Tralee social housing portfolio offers buyer 4.66% yield

The prospect of secure long income is expected to see strong interest from a range of domestic and international investors in the sale of a Tralee apartment portfolio which is fully let to two approved housing bodies.

The investment which comprises 40 units in An Sean Mhuileann, North Circular Road and 29 units in Parklands, Ivy Terrace, is being offered to the market by agent Colliers at a guide price of €10.75 million.

The portfolio is producing a current net income of €524,000 per annum, and offers the prospective purchaser the opportunity of a 4.66 per cent net initial yield.

In the case of An Sean Mhuileann, the Tuath Housing Association has taken 20-year leases on the 40 units with staggered commencement dates from July 2018 to October 2019. The gross annual rent payable for the 21 three-bed and 19 two-bed units is €362,355. The lease allows for a mix of three and four-yearly rent reviews linked to the Consumer Price Index (CPI), with the next rent reviews due in the third and final quarters of 2022.

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The remaining 29 units at Parklands on Tralee's North Circular Road have been taken on 20-year leases by Co-operative Housing Ireland with staggered commencement dates from July 2018 to September 2019. The gross annual rent payable for the 26 two-bedroom, two one-bedroom and one three-bedroom units is €255,510. The leases allow for rent reviews, linked to the CPI , every four years, with the next rent reviews due in the third and final quarters of 2022 and 2023.

The total gross annual income is €617,865, and the current net income is €524,846 per annum after allowing for annual service charges. Both developments are managed by established management companies according to the selling agent, while substantial works have been carried out by the vendors to bring the units up to the high standard required by the housing agencies and to ensure the units are fully compliant.

Established and registered in 2000, Tuath Housing Association was awarded voluntary housing status by the Department of the Environment and is a member of the Irish Council for Social Housing. It currently provides and manages more than 6,500 social homes mainly for families in rural and urban areas.

Co-operative Housing Ireland is an approved housing body and works closely with various stakeholders in the housing sector, including local authorities, central government, aspiring home owners, tenants and developers, to provide high-quality social-rented and home ownership co-operative homes across the country. It currently manages over 3,000 homes.

Michele McGarry of Colliers capital markets division says she expects to see strong interest in the Tralee portfolio from both domestic and overseas buyers.

She says: “The acquisition of these 69 units will provide a good platform for buyers seeking scale in this sector. With the recent announcements of negative interest being charged on deposits, the market is experiencing a weight of capital looking for long secure-income opportunities.”