• THE CURRENT BOARD HAS UNDERPERFORMED AND MISLED SHAREHOLDERS
• THE CURRENT BOARD CAN’T BE TRUSTED TO RUN A STRATEGIC REVIEW
• VISION’S HIGHLY QUALIFIED NOMINEES ARE ALL INDEPENDENT, HIGHLY EXPERIENCED WITH OUTSTANDING GOVERNANCE, FINANCIAL AND REAL ESTATE EXPERTISE
• VISION HAS HEARD FROM NUMEROUS SUPPORTIVE SHAREHOLDERS

Please click here to find a downloadable PDF version of this press release.

DUBLIN, Jan. 18, 2024 /PRNewswire/ — – Vision Capital Corporation, together with its affiliates, (collectively referred to as “Vision“, “we“, “us” or “our“) are providing additional information in reference to our open letters to Irish Residential Properties REIT plc (“IRES” or the “Company“) shareholders on April 12^th, 2023, and April 24^th, 2023 (the “Vision Letters“). This communication (the “Response Letter“) is also in reference to our extraordinary general meeting requisition letter dated December 18^th, 2023 (the “Requisition Letter“), and is issued in response to the Circular published by IRES on January 8^th, 2024 (the “Circular“).

Vision is writing this Response Letter to set the record straight and correct the many misrepresentations made by the current IRES board of directors (the “Current Board“) in the Circular. The Current Board’s efforts to discredit Vision appear to be a strategy aimed at diverting attention from its poor performance and include many misrepresentations. This response addresses many of these claims in five sections, which follow the Executive Summary.

Let us remind you that we are here because the Current Board has failed its shareholders. We have made many attempts over the course of the last three years to work constructively, and we have been blatantly misled by the Current Board. The Current Board has proven it cannot be trusted, it cannot create value and is not capable of running a strategic review process, which is clearly a last-ditch attempt to maintain its entrenchment.

Vision will stick to the facts. We are aligned with all shareholders; our nominees are all independent of Vision, and this is not an attempt to take over the Company. This is a concerted effort to ensure a strong, capable board is in place to properly execute a strategy that finally delivers value to all shareholders.

Vision has retained the services of shareholder-advisory firm Morrow Sodali. While we are not soliciting proxies for the February 16^th, 2024, extraordinary general meeting (the “EGM“), we encourage any IRES shareholder who shares our concerns or has any questions, to contact Morrow Sodali at +44 208 089 3286, or 1.888.777.2092 toll-free in North America (+1.289.695.3075 collect), or by e-mail at [email protected] for further assistance.

EXECUTIVE SUMMARY

Vision has summarised the Current Board’s many misrepresentations in the Circular in five different sections below:

1. IRES’ Misleading Statements & Attack of Vision
2. IRES’ Misleading Operations and Financial Performance Claims
3. IRES’ Misleading Capital Allocation and Balance Sheet Claims
4. IRES’ Misleading EGM Requisition & Strategic Review Claims
5. IRES’ Misleading Comparables

Select and verifiable examples detailed herein include:

• The Current Board asserts that Vision’s interests somehow differ from other shareholders and involve a takeover and/or distressed sale. This is simply not true; in fact, the opposite is the case. Vision has but one interest in this matter and it is completely aligned with all shareholders on a proportional basis. This claim is inaccurate, misleading, inflammatory, and alarmist as the wording in Resolution 4 as put forth by Vision in the Requisition Letter clearly requires the Board to use “reasonable” and “best endeavours” to affect a value–maximising transaction.

• Repeated statements that the Current Board is strongly aligned with shareholders. The Current Board collectively owns a negligible number of shares. In fact, the non-executive Directors, excluding the retiring Chair and CEO, collectively own a mere 185,979 shares, representing 0.04% ownership of IRES.
• The assertion that the nominee directors put forth by Vision lack independence is unfounded, as all nominees adhere to the criteria of independence outlined in the UK Corporate Governance Code.
• In April 2022, Vision agreed to withdraw its AGM shareholder resolutions for the May 2022 meeting under the condition that IRES would give due consideration to a nominee director proposed by Vision. Additionally, IRES committed in writing to Vision to undertake a strategic review and publicly disclose the findings to all shareholders concurrently with or before the release of its first-half of 2022 financial results. However, no such public disclosure was made. While the Circular mentions the consideration of a Vision nominee director, it is noteworthy that the Chronology of Events in Section II of the Circular (the “Chronology of Events”) intentionally excludes any mention of the public release of the 2022 strategic review and the decision to maintain the existing status quo.

  Vision believes that it is an indictment of IRES’ entrenched and misaligned Current Board that its Circular intentionally omits the crucial details regarding this engagement (even though this background was publicly disclosed in Vision’s open letter to shareholders of April 12^th, 2023), and omits details regarding the strategic review, preventing shareholders from having an accurate understanding of the issues central to the resolutions. It required several years of constructive engagement by Vision and ultimately the requisitioning of the EGM to REQUIRE a response from IRES’ entrenched and misaligned Current Board, and underscores the Current Board’s reluctance to address key issues. It is evident that the repeated misrepresentations by the entrenched and misaligned Current Board do not magically make it competent, and it should not now suddenly be trusted with a very broad and uncommitted review potentially extending for many years (since the Circular repeatedly notes that Vision’s resolution entailing reasonable and best endeavours to effect an action plan in 24 months is too restrictive), which would be consistent with their track record of preserving their role and fees as entrenched and misaligned directors with no “skin in the game”.

• IRES has “cherry-picked” data in its Circular by using a flawed comparison set with the intent to mislead and influence shareholders. In one highly egregious example, the Circular cites share price performance up to January 4^th, 2024. This timeframe conveniently encompasses the obvious primary positive impact resulting from the anticipation of an increase in the share price stemming from Vision’s activism and plan subsequent to its detailed open letter to shareholders of April 12^th, 2023, and its announcement of the EGM requisition on December 18^th, 2023. In doing so IRES’ entrenched and misaligned Current Board appears to be making a desperate and arrogant attempt to take credit for the increase in the share price – an increase primarily driven by shareholder enthusiasm in response to Vision’s action plan, an initiative that the Current Board opposes! This strategic misrepresentation raises concerns about the transparency and credibility of IRES’ communication with its shareholders.

  In fact, since IRES’ IPO on April 16^th, 2014, at €1.00 per share until the share price of April 11^th, 2023, of €0.94 (the last day prior to the share price being primarily impacted by Vision’s initiatives)(“Unaffected Share Price”), IRES’ ordinary shares have not only performed significantly worse than the median of the public companies in both IRES’ “cherry-picked” and flawed competitive set but performed significantly worse than the median of residential REIT shares both in Europe (36^th percentile), and globally (35^th percentile). For the full list, please see Appendix I.

• The nominee directors recommended by Vision possess exceptional expertise, competence, and independence, aligning with UK Corporate Governance Code standards. Their outstanding professional experience and proven corporate governance track records are aligned with shareholder interests and enhance shareholder value.
• The Circular parrots the list of concerns that Vision has identified for several years regarding the limitations of the REIT structure in Ireland to “check the box” in order to feign a response for its Circular. However, it omits a thorough examination and acknowledgement of the REIT structure’s shortcomings in Ireland. This omission is significant, as it has led every other REIT in Ireland to undertake value-maximising transactions, effectively discontinuing their REIT status. Notably, IRES stands as the sole exception, operating primarily, in Vision’s view, to generate fees for the entrenched and misaligned Current Board.
• As a rationalisation to terminate the management contract of Canadian Apartment Properties REIT (“CAPREIT”), IRES asserted that it would involve materially significant cost savings. This was and remains false.
• The bad faith and manipulation of IRES’ entrenched and misaligned Current Board has continued to the date of publication of this Response Letter. In Vision’s approaches to IRES to seek to resolve the matters to avoid an EGM, IRES has pre-empted the discussions by requesting Vision enter confidentiality agreements and commitments, in order to engage in “good faith negotiations”, that would have the effect of restricting Vision’s communications with shareholders, the media, and other stakeholders extending right up to the date of the scheduled EGM on February 16^th, 2024.

• Claim 1: Throughout the Circular, the Current Board attempts to frame Resolution 4 from the Requisition Letter as Vision trying to force a sale of IRES or its assets within the next 24 months, and that this is tantamount to advocating for a “distressed sale”.
  
• Claim 2: The Circular asserts that Vision’s proposals entail an effective takeover of IRES (without paying shareholders a premium or a fair price for obtaining control), suggesting that Vision’s nominees are not independent and have “significantly less experience in relevant fields”. Furthermore, the Current Board repeatedly suggests that Vision’s recommendations are solely in the interest of Vision, and not in the interest of shareholders as a whole.
  
• Claim 3: The Current Board claims that “Vision has no credible plan to create value – Vision has not articulated an alternative business or operational strategy for the Company beyond a liquidation or a sale”.
  
• Claim 4: The Current Board claims that “At all times, the Board has sought to engage with Vision constructively and has been responsive to Vision’s requests. This constructive approach has not been reciprocated by Vision which, acting in its own interests, has elected to pursue a costly, distracting, and unnecessary campaign against the Company of which this Requisition represents the latest action”.
  
• Claim 5: The Current Board, in both the Circular and in the IRES Press Release dated December 18^th, 2023, often claims that Vision’s actions are “contrary to” or “undermine” good governance.

Response to Claim 1

Vision believes the Circular completely and intentionally misrepresents and mischaracterises the specific words and resolutions in Vision’s Requisition Letter in order to prolong the Current Board’s entrenchment.

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Resolution 4(ii) put forth by Vision in its Requisition Letter clearly states as a preamble and condition that the Board…. would be required to use its “best endeavours” and in section 4(ii)(D) to “to use all reasonable endeavours to effectuate any sales or divestment process recommended by the Review…”. Vision did not advocate for a ‘distressed sale’ as IRES has stated, nor is such a sale part of any resolution that Vision has advanced. For clarity, as there is no distress in IRES’ property holdings and the supply-demand fundamentals in its markets are extremely favourable, and rental apartments are one of the most highly sought-after real estate subsectors globally, Vision does not support any distressed sale. Vision believes these mischaracterisations are intended to create alarm in order to keep the entrenched Current Board in place.

Vision’s proposed approach to surface and realise value for IRES shareholders has been advanced by Vision after research and discussions with several Ireland and UK-based asset managers that own, operate, and manage significant portfolios of rental residential apartments in Dublin. All of these experienced asset managers, who are involved in the same business as IRES, coalesced around the same multi-pronged plan that is reflected in Vision’s recommendations. This plan, discussed further in this Response Letter, is believed to allow for a sufficient timeframe of up to 24 months to successfully affect the breadth of property transactions contemplated and as outlined in greater detail herein. At the same time, several commented on the dismal condition and poor operating management of the properties (which was evident in side-by-side tours of properties owned by these asset managers directly next to IRES owned properties), and that they operate similar portfolios at a cost of approximately 50% of IRES’ property management.

Vision’s resolutions acknowledge that while an en bloc sale may prove to be beneficial, a practical alternative at this time is a six-to-24-month period to execute a value optimisation plan.Response to Claim 2

Claims relating to Vision’s EGM proposals being an effective takeover of IRES

The assertions and mischaracterisations are simply preposterous. Vision is not seeking control of anything. The Current Board repeatedly attempts to misleadingly frame the requisitioning of the EGM as Vision, a 5% shareholder, trying to take over the Company without paying a premium. What the Current Board fails to understand is that we believe we are the voice of a much larger percentage of both individual and institutional shareholders that have the same frustrations and views as Vision (as articulated in the Requisition Letter and Vision Letters). 

Despite the fact that a significant number of those shareholders voted in line with Vision at the 2023 IRES Annual General Meeting (against certain directors and other resolutions and at a time when shareholders did not have any other options for Board nominees or plan of action on the agenda), Vision believes IRES has yet to meaningfully engage with those shareholders, which leads us to believe that they are not serious about shareholder democracy. 

The process advocated by Vision is the opposite of a takeover; it is intended that a board refreshed with five new directors as recommended by Vision (the “Refreshed Board“) would oversee a professionally managed process over a reasonable period of time to surface and return capital to its shareholders in an equal and proportional basis and avoid the continued destruction of shareholder value.

Claims relating to Vision’s nominee directors lacking independence

The Circular attempts to challenge the independence of Vision’s nominee directors. This is both misleading and inaccurate.

We have recommended five highly competent, experienced, accomplished, and independent nominee directors (as defined by the UK Corporate Governance Code) to the board to represent and oversee a process to surface value for all shareholders.

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Ms. Amy Freedman is an advisor to Ewing Morris, not an employee. Vision has no affiliation whatsoever with Ewing Morris. Ewing Morris and Vision are indeed both shareholders of IRES and First Capital REIT, however, the fact that shareholders of IRES may have common investments in other REITs that are independently managed does not suggest a lack of independence. Shareholders with common shareholdings and similar views on the merits and issues of those investments remain independent from each other. Ms. Freedman’s affiliation with Ewing Morris only serves to better align her with fellow shareholders.

Mr. Richard Nesbitt is one of the most experienced and highly accomplished financial executives globally. He has held many notable financial industry roles including President and CEO of CIBC World Markets; COO of CIBC Bank (one of the top 50 banks globally)¹; and CEO of the Global Risk Institute. Mr. Nesbitt’s expertise, competence, and understanding of fiduciary obligations as an independent director are unquestionable. His financial competence and experience are unmatched by any members of IRES’ entrenched and misaligned Current Board.

Mr. Mark Barr is a highly experienced former partner of Arthur Cox, a leading Irish law firm. He has an impeccable reputation and was Head of the Real Estate practice at the firm. Furthermore, it should be noted that Mr. Barr retired well in advance of Vision engaging Arthur Cox, and this fact does not impinge whatsoever on his independence.

For these reasons, all of Vision’s nominee directors would be deemed to be independent in accordance with the UK Corporate Governance Code.

Claims relating to Vision’s nominee directors lacking relevant experience

The nominee directors recommended by Vision not only are independent, experienced, and competent but also individually and collectively bring a breadth of skills and expertise to IRES. We refer the reader to the more detailed profiles of nominee directors in the Requisition Letter however would note and summarise herein that:

Mr. Richard Nesbitt has extensive breadth and depth of experience as a highly accomplished financial executive. He has held many notable financial industry roles as noted above. In Vision’s view, he is one of the most experienced and accomplished financial service professionals globally.

Mr. Colm Lauder is one of the more experienced and knowledgeable property sector professionals in Ireland with extensive expertise in capital markets, M&A, financial analysis, and housing policy in Ireland and extensive relationships with real estate industry investors and stakeholders.

Ms. Amy Freedman is an experienced corporate director with significant M&A financial expertise based on her investment banking background and served as CEO of one of the leading global shareholder advisory firms with specific expertise in corporate governance.

Mr. Mark Barr, one of the most accomplished legal professionals in Ireland, has deep experience in property law and transactions, a deep understanding of the Irish market, and significant corporate governance experience.

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Ms. Sharon Stern is a savvy real estate investor and operator with a successful track record of identifying and surfacing value for shareholders in public REITs which is the core objective of Vision’s initiative.

In addition, the Circular contains an inaccuracy regarding the potential consequences of electing Vision’s nominee directors. It erroneously suggests that such elections would result in a deficiency of financial expertise within the IRES board’s executive membership, thereby violating the UK Corporate Governance Code. It is essential to clarify that individuals with a background as a former executive of a multinational bank ranked 49^th largest globally, and as one of the most respected and experienced real estate research analysts in Ireland, undeniably possess significant financial expertise.

Furthermore, the Circular makes a misleading claim, at least by omission: it states that the proposed board, should all of Vision’s nominee directors be elected, would have six out of nine international directors. To be clear, the UK Corporate Governance Code states that one director must be resident in the EEA. At a minimum, should all of Vision’s nominee directors be elected to the board, the resulting Refreshed Board would comprise a minimum of four directors residing in the EEA, exceeding the requirements of the UK Corporate Governance Code by 300%. Additionally, three more directors on the board would be residents of the U.K. Furthermore, and as we highlight above, all the nominee directors proposed by Vision are highly qualified and highly experienced in real estate, mergers and acquisitions, and finance. They bring a diverse set of skills, substantial experience, and a wealth of both local and international knowledge and relationships. This collective proficiency is intended to complement the remaining board members, furthering the Vision strategic review initiative in accordance with the directives of the shareholders.

Claims that Vision’s recommendations are solely in the interest of Vision, and not in the interest of shareholders as a whole

The Circular does not explain whatsoever the illogical, false claims alleging that Vision has different interests than other shareholders. The reason for this is simple: there are none. We are advancing Vision’s initiative, which is intended to serve the interests of all shareholders, who would benefit from the surfacing of value through the sale of this Company or its assets on a proportional basis. Vision encourages shareholders to ask: Who is more aligned with your interests – the non-executive members of the Current Board that (after the retirement of the Current Chair and CEO) own 185,979 shares (which represents a 0.04% ownership stake), or the shareholders who have real “skin in the game”?

Response to Claim 3

Vision has documented very specifically its plan in Resolution 4 which refers to Vision’s strategic review with a view to using best endeavours to sell the Company en bloc, or over 24 months (“Resolution 4“).

Vision’s operational plan involves the Refreshed Board applying a greater focus on the operations of its existing portfolio and recommends a 30-to-60-day period during which a review of the assets would identify the cost/benefit of any value-enhancing initiatives necessary to prepare the portfolio for optimising its near-term realisable value.

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Concurrently, as Vision is cognisant of and has estimated the various types and amounts of tax relevant to its recommended action plan, Vision has provided this 30-to-60-day period for the Refreshed Board to analyse and assess the most prudent and tax-effective structure to affect the plan.

Vision intends that the Refreshed Board takes the first 30 to 60 days to explore different alternatives for the stewardship of the Company, in the context of the new strategic direction mandated by shareholders. This involves engaging the services of real estate and financial advisers to facilitate a professionally managed process for a competitive sale and strategic transaction.

Moreover, as the current CEO has indicated that she is prepared to continue her tenure through April 2024, and is receptive to extending it beyond should this be deemed prudent, a rushed initiative to hire a CEO is not necessary. For clarity, Vision believes that IRES’ Current Board hiring a new CEO in advance of the EGM would be premature, negligent, and a breach of its fiduciary obligation, given that it would be doing so without prior insight into shareholders’ views through a shareholder vote at the EGM, along with a corresponding understanding of the required skills, mandate, and necessary compensation. Vision is committed to holding the Current Board accountable should such a move be expedited in the few weeks leading up to the EGM, thereby depriving shareholders of the opportunity to express their opinions on the best course of action. It is crucial to acknowledge that the requirements, responsibilities, contractual terms and compensation structure may undergo significant changes depending on the outcome of the EGM.

It is important to underscore that Resolution 4 was advanced after many months of researching the issues and opportunities in Dublin’s residential market. Vision has met with several experienced Ireland and UK-based asset managers who focus on the apartment sector and who own, manage, and operate apartments. All of them were critical of IRES’ management, operations, and elevated cost structure.  Some of them have extensively toured the IRES portfolio and highlighted the neglect of the assets through documented reports and photographs (a few of the photos depicting the operating conditions of IRES’ portfolio are included in Appendix II). All of them recommended a multipronged process to surface value, should an en bloc sale not be viable, that was thought readily achievable within the six-to-24-month time frame Vision has outlined.

Generally, this involved the consideration of a three-pronged approach:

1. Some of the higher-end properties such as, for example only, The Marker, are anticipated to have a strong bid at any time.
2. Other properties with more affordable rents could be sold to government or non-profit groups to preserve their tenure as affordable apartments, which are well recognised as being desperately needed in the Dublin market at this time. This would be a win-win to both surface and return value to shareholders and preserve and maintain an inventory of apartments that are affordable for tenants in Dublin.
3. A portion of the remaining units, which are all individually titled, could be sold directly to end users as allowed under current legislation.

It is important to note that property owners, managers and investors understand that Dublin, has amongst the most favourable supply-demand fundamentals globally as evidenced by its 1% vacancy rate across residential dwellings², and a significant shortage of housing both to own and rent. In the current market conditions, it is pertinent to consider not only the EPRA NTA NAV of €1.479 per share as of the first half of 2023 as a relevant benchmark, but also, the replacement cost value of an estimated €460,000 per residential unit, which equates to a value of approximately €2.10 per share, based on Vision’s analysis, which is significant. These metrics represent the valuation framework to capitalise on the opportunity to realise significant value for IRES shareholders.

Response to Claim 4

Vision has engaged with the Current Board many times over the past few years. Vision has always been mindful of unnecessary campaigns that could prove to be costly and distracting, and ultimately not create shareholder value. Most recently, Vision engaged with the Current Board over a period of time ultimately concluding in April 2022 in which Vision withdrew its AGM shareholder resolutions for the May 2022 meeting based on the Current Board’s written promise to pursue a strategic review and report the results back publicly to shareholders no later than Summer of 2022. No such report was made. An excerpt from IRES’ written communication from April 2022 relating to this promise can be found below:

“Your letters and resolutions have highlighted and reinforced this urgency and we plan to deepen the focus on this and update the market as soon as possible on all options and activities, but no later than results in the summer [emphasis added].“

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Ironically, in this case, the Current Board expended a significant amount of shareholder capital on advisers to avoid addressing shareholder interests. This issue is discussed further in Section IV of the Response Letter.

Response to Claim 5

The process initiated by Vision is a remedy available to all shareholders under IRES’ constitution and the Companies Act and Vision finds it intriguing that the Current Board criticises Vision for “undermining” good governance. The proposed resolutions will only be effective if other shareholders vote in favour of those resolutions, as Vision will do. Does this mean the entrenched and misaligned Current Board thinks good governance means that it can do whatever it wants without any interference from pesky shareholders?

This is particularly ironic seeing as the entire combined ownership of shares by the remaining, non-executive members of IRES (the non-executive Current Board members excluding Declan Moylan and Margaret Sweeney due to their impending retirements) (the “Remaining Non-Executive Current Directors“) is a total of 185,979 shares! This represents less than a tenth of 1% of the shares outstanding. In addition to larger institutional shareholder support, Vision has received many unsolicited emails and phone calls from Irish-based independent individual investors, who each own three to 20 times more than the entire ownership of the Remaining Non-Executive Current Directors, expressing support for Vision’s initiatives, plans, and resolutions over the past nine months.

Current Directors	Director Type	Total Shares	Value of Shares3	% of IRES Shares Outstanding
Kavanagh, Tom1 Advertisement	Non-executive	81,129	€ 91,838	0.02 %
Scott-Barrett, Hugh1	Non-executive	40,000	€ 45,280	0.01 %
Garahy, Joan1 Advertisement	Non-executive	34,850	€ 39,450	0.01 %
Frensch, Stefanie1	Non-executive	30,000	€ 33,960	0.01 %
Turner, Denise1 Advertisement	Non-executive	0	€ 0	0.00 %
Burns, Phillip1	Non-executive	0	€ 0	0.00 %
Total: Remaining Non-Executive Current Directors Advertisement		185,979	€ 210,528	0.04 %
IRES Ordinary Shares Outstanding2		529,578,946	€ 599,483,367	100.00 %
Sources:
1: Bloomberg – Jan 12th, 2024
2: IRES “Commencement of Strategic Review” Press Release dated 8 January 2024 Advertisement
3: Bloomberg – Share price of €1.13 as at Jan 12th, 2024.

As indicated from the above responses to the Circular’s claims, the Current Board has consistently misrepresented the facts to create confusion and to deflect from the very real issues affecting IRES. These misrepresentations made by IRES and its advisers are, at best, both inflammatory and misleading, and potentially negligent. It is imperative that shareholders, their advisers, and regulators denounce these actions. Such misrepresentations are indicative of the long-standing conduct exhibited by the entrenched and misaligned Current Board.

The Circular makes the following claims regarding the Current Board and Management’s ‘operational excellence‘:

• Claim 1: The Current Board claims that the termination of the management agreement with CAPREIT, and the subsequent internalisation of the management of the Company was “A key action instigated by the Board to reduce costs, which stands to create greater longer-term value for Shareholders… With a fully internalised management structure and an integrated platform, IRES is better positioned to control costs“.
  
• Claim 2: The Current Board claims that “The Board and Management successfully delivered another strong operational and financial performance for the first half of 2023 and announced continued strong performance and stable cash flows in its October 2023 trading update”.

Response to Claim 1

Vision notes that this is incorrect. To date, there have not yet been any general and administrative cost savings through the internalisation programme, despite operating with 1.7% fewer units as of the first half of 2023. Furthermore, IRES management has acknowledged in meetings with Vision that these general and administrative cost savings have not materialised since that time. Nevertheless, the Circular clings to the unsubstantiated and historically false and hence misleading assertion that they are in a “better position” to control costs.

Response to Claim 2

In yet another misleading statement by the Current Board, it refers to “Stable Cash Flow”.

Shareholders should ask IRES why it failed to mention the Adjusted EPRA Earnings per Share (a cash flow metric that removes the impact of non-recurring items as is typically reported and that Vision believes is the best metric to reflect REIT recurring cash flow in Europe) as a metric in this analysis in the Circular despite publishing it in its 2023 Interim Results? As a more accurate assessment of true cash flow, it is important to note that IRES recorded a 22.1% year-on-year DECLINE in Adjusted EPRA Earnings Per Share in the first half of 2023. The key reason contributing to this situation is an 80% year-on-year surge in interest expense. This substantial increase directly stems from the mismanagement of IRES by the Current Board and Management, as discussed separately in this Response Letter. Notably, respected research analysts and Vision had highlighted this risk, which IRES management and Board brazenly ignored. In essence, the Current Board and Management exhibited a lack of proactive and reactive measures, even when these risks were well telegraphed and identified in advance.

Furthermore, the Circular mischaracterises the financial and operational performance of IRES as it fails to acknowledge that, in light of the aforementioned mismanagement of the balance sheet, IRES walked away from highly desired developments that would not only have added significantly needed supply to the Irish housing market but that had been heralded as a key component of IRES’ growth strategy to shareholders. This is discussed in further detail in Section III.

The Circular makes the following claims regarding the Current Board and Management’s capital allocation decisions and balance sheet management:

• Claim 1: The Company has… “effective asset management and capital allocation”.
  
• Claim 2: The Current Board oversaw the growth of “IRES from 338 apartments at IPO in 2014 to 3,734 apartments”, and credits the Current Board and Management with the growth of IRES from 2,679 units to 3,938 units over the past 5 years through FY 2022.
  
• Claim 3: The Company “increased the dividend payable by 6.5% [year-on-year] in the first of 2023.
  
• Claim 4: “Over the last two years, … the Company has strengthened its balance sheet” and “pro-actively and carefully re-structured, with the Company entering into a number of hedging arrangements in addition to paying down higher cost debt in a targeted manner and negotiating more favourable covenant terms in December 2023.”
  
• Claim 5: The Current Board announced a €100 million disposal program to pay down debt, and in the same paragraph, says “IRES has not needed to raise new capital nor place restrictions on, or withdrawals of, its dividend policy as a response to the recent challenging recent market environment”.

Response to Claim 1

Vision believes the Current Board cannot claim that IRES has effectively allocated capital when the mismanagement of the Company’s balance sheet likely led to a sizable shift in its growth strategy, particularly through its development pipeline. To this point, Management had extensively highlighted its Rockbrook, Sandyford development, which was most recently profiled in its “2021 Preliminary Results Investor Conference Call Presentation” released on February 23^rd, 2022, as part of its “Sustainable Accretive Growth Strategy.” The Rockbrook site, at 428 units, at that time, represented an overwhelming majority, at over three-quarters, of units that the Company had planning permissions for. Despite this, approximately one year later, the Company, in an abrupt shift, announced its intention to dispose of the site, as “yield metrics became challenged.” Nonetheless, it was reported in the Business Post in April 2023³, that the Comer Group, a leading real estate developer, had acquired the site and intends “in the coming months” to start construction on the 428 units. As such, Vision believes this implies that either IRES’ ability to develop is sub-optimal as compared to its peers (seeing as another developer is proceeding with the project), or that the Company was forced to walk away from the project as a result of its inability to efficiently raise capital to complete the project, likely due in part to its poor balance sheet planning and inability to cost-effectively and efficiently raise equity capital in an accretive manner.

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Furthermore, Vision does not understand how the Current Board can claim IRES has effectively allocated capital when its mismanagement of IRES’ balance sheet effectively forced IRES to sell assets to pay down debt and reduce the Company’s overall debt levels.

Response to Claim 2

Throughout the Circular as well as other publications by IRES, the Current Board and Management continue to misleadingly and inaccurately take credit for the rapid growth of IRES, when in fact, quite literally, all the growth in the number of units through acquisitions and developments in aggregate occurred during the period in which IRES was under CAPREIT’s management (CAPREIT’s management officially ended on January 31^st, 2022). In fact, under the stewardship of the Current Board and Management (and without CAPREIT’s involvement), IRES’ residential portfolio actually shrunk, as shown below. Furthermore, this analysis does not consider the disposal of the Rockbrook development land plot, which would have added over 400 units to IRES’ portfolio.

IRES Residential Units after Termination of CAPREIT Management Agreement	Opening Number of Units	Units Added	Units Sold	Ending Number of Units
Jan 2022 – Dec 2022	3,829 Advertisement	237	-128	3,938
Jan 2023 – Circular (dated January 8th, 2024)	3,938	0	-204	3,734
Total Units Added:	237 Advertisement
Total Units Sold:	-332
Net Change:	-95
Source: IRES Financials/Publications

Response to Claim 3

Vision believes the claim that the Current Board increased the dividends by 6.5% year-on-year in the first half of 2023 is especially misleading as it omits the very relevant and recent fact that the 2022 declared dividends of €0.0511 was 15% lower than the 2021 declared dividends of €0.0599.

Response to Claim 4

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It is important to note the inaccurate and misleading nature of the claim of having a “strengthened” balance sheet.

Vision finds this assertion a misrepresentation as the Current Board is trying to take credit for a ‘strong’ balance sheet when its hands were effectively tied in 2023, and it was apparent that IRES was forced to sell assets in order to reduce balance sheet leverage levels. This is a direct result of the complete mismanagement of the balance sheet when one takes into account IRES’ loan-to-value of approximately 43% and the fact that 70% of IRES’ debt was variable rate (and linked to the EURIBOR) as at the first half of 2022, prior to the start of the interest rate hiking cycle in 2022. It was the Current Board and Management’s decision to maintain such levels of LTV and floating rate debt. IRES’ CFO and Management were alerted to concerns of high levels of variable debt by both shareholders and analysts, and in fact, this point was specifically brought up in the first half of 2022 earnings conference call by Colin Grant, Healthcare and REITs analyst at Davy (as outlined in the transcript of the earnings call), and yet, Management only decided to fix the interest rate for a portion of the debt by December 2022 – approximately half a year later.

For emphasis, the Company’s debt was not proactively structured, and not even reactively structured as the Current Board and Management failed to react to the extensive amount of variable rate debt until approximately half a year after shareholders and analysts highlighted the large variable rate debt exposure.

At the 2023 Annual General Meeting, Vision shared an analysis indicating that, as of that date, IRES, based on Vision’s analysis, had destroyed approximately €170 million in value, which we noted was approximately 30% of the Company’s then current equity market cap, as calculated through a 17x three-year average FFO multiple and approximately €10 million in increased interest expense, attributed to the impact of the floating rate debt resulting from the balance sheet mismanagement by the Current Board and Management.

It is important to note that when asked by Vision at the 2023 AGM why the CFO was so slow to act, he began his response with: “as part of internalisation, there was a long list of things to do”. In other words, the CFO was too busy to take responsibility to address a core responsibility of managing the Company’s balance sheet as further compounded by the incompetent oversight by this entrenched and misaligned Current Board even after Vision and analysts pointed out these risks.

Response to Claim 5

Vision would like to understand what exactly the Current Board is referring to when it says that IRES has not needed to raise capital, yet in the same paragraph, goes on to say that IRES sold €100 million in assets to “strengthen” the balance sheet. In what world is liquidating assets to raise capital not raising new capital?

It is apparent that IRES was forced to sell these assets due to the Current Board and Management’s failure to effectively manage IRES’ balance sheet on a timely basis and the requirement to sell assets to avoid breaching its REIT leverage limits.

Furthermore, Vision would like to highlight the Current Board’s hypocrisy in congratulating itself for the disposal of €100 million of assets at book value despite the Current Board contradictorily ‘concluding’ only months prior to the disposals (in an IRES press release dated April 17^th, 2023) “that a formal sales process, given the macro-economic challenges and regulatory backdrop, is highly unlikely to result in value maximisation for shareholders”.

In fact, the demand for IRES’ assets was so high that even IRES admits, in its third quarter of 2023 Trading Update, that the sale process finished “well ahead of [the] expected time frame”! Shareholders should note that, in the event that all of IRES’ assets were sold at book value in 2023, this would have implied a value of €1.479 per share, approximately 60% above the Unaffected Share Price when Vision sent out its first shareholder letter on April 12^th, 2023.

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It is also noteworthy that in 2023, Brookfield, a leading global asset manager, ran a process to sell an Irish residential portfolio, and had reportedly (including reports to Vision by IRES’ CEO Margaret Sweeney in a meeting held with Vision on June 23^rd, 2023) received numerous bids which imply a Net Initial Yield (“NIY“) of ~4.5%. This is approximately the same NIY that IRES uses in the valuation of its residential portfolio as of its first half of 2023 financials.

SECTION IV: IRES’ Misleading EGM Requisition & Strategic Review Claims

The Circular makes the following claims:

• Claim 1: The Current Board claims that the strategic review being led by it is superior to the defined strategic review being recommended by Vision.
  
• Claim 2: The Current Board notes that “As at the date of this Circular, the Company is not in receipt of any approach nor any discussion with any offer or in talks with any potential counterparty generally in connection with a transaction”.
  
• Claim 3: In response to Vision highlighting its inability to effectively raise meaningful equity capital in a value-accretive manner (in the context of the REIT structure in Ireland), the Current Board responds that “Capital raising (including for REITs) in Ireland and Europe via a placing structure is easy, efficient and well understood by market participants. Placings can be commenced and executed from start to finish in a matter of one to two weeks when shareholder authority is in place. The placing mechanism has recently been further enhanced with the main industry body (Pre-Emption Group) updating their guidelines to allow companies to disapply pre-emption rights of up to 20% on an annual basis (previously 10%), subject to certain conditions. The Board hopes that shareholder authority to afford the Company this flexibility will be granted by Shareholders.”
  
• Claim 4: In response to Vision highlighting the inefficiency and limitations of the REIT structure in Ireland, the Current Board states “The REIT structure is a globally recognised standard for investment in rental property assets, established in many developed economies across the world. REITs provide a number of benefits to both small and large investors, including liquidity, regular income through dividends, wider investor participation in the asset class, risk diversification, professional property management, high levels of transparency and also eliminate the double layer of taxation at corporate and shareholder level which would otherwise apply if the activity were to be undertaken by a property rental company.” … “In recent years, the REIT regime in Ireland has been amended and changes have been made to the applicable fiscal terms which have, in the Board’s view, resulted in some diminution in the attractiveness of Irish REITs for international investors.”
  
• Claim 5: IRES board claims that “Resolution 3 if passed, would amend the Company’s Articles of Association to require that the Board comply with a shareholder direction of the type proposed by Resolution 4. The Board has been advised that the Board is not required to comply with a shareholder direction should Resolution 3 not be passed. Accordingly, the Board has determined that should Resolution 4 be passed but Resolution 3 not be passed, Resolution 4 would be treated as having no effect. Shareholders should be aware, therefore, that Resolution 4 is in effect conditional upon Resolution 3 being passed”.

Response to Claim 1

Our response to this claim will first begin by highlighting omitted facts relating to Vision’s engagement with IRES, as documented in Part II of the Circular, the representations by the Company, and reflects the half-truths, misstatements, and entrenchment of the Current Board.

The Chronology of Events correctly summarises Vision’s request in March 2022 for certain resolutions to be advanced at the 2022 AGM. However, the Chronology of Events does not disclose that, as part of the consideration for Vision withdrawing its resolutions at that time, IRES stated, in a written letter to Vision dated April 3^rd, 2022, that it would undertake a strategic review and report back to all shareholders publicly on the details and results of this review to all shareholders prior to the publication of its half-year results in August 2022. The below excerpt was taken directly from the above-referenced letter:

“You have written a series of letters and we have had many discussions since last Summer around the valuation and we believe these have primarily been constructive for both sides. The macro events of the last year, regulatory change and the move to internalisation have given us a lot to discuss. We recognise, as do you the Board must review solutions to the discount from where we stand at the present time and any strategic changes necessitated by the macro and regulatory changes which have taken place. We have a set of experienced advisers who are helping with this. This work is always ongoing as part of the role of the Board, but has become more acute with recent events. Your letters and resolutions have highlighted and reinforced this urgency and we plan to deepen the focus on this and update the market as soon as possible on all options and activities, but no later than results in the summer [emphasis added].“

As there was no such announcement or disclosure of the existence of the strategic review or the results thereof, Vision enquired with IRES as to why this commitment was breached. Vision was informed that the review had been concluded and that it was determined that the status quo was the best course of action, and so there was no point in providing public disclosure when there was no change to advance. Notwithstanding that Vision shared this background in its open letter to shareholders of April 12^th, 2023, it is notable that the Chronology of Events omits these very salient facts as we believe the Current Board anticipated that this disclosure would be a further indictment of the Current Board’s entrenchment and misalignment.

Vision is concerned about the prospect of the strategic review being overseen by the entrenched and misaligned Current Board being a ‘sham’ that may take years and involve millions of euros on advisers and consultants. Vision is also concerned by the prospect of another determination of status quo similar to the 2022 commitments to Vision which we have noted were omitted from the Chronology of Events in the IRES Circular.

Accordingly, Vision believes shareholders should be very sceptical of the evaluation, intention, competence, and alignment of the Current Board to manage its wide-reaching, broadly defined, and non-committed strategic review as compared to the plan of action proposed by Vision and the recommended refreshment of the Current Board with strong, competent, independent, and experienced directors. Shareholders do not require another strategic review costing them hundreds of thousands of euros that has the prospect of a 2, 3, or 4-year timeframe which could, once again, result in the recommendation of the “status quo” and maintenance of this entrenched and misaligned Current Board. Vision’s approach is based on a well-researched action plan with the potential to surface value in the next two years and abate the quarterly bleeding and wasteful spending by the entrenched and misaligned Current Board.

Response to Claim 2

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Professionals engaged in property transactions understand the significant disparity between adopting a passive approach, merely waiting for a potentially interested party to “knock on your door”, and implementing a professionally managed and competitive sales strategy. The latter involves a strategic transaction process, instilling confidence among transaction proponents that the transaction will advance. It ensures access to a transparent and professionally managed process, providing the necessary financial information needed for informed bidding. This approach aims to maximise the overall value of the transaction. In fact, several global, highly regarded institutions with significant real estate asset management operations will not advance unsolicited transactions and will only participate in a seller-initiated transaction.

Response to Claim 3

This is at best inaccurate generally, and in IRES’ case, inaccurate and a misrepresentation of IRES’ own experience. Vision has been advised by leading Irish based investment dealers of select initiatives by IRES to undertake new issue financings, which were initiated but subsequently aborted by IRES after a significant decline in the Company’s share price. Vision believes that this is indicative of both the capital market inefficiencies that Vision has previously highlighted and puts into question IRES’ effective management of these initiatives.

The Circular also attempts to differentiate Vision in terms of the Company’s repeated failed attempts to obtain a general disapplication of the pre-emption rights of shareholders available under the Companies Act. Vision was not alone in voting against the disapplication of pre-emption rights. In fact, over 25% of shareholders did this.

In both 2022 and 2023, over 25% of shareholders voting rejected IRES’ resolution to disapply pre-emption rights. Vision was just one of many shareholders that rejected this proposal on both occasions. Notwithstanding the Current Board’s failed attempts at both the 2022 and 2023 AGM, this entrenched, and misaligned board has disclosed in the Circular that it intends to, for the third time without making any significant changes, propose that shareholders grant this authority.

Response to Claim 4

To reiterate this point from our public letter to shareholders dated April 12^th, 2023, Vision agrees – globally, the REIT structure works, but locally in Ireland, it does not.

For clarity, given that REITs must distribute most or all of their income in dividends, REITs are generally unable to retain sufficient cash flow to supplement growth plans or improve capital structure. Globally, the reason this structure works is that REITs typically have access to highly efficient capital markets that allow for seamless debt and equity raising.

However, due to the size of the Irish market, other regulatory hurdles, and a general lack of access to capital/liquidity, IRES simply does not have sufficient access to capital in order to grow the business given that it cannot retain cash flow. As we highlighted in our first public shareholder letter, other Irish REITs have recognised this, and their boards correctly decided that in the interest of shareholders, they should be taken private or sold – which they were. IRES is the last remaining Irish REIT. The simple fact of the matter is: IRES’ REIT structure simply does not work in its current form.

Davy analyst Colin Grant discussed this matter, as highlighted by the Irish Times when Yew Grove was sold/privatised, saying: “Irish reit [sic] legislation also has significant restrictions on growth due to the minimum 85 per cent [dividend] payout ratio, maximum 50 per cent loan to value and other tax-related restrictions on selling assets and recycling the proceeds” …. “The favouring by investors of growth stocks over value stocks has been a further issue. Management was left with no other strategic option”.

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Independent of IRES’ or Vision’s views, it is absolutely evident that the market has concluded that the Irish REIT structure is flawed. Every other REIT has pursued value and liquidity-enhancing transactions, similar to the resolution that Vision has advanced, and successfully delivered shareholder value. Yet, despite the evidence, this entrenched and misaligned Current Board enables IRES to continue as a REIT, and in doing so, we believe, destroy value on an ongoing basis for shareholders.

Response to Claim 5

The suggestion by IRES’ entrenched and misaligned Current Board that it will ignore shareholders’ votes on Resolution 4 (which refers to the Vision strategic review to sell the Company en bloc or over the course of two years) in the event that Resolution 3 fails seems incredible. To be clear, IRES has unequivocally stated in its Circular that even in the event that 75% of shareholders approve Resolution 4 to require IRES to use its “reasonable” and “best endeavours” to undertake a transaction unless Resolution 3 also passes, the Current Board intends to ignore Resolution 4 even when passed by a supermajority with 75% support of shareholders! It is not settled case law in Ireland that IRES could ignore Resolution 4 in what IRES has acknowledged is a validly constituted EGM. Notwithstanding any practical considerations that may result in similar voting thresholds for Resolutions 3 and 4, it is unfathomable that any board in any jurisdiction would so stridently state that it believes it can and will ignore the votes of 75% + of its voting shareholders, never mind a board that repeatedly asserts that they act utilising best corporate governance principles to serve their fiduciary obligation to shareholders and have strong alignment to shareholders. What kind of ‘shareholder aligned’ board would say it would not even consider the vote of shareholders on a resolution as consequential as Resolution 4 (which refers to the Vision strategic review to sell the Company en bloc or over the course of two years), all while knowing full well that the arrogant, entrenched, and misaligned Current Board will already have a significant number (if not most) of the votes already tabulated by that time?

Who does this entrenched, and misaligned Current Board think it represents? Its own interests or the interests of shareholders? Never has Vision seen such a claim made by any board of directors, let alone one that claims to be “aligned” with shareholders.  

• Claim 1: The Current Board claims that “The Board, together with Management, have taken the right strategic decisions over a number of years to maximise value for all Shareholders, which has placed the Company in a strong position in the current environment and for the future.”
  
• Claim 2: The Circular attempts to deflect from IRES’ poor performance by arbitrarily comparing itself to nine companies that are based in other countries, have different portfolio compositions, and have different business models.
• Claim 3: IRES’ entrenched and misaligned Current Board has materially and intentionally misrepresented the disclosure of the time frames measuring total shareholder return as the time frame of measurement to January 4^th, 2023, including the period during which the share price was primarily impacted by Vision’s public efforts to have the company surface value.
  
• Claim 4: The Current Board claims that “Over the last five full financial years to 31 December 2022, the Board, together with Management, increased net rental revenue from €41.2m to €65.7m, total property value from €921m to €1,499m, total number of residential units from 2,679 to 3,938 and NAV per share from 142.5c to 160c”.

Response to Claim 1

Vision would like to understand how the Current Board can claim to have maximised value for all shareholders when, prior to Vision’s public initiatives starting April 12^th, 2023, IRES’ share price was €0.94, which was BELOW the €1.00 price at IPO, nine years earlier!

Response to Claim 2

It is appropriate that the breadth of stakeholders involved in this matter consider the uniqueness of the real estate asset class as compared to other industry sectors and public companies. It is crucial to recognise the unique difference between real estate and other asset classes and public companies. Notably, the private property market far surpasses the publicly traded real estate sector in size, creating an arbitrage opportunity between the two. This forms the core of the opportunity being considered at the EGM – to implement a well-researched action plan to surface the value inherent in the real estate within one of the most favourable globally imbalanced supply and demand markets. This potential value significantly exceeds the implied value present in the Unaffected Market Price of IRES’ common shares as well as the recent trading price. For example, Blackstone, a leading global asset manager, has recognised this and has undertaken 50 acquisitions of REITs globally since they first formed their real estate group. Often the most efficient path to acquire a real estate portfolio is to acquire the assets from publicly traded REITs. 

As such, Vision believes IRES and its advisers have cherry-picked a data set that was not sufficiently explained nor contextualised to further mislead shareholders and this comparison is nevertheless largely irrelevant to the issues at hand regarding the optimal paths to surface value for IRES shareholders.

Rental apartments are one of the most highly sought-after asset classes by institutional and smaller investors globally, through all market cycles. While the source of capital for real estate investments is from a wide array of domestic and international institutional, family office, and private investors, the investment decision and valuation for real estate is driven by local market supply and demand dynamics, local decision-making, local economic conditions, local regulatory factors, more so than global markets. The deflection by IRES and its advisers of this fundamental reality by referring to other public entities in other markets is a poor attempt to deflect attention away from this fact. In making an investment decision in Ireland, domestic and international investors have little concern about the property fundamentals such as supply-demand or regulations in foreign markets.

Notwithstanding that Vision believes that the data set of IRES’ market comparables has limited relevance, the “competitive” set of nine residential European companies with market floats below €1.5 billion (the “Misleading IRES Comp Set“) and the comparisons thereto warrants highlighting as it is misleading at best as set out below.

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In Vision’s view, the provided Misleading IRES Comp Set is highly problematic for the following reasons:

• As there are no Irish competitors because there are no other Irish REITs (as previously noted, they have all been sold or privatised), the majority of the companies chosen by IRES to be in the Misleading IRES Comp Set are located in Sweden, which has its own regulatory, political, economic, and local issues and supply-demand fundamentals.
• In terms of size as measured by market capitalisation as at January 12^th, 2024, many of these companies are substantially smaller (median of the Misleading IRES Comp Set is €237 million) than IRES (€599 million), which will naturally result in lower liquidity due to their small cap status.
• Many of these companies have significant income outside of residential real estate (for example, such as commercial or office). As is well documented, the office sector has had an extremely difficult period since the advent of Covid-19 both in terms of operations and share price performance, which makes these comparisons particularly egregious.
• Some of the companies in the Misleading IRES Comp Set contain non-recurring items in full-year 2022 and their recent reporting periods of 2023 (for example, one of the companies had a large expense associated with the termination of its CFO, which inflated expenses for the period; another had high one-time expenses associated with listing shares on the relevant stock exchange). It does not appear that IRES has considered this in its analysis which would render its conclusions misleading.
• Some of the companies in the Misleading IRES Comp Set appear to have different business models when compared to IRES, including, for example, one which is focused on value-add residential, and another which includes other business activities such as multifamily-to-condo conversions and property management.
• One of the companies in the Misleading IRES Comp Set is an externally managed company and is, therefore, unsuitable for comparison.

All the above notwithstanding, Vision has assessed these companies as a basis for comparison in terms of overhead costs⁴, as noted below.

For both full-year 2022 and the most recent reporting period (annualised) of the companies in the Misleading IRES Comp Set, Vision conducted the same analysis as IRES (General & Administrative Expenses – or G&A – as a % of total revenue) and was unable to replicate IRES’ quoted numbers.

For the avoidance of doubt, Vision did not include the non-recurring portion of IRES expenses in G&A for these analyses and has used the most recent reporting period (annualised) for all companies involved.

• Vision’s analyses show IRES performed worse than the median of the Misleading IRES Comp Set in terms of 1) G&A as a % of total revenues, 2) G&A as a % of total assets, and 3) G&A per residential unit owned.
• In fact, IRES is the least efficient company on a G&A per residential unit basis than all the nine companies in the Misleading IRES Comp Set, with a cost of €2,865 per unit vs peer set median of €1,251 per unit.
• It is worth highlighting that of the nine companies in the Misleading IRES Comp Set, only three have greater revenue than IRES, whereas six of the nine companies have G&A expenses lower than IRES. This shows the bloated nature of IRES’ G&A expenditure.

The above-referenced G&A metrics for each company in the Misleading IRES Comp Set can be found in Appendix III of this Response Letter.

Response to Claim 3

It is an inappropriate and irresponsible misrepresentation for IRES and its advisers to refer to any analysis that includes share prices as of January 4^th, 2024. Not only does this include share price movements from December 18^th, 2023, onwards (the date of the Requisition Letter), but it is apparent that the share price movement since the public shareholder letter published by Vision on April 12^th, 2023, is influenced by Vision’s engagement and activism and shareholder enthusiasm regarding the prospect of realising value for shareholders.

In doing so, IRES’ entrenched and misaligned Current Board desperately has the audacity to purport to take credit for the increase in the share price driven by shareholder enthusiasm from Vision’s action plan which it opposes!

From the date of its IPO on April 16^th, 2014 until the unaffected Share Price of April 11^th, 2023, of €0.94 (the last day prior to the share price being primarily impacted by Vision’s initiatives) IRES’ ordinary shares have not only performed significantly worse than the median of the public companies in both the “cherry-picked” Misleading IRES Comp Set but performed significantly worse than the median of residential REIT shares both in Europe (36^th percentile), and globally (35^th percentile). For the full list, please see Appendix I.

Company Name Advertisement	Bloomberg Ticker	Listing Country	Total Return from IRES IPO to April 11th, 2023
Irish Residential Properties REIT	IRES ID Equity	Ireland	29 %
European Index
FTSE EPRA NAREIT Europe Residential Index	EPREE Index Advertisement		48 %
Vision-Sourced European Residential Composite (including the Misleading IRES Comp Set)
Median			45 %
Misleading IRES Comp Set
Overall – Median			45 %
Companies of Similar Market Cap – Median			60 %
Vision-Sourced European Residential REITS Advertisement
Grand City Properties	GYC GR Equity	Germany	9 %
LEG Immombilien AG	LEG GR Equity	Germany	45 %
TAG Immobilien AG	TEG GR Equity Advertisement	Germany	18 %
Vonovia	VNA GR Equity	Germany	38 %
Deutsche Wohnen	DWNI GR Equity	Germany	49 % Advertisement
Akelius Residential AB-D	AKELD SS Equity	Stockholm	27 %
Atrium Residential AB-D	ATRLJB SS Equity	Stockholm	129 %
Grainger	GRI LN Equity Advertisement	United Kingdom	48 %
Unite Group PLC	UTG LN Equity	United Kingdom	183 %
Kojamo OYJ	KOJAMO FH Equity	Finland	47 % Advertisement
Xior Student Housing NV	XIOR BB Equity	Belgium	67 %
Empiric Student Property PLC	ESP LN Equity	United Kingdom	32 %
Adler Group SA	ADJ GY Equity Advertisement	Luxembourg	-95 %
Misleading IRES Comp Set
European Residential REIT	ERE-U CN Equity	Canada	60 %
Peach Property Group AG	PEAN SW Equity	Switzerland Advertisement	10 %
Home Invest Belgium SA	HOMI BB Equity	Belgium	93 %
Phoenix Spree Deutschland Ord	PSDL LN Equity	United Kingdom	45 %
HEBA Fastighets AB Advertisement	HEBAB SS Equity	Stockholm	60 %
KlaraBo Sverige AB	KLARAB SS Equity	Stockholm	-55 %
Svenska Nyttobostäder AB	NYTTO SS Equity	Stockholm Advertisement	-72 %
Neobo fastigheter AB	NEOBO SS Equity	Stockholm	208 %
John Mattson Fastighets AB	JOMA SS Equity	Stockholm	-23 %

Response to Claim 4

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Vision believes this statement is misleading and a misrepresentation due to the obfuscation of more recent facts. It is curious to us that on a Circular dated January 8^th, 2024, the Current Board decided to frame the growth in NAV per share as increasing from 142.5c to 160c back in 2022, while completely neglecting to mention that IRES’ published EPRA NTA NAV per share as of first half of 2023 is in fact 147.9c.

Arthur Cox LLP and Goodmans LLP are advising Vision.

No Offer or Solicitation 

This press release is not intended to, and does not, constitute or form part of any offer, invitation, request to cooperate or solicitation in respect of any securities or the solicitation of any vote, approval or cooperation in any jurisdiction. The release, distribution or publication of this announcement in jurisdictions outside of Ireland may be restricted by laws of the relevant jurisdictions, and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Company Name	Bloomberg Ticker	Listing Country	Total Return from IRES IPO to April 11th, 2023
Irish Residential Properties REIT	IRES ID Equity Advertisement	Ireland	29 %
Median			52 %
Market Cap Weighted (in Euros)			88 %
Apartment Income REIT	AIRC US Equity	United States	3 % Advertisement
Avalonbay	AVB US Equity	United States	69 %
Camden Property Trust	CPT US Equity	United States	119 %
Equity Residential	EQR US Equity Advertisement	United States	63 %
Essex Apartment	ESS US Equity	United States	65 %
Indepence Realty Trust	IRT US Equity	United States	218 % Advertisement
Veris Residential	VRE US Equity	United States	-6 %
Elme Communities	ELME US Equity	United States	9 %
Centerspace	CSR US Equity Advertisement	United States	1 %
BSR REIT	HOM-U CN Equity	Canada	52 %
MAA	MAA US Equity	United States	196 % Advertisement
UDR	UDR US Equity	United States	116 %
Nextpoint Residential	NXRT US Equity	United States	299 %
Sunresidential REIT	SRES CN Equity Advertisement	Canada	-40 %
Boardwalk REIT	BEI-U CN Equity	Canada	28 %
Canadian Apartment REIT	CAR-U CN Equity	Canada	201 % Advertisement
Interrent REIT	IIP-U CN Equity	Canada	196 %
Killam Properties	KMP-U CN Equity	Canada	146 %
Minto Apartment REIT	MI-U CN Equity Advertisement	Canada	2 %
Mainstreet Equity Corp	MEQ CN Equity	Canada	267 %
Morguard North American Residential	MRG-U CN Equity	Canada	165 % Advertisement
Dream Residential REIT	DRR/U CN Equity	Canada	-35 %
European Residential REIT	ERE-U CN Equity	Canada	60 %
Direcional Engenharia SA	DIRR3 BZ Equity Advertisement	Brazil	192 %
MRV Engenharia e Participacoes, SA	MRVE3 BZ Equity	Brazil	61 %
Tecnisa	TCSA3 BZ Equity	Brazil	-95 % Advertisement
Hong Pu Real Estate Developer	2536 TT Equity	Taiwan	49 %
Ananda Development Public Company Ltd	Anan TB Equity	Thailand	-31 %
AP (Thailand) Public Co Ltd	AP TB Equity Advertisement	Thailand	287 %
LPN Development	LPN TB Equity	Thailand	-44 %
Origin Property Public CoLtd	ORI TB Equity	Thailand	600 % Advertisement
Property Pefect Public Co. Ltd	PF TB Equity	Thailand	-26 %
Pruksa Holding	PSH TB Equity	Thailand	2 %
Quality Houses	QH TB Equity Advertisement	Thailand	47 %
Sansiri Public Co. LTD	SPALI TB Equity	Thailand	79 %
Advance Residence Investment	3269 JT Equity	Japan	102 % Advertisement
Comforia Residential REIT	3282 JT Equity	Japan	149 %
Daiwa Securities Living	8986 JT Equity	Japan	160 %
Nippon Accommodations Fund	3226 JT Equity Advertisement	Japan	144 %
Grand City Properties	GYC GR Equity	Germany	9 %
LEG Immombilien AG	LEG GR Equity	Germany	45 % Advertisement
TAG Immobilien AG	TEG GR Equity	Germany	18 %
Vonovia	VNA GR Equity	Germany	38 %
Deutsche Wohnen	DWNI GR Equity Advertisement	Germany	49 %
Akelius Residential AB-D	AKELD SS Equity	Sweeden	27 %
Atrium Residential AB-D	ATRLJB SS Equity	Sweeden	129 % Advertisement
Grainger	GRI LN Equity	United Kingdom	48 %
Balwin Properties Pty Ltd	BWN SJ Equity	South Africa	-55 %
Unite Group PLC	UTG LN Equity Advertisement	United Kingdom	183 %
Kojamo OYJ	KOJAMO FH Equity	Finland	47 %
Xior Student Housing NV	XIOR BB Equity	Belgium	67 % Advertisement
Empiric Student Property PLC	ESP LN Equity	United Kingdom	32 %
Adler Group SA	ADJ GY Equity	Luxembourg	-95 %
Peach Property Group AG	PEAN SW Equity Advertisement	Switzerland	10 %
Home Invest Belgium SA	HOMI BB Equity	Belgium	93 %

Please click here to find photos highlighting the poor management of select IRES properties.

G&A analysis using data from most recent reporting period in 2023
Misleading IRES Comp Set	Bloomberg Ticker Advertisement	Market Capitalisation (millions) as at Jan 12th, 2024	G&A per Residential Unit	G&A – % of Revenue	G&A – % of Total Assets
European Residential REIT	ERE-U CN Equity	€ 399.2	€ 1,251	8.9 %	0.5 % Advertisement
Peach Property Group AG	PEAN SW Equity	€ 236.6	€ 696	13.6 %	0.7 %
Home Invest Belgium SA	HOMI BB Equity	€ 295.2	€ 1,450 Advertisement	10.1 %	0.4 %
Phoenix Spree Deutschland Ord	PSDL LN Equity	€ 180.6	€ 2,823	25.3 %	0.9 %
HEBA Fastighets AB1	HEBAB SS Equity Advertisement	€ 524.7	€ 857	6.3 %	0.2 %
KlaraBo Sverige AB1	KLARAB SS Equity	€ 192.4	€ 736	9.2 %	0.6 % Advertisement
Svenska Nyttobostäder AB1	NYTTO SS Equity	€ 145.3	€ 2,405	25.0 %	0.7 %
Neobo fastigheter AB1	NEOBO SS Equity	€ 173.2	€ 1,822 Advertisement	16.1 %	1.1 %
John Mattson Fastighets AB1	JOMA SS Equity	€ 384.2	€ 1,111	8.7 %	0.4 %
Median	– Advertisement	€ 236.6	€ 1,251	10.1 %	0.6 %
Weighted Avg. (Market Capitalisation)	–	€ 334.3	€ 1,298	11.5 %	0.5 % Advertisement
Irish Residential REIT	–	€ 599.5	€ 2,865	12.7 %	0.8 %
1: Original data in Swedish Krona. Converted using SEK 1.000 : EUR 0.089
2: For Phoenix Spree Deutschland Ord, G&A includes external management fees as it is externally managed

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