underpins our resilient revenue profile. Turning to Slide 20. The overall economic outlook for Ireland remains supportive of our strategy. Ireland recorded the highest GDP growth in the EU in 2021 and 2022, reaching 12.2% last year. Ireland's GDP is expected to outperform again in 2023 with forecast reaching 5%, while EU GDP is forecast to reach 0.8%. Modified domestic demand a better indicator of underlying demand, excluding globalization effects such as trade and IP and trade and aircraft by leasing companies grew by 6.4% in 2022. Ireland also pose a low unemployment rate at 4.3%, that's 2.3% below the eurozone unemployment rate. The Central Bank of Ireland also forecasts the exceptionally high demand for labor to drive wage growth, expecting wage growth to outstrip inflation towards the end of 2023. So all of these long-term structural drivers underpin the private rental market and contribute to the supply and demand constraints we currently see in the Irish market. These powerful economic, social and demographic factors are driving demand for rental accommodation. In contrast, as evidenced in our previous slide, the supply of new homes to the market seriously lags this growing level of demand, further supporting the long-term outlook for the sector in terms of cash flows and capital values, further and also supporting our long-term view of the Irish rental market and investment thesis. Turning now to Slide 22. While completing the important strategic initiative of transitioning to an internally managed REIT and navigating an increasingly challenging macroeconomic backdrop, IRES continued to deliver a strong performance across all parts of the business in 2022. We have a highly cash-generative and well-positioned business coming into '23 with high sustainability credentials. We are acutely aware that heightened macroeconomic and geopolitical uncertainty will likely continue in 2023. However, we are well positioned and have the right strategy and experienced team and a market-leading operating platform to meet the challenges now presented. The fundamentals in the Irish market and particularly in the private residential market in which IRES operates are strong and supportive. The market-wide supply-demand imbalance for housing, including rental housing were fewer than 1,100 units were available at the beginning of February from the latest reports, coupled with competitively priced and well positioned portfolio will support occupancy and collection rates to remain high. And whilst the path of inflation and interest rates remain uncertain, Ireland remains an outlier in terms of forecast GDP growth and employment. And due to the unique features of the Irish market, valuation resilience is expected to continue. We have a strong record of accomplishment and proven execution despite many unforeseen events over the last 3 years. And with the internalization of management and new technology, the company is well positioned to drive operational efficiencies and achieve scale from the integrated operating platform and to manage within the current regulatory cap, which is due for review in 2024. We have a robust financial position with committed credit facility headroom and LTV at 43.3%. We have long-dated debt facilities and no maturities before 2026, as well as hedging arrangements on 72% of our drawn debt, which delivers certainty on financing costs and along with [ free types ] and effective capital management. So we remain confident that with the strong business underpinned by positive market fundamentals and for the degree of patience that is needed to feed through the macro uncertainty and volatility in the short term, IRES is well positioned to continue to deliver growth and value. Thank you for your time this morning. And we're now happy to take any questions.

[Operator Instructions] Our first question comes from Colin Grant from Davy.

A couple of questions. Just firstly, to do with some of the announcements we've seen from the tech sector in Dublin and in Ireland regarding layoffs. And I'm just wondering if you foresee any potential impact in terms of your very strong occupancy levels and bad debt associated with that, if any? And I suppose the secondary then really would just be to do with the level of turnover in your properties. I would imagine given how strong the occupancy is quite -- people are staying in properties for longer. Just any kind of anecdotes or color you can give us on what's happening there in terms of your turnover on your properties would be great.

Thank you very much for joining us. So maybe taking your questions. Firstly, in relation to the resilience and what we foresee in the market, there has been a nice, as we all know, in relation to the tech sector over the last number of months. My understanding is in terms of the actual numbers related to Ireland, they're not significant to say the headline numbers globally. And what we are seeing is quite a lot of job creation in Ireland across a lot of sectors. We have quite a breadth of sectors now. We're seeing it in pharma, recent reports by the professional services firms in terms of the need for accommodation and their group. So we're seeing actually quite a demand. That's reflected really in that 94% occupancy that Brian outlined, which we told we were all with a full occupancy and sort of 98%, 99%, but we're still seeing that demand. And our turnover levels are low. We have very good retention. We provide a full service model to our tenants. So our rents also include full service with maintenance support and leasing up support. And we're also, I think, to achieve that level of occupancy is testament really to like our property management team who are very efficient and have great speed between turnovers. I don't think we're seeing any other stuff that I mentioned earlier of 1,100 units being available across Ireland. And in February for rental accommodation just indicates a significant lacks supply and shortage in the market against the demand.

Our next question comes from Colm Lauder from Goodbody.

And thanks for the details in the presentation this morning. A few questions just on -- particularly on balance sheet management to sort of start off with. And obviously, it was interesting, firstly, to note that, obviously, the Rockbrook disposal being confirmed, but also just to have a bit of understanding as well around acquisitions and what anticipated capital expenditure you see for 2023. So maybe it's one for Brian, but obviously, looking at your loan to value, 43.3% at year-end. Firstly, does that include the -- on a pro forma basis, the proceeds from the Rockbrook disposal and perhaps you can guide on those proceeds? And also, does that include expected expenditure for the remaining chunk of Ashbrook the EUR 44 million there. So perhaps if you can just guide us towards a pro forma loan to value.

So Colm, first off, in relation to the figure at the year-end, that does not include any amount for any disposals in 2023. We have made a decision to move on from Rockbrook, but it hasn't been in disposals yet, right, okay? Moving forward, okay, the main item of commitment to our capital expenditure that we would have in 2023 in Q4 of 2023 would be the final phase of Ashbrook, right? And that commitment is [ EUR 24 million ]. We do have our ongoing annual CapEx, right, okay, and taking both of those together, our pro forma LTV, everything else being equal would be 44.5%.

44.5%. Is that correct? Okay. And maybe just to dwell a little bit on the Rockbrook disposal. And just to understand a bit more around that. So in terms of the current stage, obviously, it's not completed, but you are agreed to dispose of. Is that correct? And is it in line with book values? And then perhaps maybe to understand as well in terms of costs that perhaps were associated with that over the last 2 years in terms of planning costs and what was invested in bringing that site forward.

Yes. And look, just dealing with that to reiterate, okay, the Board has made a decision to move on from Rockbrook. And that's the position now. In relation to costs, that would have been incurred on the planning process. I mean, obviously, all of our assets, right, all of our investment properties, including development sites, prospective property to open sites, okay, they are valued on an annual basis twice a year in fact, right? Okay. And that asset would be in our books at this point in time at an appropriate level based on what the valuers and what the Board would feel is a realizable level.

Okay. Okay. And then just very finally, just looking at some of the developments that compete obviously, it's great to get Baker's Yard's dawn or the School House -- now it's called School Yard is called now and obviously, Tara View completed during the period. And just perhaps I was just looking at those yields on cost versus your existing portfolio, your in situ portfolio yields. Are those yields on costs achieved? Are they in line with underwrite? And what's your sort of thoughts on the performance of development versus the in situ portfolio?

Yes. I mean, Colm, look, obviously, yields have gone out. They've gone out during the current year, primarily due to the decrease in the overall valuation of the portfolio at year-end, it decreased by [ EUR 45 million ]. The yield -- the gross yield up the overall portfolio has gone from 5.6% to 5.9%. I mean the 2 developments that we brought on stream during 2022 commenced quite some time ago. So the contracts in relation to Tara View had entered into in 2018, it was delivered in Q2 2020 -- sorry, H2 2022, 4 years later, right, okay? So they were -- those contracts were entered into at a particular time. They absolutely [ made EUR 0.08 ] at that time. Yields have moved at December 2022, right, okay? It was a different yield environment, different metrics at that point in time. I mean what I would say in relation to both of them from an operating point of view and School Yard fully leased up within 5 weeks of practical completion. Tara View is a different sort of a product, right, okay? It's a higher-end product rise. It is leasing up in line with expectations. At this point in time, it's 85% leased. We did do it actually in 2 phases, Colm, because, again, I mean, just reflecting which we all read about, right, okay, supply chain issue. So we figured out half of the units initially with the second half and being fit in and out closer into the last quarter of the year. But as I say, look, it's leasing up well. 85% leased up at this point in time. And we're very pleased.

The operational performance looks good. And see a similar situation then perhaps with the Ashbrook scheme. Obviously, I noticed in the presentation, you've guided to a yield on cost there of 5.4% for Ashbrook; and obviously, versus a 5.9% in situ portfolio yield, again, in line with underwrite expectations? Or what are your thoughts there?

No. Ashbrook would have been actually -- hello Colm, Margaret here. Ashbrook actually was a standing stock. So there was quite a few residents there when we bought it over, but equally performing as well in line with our expectations. And we also then have the, as you mentioned, the 44 new units under development, which were also due for delivery later this year. And this would be leased up at market rents at that time.

[Operator Instructions] Our final question comes from Eleanor Frew from Barclays.

Just a quick follow-up on the Rockbrook disposal. Can you talk about where you see growth coming from moving forward without the site and how you use the proceeds?

Nice to speak with you. The -- what we actually, as I just mentioned, we have 44 units due for delivery this year from Ashbrook, which we had previously committed. And we actually see that we're well positioned in the market. We have a very unique operating platform. And I think as I said at the end of the presentation, there's still quite a lot of uncertainty out there. So I think patience is an important trace in the current climate. We have very good, disciplined asset management. We manage the portfolio carefully. So we actually are very confident in terms of in the -- as I call it, the short-term strategy and the medium-term strategy and the short term, managing the balance sheet of the business very carefully and well and then looking to take advantage of growth opportunities as we see some of the macro factors settling done.

We currently have no further questions. I'll now hand you back over to Margaret Sweeney, CEO for closing remarks.

Thank you all for joining us this morning. I'm delighted that we have a strong set of results to present to you and appreciate your time and also your support for the company. Thank you very much, and good to talk to everyone.