Merrion Private, a financial services provider, has downgraded Irish Residential Properties (IRES) Reit to a 'hold' rating from 'buy' as the share price has reached fair value.
A number of factors have caused Merrion to downgrade the stock including the appointment of a new housing minister which, it says, leads to a “possibility of change with regard to the first time buyer tax relief”. Although a change in that policy may not impact actual property prices, it “would almost certainly weigh on sentiment toward IRES”, Merrion analyst, Darren McKinley wrote.
Mr McKinley also believes that organic revenue growth has been curtailed by the government's rental cap and that net asset value growth for IRES may be delayed due to planning issues at the company's Rockbrock and Sandyford projects.
“We assume that over the short term that their share price may correct to €1.25-1.30 range which would provide a good entry point to invest once again”, Mr McKinley continued.
IRES currently owns 2,378 apartments in Dublin and was trading at €1.39 per share on Friday morning.
