22 Mar 2019

IRES REIT: Seeking fast track permission for Rockbrook

Today’s Irish Times reports that IRES is to submit a planning application for its Rockbrook scheme in Sandyford, South Dublin, “within weeks” following the successful completion of its pre-planning consultations with the local authority.




Residential schemes of 100 or more units can avail the ‘fast track’ planning regime from the State planning authority, An Bord Pleanála (ABP). Under this regime, ABP must provide a ruling within 16 weeks, which suggests that IRES should know by mid-August at the latest about whether or not its application has been successful.



Once IRES applies for permission, interested parties can make submissions to ABP, but the latter’s ultimate decision cannot be appealed, save for a judicial review of the decision at the High Court.


IRES said in its preliminary results release last month that it expected to receive a final decision with regards to a planning application for 428 residential units at Rockbrook “in the second half of 2019”, so today’s report helps to refine that timeframe somewhat. Rockbrook accounts for roughly half of the 800+ units that it expects to add to its portfolio (which stood at 2,679 at end-2018) over the coming years between its own developments and forward purchase deals. Given that Irish REITs must distribute a minimum of 85% of their profits from rental activities to shareholders, it follows that Rockbrook is a key component in our expectation of a material step-up in dividends from 2018’s 5.6c a share (a yield of 3.5%, based on last night’s close) over the coming years. 


EU agree to extend Article 50


Following eight hours of fraught late-night talks, leaders of the remaining 27 EU nations last night agreed to extend the UK’s Article 50 period beyond its initial expiration of 29 March. However, the length of the extension is dependent upon whether or not the Prime Minister can get the deal through the House of Commons next week. Providing that she can successfully win parliamentary backing through a third “meaningful vote” (MV3), then a short technical extension to 22 May will apply for the purposes of passing the necessary legislation. If she fails to do so, then the delay will only run until 12 April, at which point the Prime Minister would be required to “indicate a way forward”. The significance of these dates is that they relate to this year’s European Parliament elections; these are set to be held between 22-23 May, with the UK’s participation required to be decided by 12 April under domestic law. The process of UK ratification of the 29th March – 12th April extension is still unclear at this point in time. 


More to do


Though the EU’s offer was shorter and more complex than the straightforward extension to 30 June sought by the Prime Minister, it is nonetheless helpful for Downing Street in a number of ways; while it pushes back the “cliff-edge” by a fortnight, at the same time it keeps both a long extension and a disorderly divorce on the table. This is important as this will allow the Prime Minister to use the threat of each to help coax the various wings of her party into supporting the deal. Despite the offer made at yesterday’s Summit, the Prime Minister still has a mountain to climb if she is to overturn the 149 majority of MPs that rejected her deal in MV2. Brexit cliff-edge nerves have nevertheless been assuaged by the EU’s offer and sterling has climbed off yesterday’s lows with the benchmark EUR/GBP rate trading back below yesterday’s opening levels. 


Euro slumps as European PMI’s disappoint


As the European trading session gets under way, the benchmark EUR/USD rate has dropped almost 100 points in just over half an hour. First came a horrible French print, followed quickly by an even more awful German print. All elements of the French PMI print came in well below consensus with manufacturing at 49.8 versus 51.4 consensus and services at 48.7 versus 50.6 consensus. The bad news got a whole lot worse when the German manufacturing print came in at a paltry 44.7 versus a 48.0 consensus, the worst print in almost 7 years. 


No surprises from MPC


UK’s Monetary Policy Committee (MPC) was firmly in ‘on hold’ mode in its meeting which concluded on Tuesday. As such, the Bank of England announced yesterday lunchtime that it had maintained Bank rate at 0.75% by unanimous vote whilst the targeted total for the asset purchase programme was also maintained (Gilt programme total at £435bn and corporate bond total at £10bn). Importantly the minutes highlighted that the MPC had not shifted away from its guidance that in response to Brexit, its policy response “would not be automatic and could be in either direction”. Assuming a disorderly Brexit outcome is avoided, we think a further move in Bank rate is on the cards for later this year. We have this pencilled in for August, but clearly the timing of such a move will be closely tied to events in Brussels and Westminster, not least MV3. 


Economic releases


EU19  09.00 Composite PMI “flash” estimate

           09.00 Manufacturing PMI “flash” estimate

           09.00 Services PMI “flash” estimate

    US  13.45 Manufacturing PMI “flash” estimate

           14.00 Existing Home Sales

           14.00 Wholesale inventories