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

Hello everyone, and welcome to the I-RES REIT PLC 2023 Interim Results Call, and thank you for standing by. My name is Daisy, and I'll be coordinating your call today. [Operator Instructions]. And I would now like to hand over to your host, Michelle Ang, Director of Investor Relations and Sustainability, to begin. So Michelle, please go ahead.

Thank you. Thank you for joining I-RES 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 CFO, Brian Fagan, to present to you our H1 2023 results. The presentation we are making today is available to download on the Investor Relations section of our website, iresreit.ie. And our results press release which we published this morning is also available at the same [ thing ]. Before we begin, I'd like to remind everyone that certain statements were made 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 discussion of these risks and uncertainties. I will now hand over to Margaret Sweeney, who will take you through on H1 2023 highlights.

Thank you, Michelle, and good morning to everyone, and thank you for joining us on the conference call this morning. So maybe turning to Slide 4 which ends up delivering on our strategy and on the strong performance. So I'm very pleased to report a strong operational and financial performance by I-RES for the first 6 months of 2023. Our well invested modern portfolio and our sector leading operating platform, coupled with the underlying fundamentals of the Irish private residential market continue to deliver strong cash flows and earnings for the company. I-RES continues to navigate this challenging macroeconomic and market backdrop. We're focused on operational excellence and along with assets and capital management that's helped us to deliver a strong operational and financial performance for the 6 months. The strong performance of our business during COVID-19 pandemic and also now during this challenging macroeconomic backdrop further demonstrates the resilience of our business and our high quality asset portfolio. We are committed to safeguarding financial stability, optimizing operational efficiency and delivering sustainable long term value to our shareholders. And through focused execution on our strategy, we drove value across all our key strategic pillars during the 6 months. Our first pillar is operational excellence. And you will see from our results announced this morning that we continue to deliver revenue growth with the 5.2% increase in the period reaching EUR 44.3 million. This is our strongest revenue performance for the first half of the year in the company's history. And doing so we have also seen increases in our adjusted EBITDA of 6.9% and also April earnings went up by 11.2% on the same period last year. And despite persistent high inflation throughout the 6 months, we are very pleased to report that we maintained our NRI margin of 77.5% which is a key performance indicator for the company. This reflects management's clear focus on costs, process efficiency and seeking opportunities to generate ancillary revenues. The delivery of these key numbers was supported by our consistently high occupancy rates, which increased to 99.5%. Second pillar of our strategy is asset management. And responding to the continuing increased risk environment as well as our focus on shareholder value, the company announced an asset disposal program of approximately EUR 100 million in April of this year. This program aims to further strengthen our balance sheet and enhanced shareholder value within the context of an uncertain backdrop. I am pleased to say that we have successfully delivered on this program. We today announced that we have entered into a contract for a further EUR 72.06 million of assets disposals, bringing the total disposals here today to approximately EUR 96.5 million. Our disciplined approach to capital allocation provides an important lever to protect long term business resilience for navigating periods of market volatility. Despite our resilient financial and operational performance, we haven't been immune to the wider recalibration of real estate sector values and our portfolio value fell the first half of the year. This non-cash revaluation adjustment of EUR 56.5 million on our assets reflects an increase in yields and weakening in values across the real estate sector generally. This is attributable to the higher interest rates and inflationary environment that we're now living through. Despite this re-valuation, our high quality portfolio has a proven resiliency. It's circa 13% reversionary and its cash generative capabilities are evident in our financial performance in the first half of the year. We have an exceptional portfolio of nearly 4000 high quality modern residential apartments and houses which are situated in attractive locations across Dublin and close to good public transport access, schools and high quality employment. Additionally, our young and modern portfolio has strong sustainability credentials with 86% in portfolio holding Building Energy Ratings A, B and C. We have market leading occupancy rates, which consistently validates the attractiveness and resilience of the portfolio. And our positioning at the mid-market segment also provides less [ downside ] risk in this economic class. Our third pillar is the focus, which is key focus for the Board and management, is capital management. And in navigating this challenging market backdrop and higher interest rate environment, we have continued to prudently manage our balance sheets by maintaining strong liquidity position. The group's net LTV in 30 June was 44.6%, and following the closing of the first phase of the sale of assets announced this morning, which will close over the coming weeks before the end of August, this will bring our LTV by the end of August down to 43.2%. 74% of our drawn debt is at fixed rates and the proceeds on disposal of assets will reduce the variable element. We have no near term debt repayments, but the first repayment due in 2026, and then subsequent repayments are [ added ] up to 2032. The company also continues to deliver a strong recurring income, revenue growth and cash generation. All of this feeds through to our dividend, a very important contributor to shareholder returns. I am pleased to report that the company proposes to declare an interim dividend of [ EUR 0.245 ] per share , an increase of 6.5% on the same period in 2022. And finally sustainability, which is a key pillar, is at the core of our whole business, and getting important focus by Board and management. It is our ambition to reduce our carbon emissions aligned with our commitment to the Paris Climate Agreement, or [ the ] Climate Action Plan of the UN Sustainable Development Goals. We have been reducing our carbon footprint with notable reductions in Scope 1 and 2 emissions in 2022. And we have also set ambitious goals for further reductions in 2023, reducing our Scope 1 emissions by 30% and Scope 2 emissions by 10%, and we're making good progress towards achieving this target. We aim to support our people by creating a diverse and welcoming community that enables employees and residents to thrive. Our dedication is to exceptional service and creating a positive living experience for our customers. Through professional property management and responsive service, we have achieved strong resident retention rates, further solidifying our position as preferred residential landlord. Now turning to Slide 5, improving management efficiencies and value creation. I am very pleased to report that we maintained our NRI margin stable at 77.5% in the period despite the ongoing and persistent high inflationary environment. The Consumer Price Index in Ireland in the 12 months to June 2023 was 6.1%. And in some cases across -- cost increases were much higher than this. Likewise, like a lot of businesses, we saw inflationary cost pressures across all costs and in the business from energy costs, repairs and maintenance, wages, service charges. And in this context, it was a significant achievement by the team in I-RES to maintain the NRI margin at the 77.5% level. And this is a result of our active cost management, increased efficiencies through business transformation and increasing ancillary revenues. We also focused on cost management right across the business. And to give you some examples, we focused on managing our energy usage and putting in place new fixed price contracts with energy providers. We also implemented parts of infrared sensors of multiple developments to ensure lighting and development has only switched on when needed. We also collaborated with utility providers in order to reduce the maximum import capacity at one of our large scale developments, and this has resulted in significant reduction of wasted energy. And through our new structure and development of our in-house teams, we have been able to increase the number of maintenance support jobs that are carried out by the in-house team without external support. Process efficiency has also been an important part of our cost management strategy. Our newly integrated cloud based IT systems haves allowed us to fully digitize many processes that have been carried out manually in the past and this has resulted in time saving and overall profit and [ prevalence ]. As part of the internalization and development of a more efficient organizational structure, we have developed a new structure for operations property maintenance, [ and ] leasing teams, and this has allowed us to reduce our regional losses from [ 4 ] to [ 3 ]. We have improved our reporting capabilities, assessing management's focus on performance and KPIs. Additionally, our operating platform and new customer app has allowed us to enhance our resident service and our communications processes. We've also been working to increase ancillary revenues and create value through additional offerings. We offer car parking, storage lockers and also ancillary commercial space across many of our properties. We see opportunities to increase our offerings as well as opening the roadmap for future resident experiences. And we will continue to explore opportunities to further maximize the potential of the platform. And turning to Slide 6, market leading, customer facing and vertically integrated digital platform. So we continue to drive value through technology leadership and operational excellence. And during the period we launched I-RES Living app. From our research with residence, we know that there's a real appetite for digital services, and now with the I-RES Living app, this allows residents access to all the I-RES services on the go via Apple, Android and web platforms. The app has been rolled out, and within 1 month of launch, we had a 51% uptake within our initial launch properties. And we expect to have it fully rolled out across the whole portfolio by this September. This is key part of our strategy to leverage technology to improve resident communication and service delivery while also improving our efficiency. For example, the platform improves the speed and efficiency of the resident onboarding process with a secure user friendly [ portal ] that's integrated into our core systems. This also allows us to start developing a 360 degree view of the customer from their initial interaction with us, and also significantly reduces processing time. It will also improve operational efficiency and also our carbon footprint. We believe that this unique platform represents a distinct opportunity to generate further value through ancillary revenues and property management opportunities, while also improving efficiency, security and service quality. I will now hand you over to Brian Fagan, our CFO, who will bring you through our financial results.

Thank you, Margaret. Moving to Slide 8 which provides a summary of our financial performance for the half year. We've achieved an excellent operating performance for the first 6 months of 2023, despite facing significant macroeconomic volatility. We have once again delivered growth across our most important financial and operational KPIs. Revenue increased year-on-year by 5.2% to EUR 44.3 million. Our net rental income grew by 5.1% to EUR 34.3 million. Occupancy in the portfolio was 99.5% at 30th of June 2023, compared with 99.3% at 30th June, 2022. We continue to focus on our rent collections, which were excellent and remained in excess of 99%. This strong occupancy and revenue performance further underlines the resilience characteristics of the business. Despite inflationary cost pressures during the period, we managed to maintain our NRI margin at the 77.5% level seen throughout 2022. We achieved this by continued focus on cost efficiencies, as Margaret outlined earlier. Adjusted EBITDA saw strong growth of 6.9% to EUR 28.7 million, while the EPRA earnings grew 11.2% to EUR 15 million. In accordance with International Financial Reporting Standards, the company's profit status after taking account of movements in the valuation of investment properties, a 30th of June 2023. This valuation process led to a reduction of EUR 56.5 million in the value of these assets, resulting from yield expansion, offset by increased net rental income, reflecting the continued reversionary potential of the portfolio. This non-cash charge results in the company reporting a EUR 43.9 million loss for the period. EPRA earnings per share amounted to [ EUR 0.28 ] against [ EUR 0.25 ] per share in the period to June 2022. Despite the headwinds facing the European real estate sector, our strong operating and financial performance, coupled with the cash generative capabilities of the business allows us to continue our strong track record of delivering dividends to shareholders. Following today's results, the Board is proposing that an interim dividend per share of [ EUR 0.245 ] will be paid, an increase of 6.5% on the same period last year. Turning to Slide 9. During the first half of the year, the total value of our property decreased by 4.8% to EUR 1.43 billion due to the sale of assets of just over EUR 20 million combined with a revaluation loss of EUR 56.5 million, a reflection of the upward pressure on yields, which is as a result of externalities within the broader macroeconomic environment, and which has been experienced by the entire real estate industry. Our gross yield has increased by circa 30 bps to 6.2%. After accounting for the above movements, our IFRS NAV on the 30th of June 2023 was [ EUR 0.1492 ] per share. Despite this revaluation, our high quality portfolio has improved in resiliency and its cash generative capabilities are evident in our financial performance. Moving to Slide 10. We continue to deliver on our strategy of assets recycling and balance sheet management, which generates value for the business and our shareholders, aligning with the current and challenging market environment and our focus on shareholder value. The company set out at its AGM in May 2023 an objective to dispose of EUR 100 million of assets. This was with the view to protecting our balance sheet and thereby the business. We are pleased to report that we have already delivered circa EUR 22 million of asset disposals including the Rockbrook development site, 3 townhouses at Tara View, with the remaining 2 [indiscernible] and also 6 apartments at Bakers Yard. We announced today a further EUR 72 million in disposals with the sale of 194 units in West Dublin. This includes 91 units in Hansfield Wood for total consideration of EUR 38 million, which is expected to close before the end of August 2023. An additional 103 units including Pipers Court has a number of conditions yet to be satisfied, and is therefore expected to close later this calendar year for total consideration of EUR 33.9 million. These disposals form part of our disciplined capital management strategy, and we will always examine opportunities to execute on potential opportunities that we believe will deliver value to our shareholders. Excess funds generated from asset management activities will be used in the following allocation priority. One, repayment of debt and management of LTV within our risk appetite range. LTV will reduce to 43.2% post execution of the disposal of the 91 units at Hansfield; two, a creative growth within our risk framework; three, return of capital to shareholders. Moving to Slide 11. In navigating the continuing volatile and increased interest rate environment, we are very focused on maintaining a prudent balance sheet and strong liquidity position. We have no debt maturing before April 2026 and debt maturities are laddered from 2026 out to 2032. Our net LTV at June was 44.6%, and following completion of the sale of the 91 units at Hansfield Wood as previously set out would be 43.2%. At 31 December 2022, this was 43.3%. 74% of our drawn debt is at fixed rates with the proceeds on disposal of these assets earmarked to reduce the variable element, which will increase our fixed portion to 79%. Moving to Slide 12. We have an unrivaled residential portfolio of high-quality assets with strong sustainability credentials. As of June 2023, the asset portfolio comprised 3,930 apartments and houses predominantly in Dublin and well diversified across locations that continue to experience significant demand. Our buildings are young and modern with an average age of 13.9 years, meaning they require low capital expenditures and they are of a high sustainability standard. 86% of our portfolio, both A, B or C Building Energy ratings. We offer attractively priced accommodation in well-connected locations. Our portfolio average monthly rent is EUR 1,772 with circa 80% of units costing below EUR 2,000 a month and 95% of them below EUR 2,500. According to our independent valuers, the average monthly rent is approximately 13% below current market rents, indicating the reversionary potential of the portfolio, whilst also providing some downside protection. As we have already touched on, we delivered an exceptionally high occupancy during the period, reflecting the strong demand for our assets as well as operational effectiveness in our leasing and turnovers. I will now hand you back to Margaret, who will touch on our sustainability and ESG progress.

Thanks, Brian. So turning to Slide 14, building a sustainable and responsible business. We are dedicated to minimizing our environmental footprint and promoting sustainable living. This commitment is built into our long-term investment approach, our property operations, maintenance and interactions with all our stakeholders, including our customers, employees, partners and the wider community. We have 3 core pillars underpinning our sustainability strategy: operating responsibly; protecting the environment; and building communities. And we are delivering across a whole range of initiatives in support of our ESG strategy, which is also aligned with the UN's Sustainable Development Goals. Our efforts include carbon reduction initiatives, energy-efficient upgrades, waste reduction measures, nature focused projects and community engagement programs. These endeavors align with our commitment to reducing our carbon impact and making a positive contribution to communities where we operate. Our reporting is aligned to EPRA sustainability best practice recommendations, and we have achieved the Gold award for 3 years straight. Our residents and our employees are central to our strategy of delivering value for shareholders, and I'm delighted to say we achieved 92% satisfaction score in our first employee survey post internalization conducted last December. As previously mentioned, we have been working on decarbonizing our portfolio. We reduced our Scope 2 greenhouse gas emissions by 26% in 2022, and we have a range of initiatives in place to continue progress here. We aim to reduce Scope 1 greenhouse gas emissions by 30% and Scope 2 operational greenhouse gas emissions by a further 10% in 2023. We also procure 100% renewable energy for our property common areas and all our offices. We are also progressing on biodiversity initiatives and a range of other sustainability objectives. Engaging with our local communities remains important to the management team and also to our employees, and we have many examples of the work we do, including partnerships with local hospitals, community and sporting organizations. Now turning to Slide 15, sustainability and action. This Slide provides a case study of one of our significant sustainability initiatives in action. In 2022, we were proud to deliver Ireland's first LEED Gold accredited residential building at School Yard. This property saw a huge level of demand with hundreds of inquiries before going live and with many inquirers noting the impressive sustainability credentials and amenities. The leasing team were able to lease the building 100% in other 5 weeks, which was a great achievement and a testament to the credentials of the development itself. School Yard is within a walking distance to the City Center, major transport links for [indiscernible] employment. Cycling facilities are feature within the development and residents enjoy a private landscape courtyard with the children's play area right in the heart of Dublin City Center. As with the old developments, we run a waste and recycling program, and we have implemented to the [indiscernible]. Residents also enjoy the luxury of 24 hour on-demand customer support and can log service requests through the mobile-enabled app. In the ancillary commercial space in that property, we have leased 2 units to a local bakery, which has been trading in Dublin for 15 years, and this brings local employment and a new amenity destination to the area and to the residents. Turning to Slide 16. We continue to make good progress on our ESG strategy. We maintain the highest levels of transparency and disclosure, and this is one of our key sustainability objectives. We have made significant progress across several key rating criteria in recent years, receiving the SBPR Gold Award from April in 2022. We've also made our first submission for this year, hoping to continue to build on the progress of past years. And we've also made our second submission to CDP, and we will be receiving a score on the submission later this year. We have an excellent team in I-RES with a culture of commitment, respect, innovation and value-add. And I'm very proud to say that the I-RES team has fully embraced sustainability in ESG right across the business. We invest in our people and I as CEO have a particular focus on organizational effectiveness, training and development as well as health and well-being, a dose to personal development within a diverse and inclusive workload. We're also actively engaged with the residents to improve our service standards and take their feedback annually with feedback from over 1,200 respondents in our last customer survey, and this also includes their views on sustainability. We are particularly proud of our active engagement with local communities in which we operate. On the I-RES Green Ambassadors program, which is run by an employee group from across the company, are very proactive in putting in place initiatives to reduce usage, increased recycling as well as improving the natural environment to our properties and wider biodiversity programs. We are part of the All-Ireland Pollinator plan and rolling out a range of initiatives to support the natural environment. The Green Ambassadors have a comprehensive program in place including communication and collaboration with residents in relation to energy, waste and water usage and reduction initiatives. All of these efforts reflect our ongoing commitment to enhance our ESG practices for the benefit of our people, our customers and our communities. We are very conscious of our impact on the planet as we conduct our business, and we strive to be a sustainability leader in our sector. So turning to Slide 17 -- or rather moving on to Slide 18 to the economic outlook. And I would like to touch on the [ Irish ] economic outlook. Ireland recorded the highest GDP growth in the EU in 2021 and 2022, reaching 12% last year. Ireland's GDP is also expected to outperform again in 2023 with forecast reaching 5.3% against EU GDP forecast to reach only 1%. Ireland continues to boast a low unemployment rate, reaching historically low levels of 3.8% in June 2023, that's 2.1% below the EU employment rate. And now turning to Slide 19. This outlines strong macroeconomic fundamentals that underpin our business and which continue to be supportive of long-term sustainable income and growth. Ireland population exceeded estimates reaching 5.12 million people in 2022. This was an 8% increase from the last census in 2016, and our population is forecast to continue strong growth due to a high birth rate and inward migration supported by strong FDI adjusting inflow. Ireland has one of the youngest populations in the EU, a highly educated workforce and is the last remaining English-speaking country in the EU. This is all helping to attract international companies and expansion across many sectors, including pharma, IT, financial services and professional services. This growing population is feeling a need for more housing and rental accommodation. And housing delivery in Ireland has not kept pace with population growth since the global financial crash, resulting in a significant deficit in housing stock. We're currently completing under 30,000 new homes per year, below government targets of 33,000 and significantly below what some independent research and economists say is needed, which ranges from 50,000 up to 62,000 homes per year. And illustrating this dislocation between supply and demand has been the significant growth in average monthly rents across the country, and in Dublin with the average monthly rent in Dublin standing at EUR 2,063 at the end of 2022. These long-term structural drivers underpin the private rental market and contributed to the supply and development [ constraints ] we currently see in the Irish market. These powerful economic, social and demographic forces are driving demand for rental accommodation. In contrast, as evidenced in our previous Slide, the supply of new homes to the market seriously lags its growing level of demand. And this supports the long-term outlook for the sector in terms of cash flows and capital values and those that support our long-term view of the Irish rental market and investment thesis. Now turning to Slide 21. We set out our strategy in responding to this new macroeconomic context for the business, and we are executing on this strategy, delivering for our shareholders through a strong operating and financial performance. As we have outlined throughout this presentation, we are focused on continuing to deliver operational excellence, being proactive for our asset and capital management and driving our sustainability agenda. We have an intensity and focus on operational excellence and cost management by leveraging our investment in a market-leading operating platform, which is underpinned by digital and mobile technology as well as business transformation. We held our NRI margin at 77.5%, a key distinctive feature of I-RES, despite the current high inflationary environment. This focus will support continued high occupancy rates, deliver best-in-class customer service, enhance retention, provide us through revenue opportunities and optimize value from the asset base. We have an unrivaled asset portfolio with a presence in key locations across Dublin and this is aligned with long-term value-add prospects. Aligning with the current challenging market environment and our focus on shareholder value, the company set out at CGM in May just 2 months ago, an objective to dispose of EUR 100 million of assets. As outlined earlier in the presentation and our announcement this morning, I'm pleased to say we have delivered approximately EUR 96.5 million against this target using the proceeds to pay down the most expensive variable portion of the RCF and reducing the LTV by the end of this month to 43.2%. While uncertain conditions may persist, our performance illustrates the resilience of the business, the sustainability of the cash flows and confidence in the dividend. We appreciate the strong support of our shareholders at a time when equity markets have been significantly impacted by the current macroeconomic and geopolitical environment within the real estate sector, with the real estate sector remaining under pressure, and we want to assure you, our shareholders, that the Board remains focused and proactive in ensuring we explore all our avenues for maximizing value. Companies with robust operational foundations can navigate uncertainty and by maintaining our focus on performance, prudent financial management and delivering an exceptional customer service, I am confident in our ability to generate continuing attractive long-term returns for shareholders. I would like to thank you all for your attention and for joining us this morning, and we would now be happy to take your questions.

[Operator Instructions] Our first question today comes from Colin Sheridan, from Davy.

Just a few for me, if I can, and first couple just on cost inflation more generally. I mean, you've given a bit of color in relation to some of the more dramatic cost increases that you've seen in relation to, say, energy relative to 1 year ago. Just wondered to what extent you've seen any slowdown in that cost inflation recently? And what your outlook is as we go into H2 on that basis? Maybe things are getting a little easier on that front? And then I guess related, the second question is just on the efficiencies that you've spoken through. I mean, I think we're all pretty happy to see the margin being maintained in H1 despite those cost increases due to those efficiencies. To what extent are there further efficiencies in the system that you think you can extract as we go forward from here, maybe further into the digitization or is there any other levers to be pulled there? And then finally, just the last question. You clearly had an extensive disposal program, which is pretty much complete. So I just wonder, more generally, are there any other asset management decisions that we're likely to see in the short term or is that activity going to be a little quieter into the end of 2023?

Maybe I'll just [indiscernible] and Brian wants to add on to it as well. In relation to the cost inflation side, as everyone would have experienced late last winter and into the early part of this year, there would have been very significant energy inflation. And as I mentioned earlier, we actually are really focused in -- on cost right across the business. Some of the initiatives there, I think, particularly in relation to energy, which is obviously in our business, an important part of running targeted properties. We have entered into a new fixed-price contracts with energy providers. We've put in a lot of new technologies like sensors, et cetera, in our properties, which we continue to do, focus on lighting efficiency. And all of that we see into maintaining and managing costs into the second half of the year. And in terms of the operating platform, we have a new operating platform underpinned by market-leading digital technology. And I think that's really helping to drive efficiency, moving away from manual processing. I think the launch of our new -- and roll out now, which [indiscernible] will be rolled out across all our properties by September. That actually is assisting really in terms of actually the onboarding of customers, leasing up all being done through the platform and integrated into our core back end as well. So we see that in terms of then the opportunity for them to also help us to have a much greater view and data around our resident-based that allows us to focus on -- in terms of ancillary revenue generation. So in terms of some of the levers, that's where we see opportunity. It's using that platform, greater data around the customers to actually then look at other opportunities for ancillary revenues for the business. In terms of our disposal program, again, we're pleased to say that we've completed on the objective assess and the objective by the Board that was announced earlier this year with the announcement of the sale this morning. We will continue to -- as we said, to focus on capital management and good asset management as well. In that context, we'll take appropriate decisions to make sure that we built a good sustainable business and protect the balance sheet.

Yes. And in the first instance, to go -- [ and ] that higher [ cost ] debt that we have, right, okay. Obviously, 74% of our drawn debt is fixed, right, okay, but we will be using this capital management program to go and reduce that higher price high [ stash ] column.

Our next question is from Colm Lauder from Goodbody.

I have a couple which I can run through one by one. But maybe just sort of starting off on the second announcement this morning on the completion of your EUR 100 million asset disposal program, obviously, on the welcome sale of units at Hansfield and Pipers Court, in [ Tara ] at the Housing Association. I was just curious, firstly, on the second tranche, the Pipers Court sale, and the statement obviously notes that there's a number of conditions yet to be satisfied before this closes. Could you [ perhaps ] detail to us what these conditions are? That's my first question.

We're delighted to announce the [ successful ] delivery of the asset disposal program and also the announcement of the sale of 194 residential units in West Dublin for EUR 472 million. So that's actually the execution just on the contract for the civil properties, is actually in 2 parts. The first part is 91 mainly townhouses, and that plant relates to funds [ rather ], and just closing up transfer costs of the tenants of the units, the apartments and some of the homes themselves, and that takes a couple of weeks to announce, due to close by the end of August. And then the second part is actually to do with the apartment building. So that's Pipers Court. And there's also a small apartment development of 8 units as well, which is more connected to Hansfield, and that's also -- and due to then we transferred over by early December. The conditions in relation to it, they're mainly just technical conditions that just have to be closed [ that way ]. Just weren't able to get it all between the 2 parties, have everything done and when go -- it is quite a sizable sale. 194 units is quite a sizable portfolio, and it's across a number of different properties that surround the buildings. So it's very much phased in that way. It will be -- the vision is once we have the first -- the house is done, the focus is on the 2 apartment buildings and getting those moved, and obviously as well with [ Tara ], they have a process themselves that needs time to do the various transfers.

So is it to be assumed that sort of the due diligence issue on their side and for the apartment separate to the houses? Is that will be the primary drivers we're talking about?

No, the due diligence was all completed, fully completed. So there's others in that context. That's fully completed. So it's very much into just transition and just phasing it because of the size of the -- across different properties as well. And we have also -- they're also occupied with residents in them. So the process of communication with the residents needed as well. And both parties are very keen to ensure that, that communication transfers them properly as well, respecting that we actually do [ have ] a lot of people. That's a key part of it as well, and hence the phases.

And on a sort of related point, obviously, those 2 schemes being sold to an arm of government in terms of a government-funded housing association, which -- you're looking at transactions in the marketplace, is one of the few pockets of liquidity in the PRS space. Have you identified other assets in the portfolio where you have majority housing system payment tenants like with Hansfield Wood and Pipers Court that could be disposed of as well?

So we always review across the portfolio for asset management, looking for accretive opportunities for value. And you would have seen, Colm, last year back in 2022 as well, starting '21, we entered into a long lease, actually, on Hampton Wood and then subsequently sold that assets [ down ] in 2022. And that would have had similar characteristics as well to the Hansfield properties. So we're continuously looking across the app space and making sure that we do active asset management and also making sure that we deliver value as well from the assets portfolio.

So is it likely that there would be further properties with the majority of [ have ] tenancies that would suit that disposals program, or further disposals?

I think we actually -- we have our range of assets. They're well let up -- well leased up. And we will continue, as I've said, to actively manage it. I think I'm sure we get value.

And just one final question then. So just looking at running cost of the business and the sort of general administrative costs, obviously, big improvements post internalization, which is very welcome. But also just thinking about tracking it relative to portfolio size, so what sold in 2022 and what has been sold and to be sold this year, the portfolio is 8% or 10% smaller than it would have been a year ago in terms of unit count. Are we likely to see a similar reduction in general administrative costs given the portfolio is now smaller?

Yes. And Colm, as you're aware, look, we still have a very large portfolio. We have a lot of inflation out there, right. We can continue to go and manage all of our costs, right, okay, right throughout and across all headings, right, okay. And we saw ourselves maintaining the margins at 77.5% in half 1 2023. And also then in relation to the G&A line ratio, okay, your more general cost, Colm. We've seen a reduction in those between this year and last year. And look, we obviously can continue always to go full focus on that cost and cost efficiencies.

But again, would there be a function that the portfolio is smaller now at this stage? And would that have an impact?

Well, look, as I say, it still is a very large portfolio, almost 4 units, right, okay, and there are those inflationary headwinds, right, okay. And as I say, we have delivered a reduction in those costs between this year and last year, and we'll continue to go focus on those.

[Operator Instructions] We have no further question. I'd like to hand back to Margaret for any closing remark.

Thank you all for joining us this morning. We appreciate your time and answer your questions. Hope you all will have a very nice day. Thank you.

Thank you, everyone, for joining today's call. You may now disconnect your lines, and have a lovely day.