CAPREIT, the largest residential landlord in Canada with more than 41,000 homes in its portfolio, is moving to expand into Europe. It already has plans to spend around EUR80 million buying a portfolio of properties in Ireland, in what could be a warm-up act for a major assault on the UK market.
The company – full name Canadian Apartment Properties Real Estate Investment Trust – already owns a small number of apartments for rent in Dublin. Last week, it announced plans to list its Irish subsidiary IRES REIT on the Irish Stock Exchange, issuing shares in a flotation that will raise EUR200 million to spend on further residential properties for rental. The organisation will be arranged as a Real Estate Investment Trust, a structure which restricts corporate activities in return for providing tax advantages.
CAPREIT entered the Irish market in September 2013, buying 338 apartments in four Dublin locations through a portfolio purchase. Now, it is bidding for a package of around 600 homes and a number of development plots in Ireland, put up for sale by Danske Bank. The package, named Project Circle, could be sold for around EUR80 million, and has around half of its properties in the greater Dublin area, with other properties in Galway, Limerick and Cork.
“IRES REIT will be our vehicle to grow our portfolio of properties in Ireland,” said Tom Schwarz, president of CAPREIT. And chief executive officer David Ehrlich added: “We are delighted to be launching IRES REIT, which we believe will be the first Irish REIT investing primarily in multi-unit residential properties. We intend to continue building a strong Irish team, backed by CAPREIT’s extensive infrastructure and to develop a professionally managed long term apartment sector in Ireland.”
In common with the UK market, the Irish rental market is characterised by amateur landlords, with three quarters of landlords owning just one rental property. And similarly, there has been an increase in demand for renting, and for long term rental contracts. And as in the UK, not enough new homes are being delivered to meet demand.
Should its bid be successful, IRES REIT will have around 1,000 rental properties in the Irish market, making it a major landlord in a sector dominated by Dublin, where rents are typically double those charged outside. When looking to grow, it may find its desire for multi-unit blocks hampered by lack of stock, particularly outside Dublin.
However, with the scale of the Irish market bound to constrain its growth, and with the experience of an Anglo Saxon property market under its belt, how long will it be before CAPREIT makes the jump across the Irish Sea, to bring its rental property expertise into the UK and the London market? Time will tell……