Irish Residential Building Properties REIT plc Communities ANNUAL and REPORT Creating 2020 Value

better living made simple TEMP RD VERSION TEMP RD VERSION RESPONSE TO COVID-19 PANDEMIC

The Company and the IRES Fund Management Limited ("IRES Fund Management" or the "Manager") responded swiftly to Covid-19, initiating the business continuity and crisis management plans. Our priority has always been to ensure the health and wellbeing of our employees, residents, partners and suppliers. The quality of the property portfolio, strength of the balance sheet and experienced management team have allowed I-RES to navigate this challenging period successfully.

Governance Our Residents › Regular Crisis Management › Active programme of Team meetings communications and › Regular Board meetings engagement and briefings › Telephone support centre › Increased investor and new resident mobile app engagement › Support for smaller › New IR website commercial tenants › Investor perception study › Completed residents survey

Our Assets › Enhanced cleaning and sanitisation › Ongoing R&M service › Virtual leasing of units › Continued program of Capex › Construction closed leading to some delays › Continuing delivery of growth strategy across acquisitions, forward purchases and development

People Giving Back › ‘Working from home' › Support to medical for staff other than front line staff through frontline site-staff provision of accommodation › Transitioned efficiently and car parking to remote working › Company and staff › Focus on regular supported homeless communications charities and other charities significantly impacted by › Health & wellbeing supports Covid-19 CORPORATE PROFILE

Irish Residential Properties REIT plc (the “Company”, “I-RES”, together with IRES Residential Properties Limited, the “Group”) is a growth oriented Real Estate Investment Trust ("REIT") that is focused on acquiring, holding, managing and developing investments primarily focused on private residential rental accommodations in Ireland. At 31 December 2020, the Group owns 3,688 apartments and houses for private rental in Ireland. The Company’s shares are listed on the Main Securities Market of Euronext Dublin.

CONTENTS

I-RES at a Glance 2 Financial Statements 105 Financial Highlights 3 Independent Auditor’s Report to the Members of Irish Residential Properties REIT PLC Strong Track Record of Growth 5 106 Consolidated Statement of Financial Position 111 Market Outlook 6 Consolidated Statement of Profit or Loss and Professionally Managed Other Comprehensive Income 112 Modern Accommodation 7 Consolidated Statement of Changes in Equity 113 Modern Diverse Portfolio 9 Consolidated Statement of Cash Flows 114 A Place to Call Home 10 Notes to Consolidated Financial Statements 115 Company Statement of Financial Position 155 Strategic Report 11 Company Statement of Profit or Loss and Chairman’s Statement 12 Other Comprehensive Income 156 Chief Executive Officer’s Statement 15 Company Statement of Changes in Equity 157 Manager’s Statement 20 Company Statement of Cash Flows 158 Business Review 21 Notes to Company Financial Statements 159 Market Update 33 Key 2020 ESG Deliverables 35 Supplementary Information 169 Business Objectives and Strategy 41 Supplementary Information 170 Investment Policy 42 CAPREIT and IRES Fund Management 174 Risk Report 44 Glossary of Terms 175 Forward-Looking Statements 176 Governance 57 Shareholder Information 177 I-RES Board of Directors 58 Corporate Governance Statement 61 Report of the Audit Committee 71 Report of the Remuneration Committee 76 Report of the Nomination Committee 90 Report of the Directors 94 Statement of Directors’ Responsibilities 103

2020 Annual Report 1 I-RES AT A GLANCE

Property Portfolio Overview 3,688 units across 35 modern properties focused on the mid-tier market, with the majority comprised of spacious 2 and 3 bedroom apartments and houses.

Distribution by Split of Bedrooms1 Photo: 1% Beechwood Court 14% 23% Stillorgan, Co Dublin 1 bed 2 bed 3 bed 101 4 bed Residential Units

62%

Distribution by Average Monthly Rent1

2% 6% 35% €1,000 to €1,500 €1,500 to €2,000 €2,000 to €2,500 >€2,500

57%

Distribution by Location1

11% 1% 29% South Dublin North Dublin 11% West Dublin City Centre West City Cork

23% 24%

Distribution by Age1

3% 7% 8% <2 3% 2 to 4 5% 5 to 7 8 to 10 11 to 13 14 to 16 17+ 45% 30%

(1) As at 31 December 2020

2 I-RES FINANCIAL HIGHLIGHTS

For the year 2020 2019 % change Operating Performance Revenue from Investment Properties (€ millions) 74.7 62.1 20.4% Net Rental Income (€ millions) 59.8 50.5 18.3% EPRA Earnings (€ millions) 34.0 33.1 2.7% Profit (€ millions) 58.3 86.3 (32.5%) Basic EPS (cents) 11.2 18.0 EPRA Earnings per share (cents) 6.5 6.9 Interim Dividend per share (cents) 2.75 2.7 Proposed Dividend per share (cents) 3.22 3.1 As at 31 December 2020 31 December 2019 % change Balance Sheet Total Property Value (€ millions) 1,380.4 1,359.2 1.6% Net Asset Value (€ millions) 841.7 810.2 3.9% IFRS Basic NAV per share (cents) 160.3 155.3 3.2% Group Total Gearing 39.2% 39.9% (1.8%) Gross Yield at Fair Value 5.5% 5.6% EPRA Net Initial Yield 4.2% 4.4% Other Market Capitalisation (€ millions) 785.5 829.5 Total Number of Shares Outstanding 525,078,946 521,678,946 Weighted Average Number of Shares – Basic 522,069,110 478,563,272

€74.7m 98.4% 6.5c Revenue from Occupancy EPRA Investment EPS Properties

(2019: €62.1m, +20.4%) (2019: 98.3%, +10bps) (2019: 6.9c, -6.2%)

€1,380.4m 160.3c 4.2% Total Basic EPRA Property NAV Net Initial Yield Value per share

(2019: €1,359.2m, +1.6%) (2019: 155.3c, +3.2%) (2019: 4.4%, -20bps)

2020 Annual Report 3 Photo: Time Place, Sandyford Dublin 18 67 Residential Units

59.8 59.8 59.8 99.8 99.8 98.399.898.3 9898.3.4 98.4 98.4 3,6663,6663,3,6866683,688 3,688 50.5 50.5 50.5

41.2 41.2 41.2 2,679 2,679 2,679

2018 2018201920182019202020192020 2020 2018 2018201920182019202020192020 2020 2018 2018201920182019202020192020 2020

Net RentNet alRentNe Intcomeal Rent Incomeal Income Total ToNumbtal NumbToertal of Numb er of er of OverOvall erPoallOvrt foPoerliallrto fo Poliort folio (€ millions)(€ millions)(€ millions) ResidentResidentialResident Unitials Unitials Units OccuOccupancOccupay Rancteypa Ranctey Rate (%) (%) (%)

4 I-RES STRONG TRACK RECORD OF GROWTH

Sustainable accretive growth in our residential rental assets portfolio is an integral part of our strategy. We have delivered circa 50% growth in the portfolio unit size over the last 3 years and continue to invest in the supply of accommodation for rent. Due to the limited supply of completed rental properties of scale that fit our business model and continued growing demand, we outlined a three-pronged strategy for growth in 2018. This, coupled with the strong fundamentals of the sector and our operational excellence, has allowed us to continue generating strong returns and growing dividends for our shareholders.

Despite the impact of the Covid-19 The Group has a pipeline of pandemic, we continued to deliver 673 residential units, representing on our investment and growth strategy c. 18% growth potential in the in 2020, adding 173 residential units portfolio, which will be delivered and bringing our overall portfolio over the coming years. of homes for rent to 3,688. The Net Rental Income ("NRI") increased We have a strong balance sheet 18.3% to €59.8 million, driven by the and ample liquidity to position completion of the 2019 Marathon the business for future growth. acquisition and the further addition of 173 residential units during 2020.

39.9%39.9%3939.2%.939% .2% 39.2% 1,359.1,352 9.1,3821,350.1,389.4 2 0.41,380.4 33.6%33.6% 33.6% 155.3 155.316015.35.3160.3 160.3 142.5 142.5 142.5 921.3 921.3 921.3

2018 2018201920182019202020192020 2020 2018 2018201920182019202020192020 2020 2018 2018201920182019202020192020 2020

Total ToPrtalop erPrTotyoptal Vaer Prtyluop eVaerlutye Value BasicBa NAsicV BaNApesicrV sh pe NAarr eVsh pearre share GearinGearing Gearing g (€ millions)(€ millions)(€ millions) (cent)(ce nt) (cent) (%) (%) (%)

2020 Annual Report 5 MARKET OUTLOOK

Supply Demand The Rental Market Growing Population Strong Foreign Direct Imbalance Remains Investment (“FDI”) sector Demand for rental The combined effect of There remains a clear accommodation in Dublin positive net migration and While initial economic and significant supply has remained strong, with natural increase resulted in forecasts envisaged a sharp and demand imbalance circa 2,600 units available an overall increase in the ‘double-digit’ contraction in for all tenures of housing for rent as at 1 February population of 55,900 (1.1%) GDP for 2020, performance in Ireland. Due to the 2021 (Daft).³ While the stock in the year to April 2020.⁴ has been resilient. This Covid-19 pandemic, the of available units for rent Ireland’s population, which is primarily due to the CSO reported that house has increased over the year, stood at 4.74 million in 2016, strength of the Irish FDI completions decreased to it is from a very low base. is projected to increase to sector, concentrated in circa 20,700 in 2020. Rental prices have remained 5.7 million by 2040. The ICT, pharmaceuticals and This is below the original stable nationally, while rent population of Dublin in medical technology. The estimate of 26,000 for price inflation softened April 2020 was estimated IDA recently reported 2020 and over the 21,000 modestly in Dublin, with to be almost 1.42 million that employment in IDA- units completed in 2019. rents at higher price points persons, 28.5% of the supported companies The Central Bank of Ireland¹ somewhat more impacted. total population.⁴ grew by 3.6% in 2020.⁵ forecasts new house As a result, tax revenue completions of around performed much more 21,500 for 2021 and 23,500 resiliently during 2020 in 2022, compared to its than expected, falling by estimate of required level just 4% year on year.⁶ of more than 34,000² houses per annum. Photo: Phoenix Park, Dublin. + See more: Phoenix Park Racecourse, Castleknock, Dublin 15. Page 21 20,700 Circa 20,700 housing completions in Ireland during 2020, down 1.9% on the previous year

1 Central Bank of Ireland - Quarterly Bulletin January 2021 2 Central Bank of Ireland - Population Change and Housing 34,000 5.7m Demand in Ireland Required number Ireland’s projected 3 Daft.ie - Q4 2020 Rental Price Report 4 CSO - Population and Migration of housing population by Estimates April 2020, completions 2040 – an increase 20 August 2020' 5 IDA Ireland 2020 Results per annum of 20% over 2016 6 Department of Finance - (ESRI) End-2020 Exchequer Returns 2019: X.X cents

6 I-RES PROFESSIONALLY MANAGED MODERN ACCOMMODATION 01 02 03 Bringing new standards Rapid response Top-quality staff to the rental market

We are transforming the residential We put our residents first at all times Those high standards also apply to rental market for the better by by offering a 24-hour on-call service our Manager’s highly trained operations offering professional property for emergencies such as loss of heat, staff who participate in regular external management services through water or essential services. We also and internal professional development the Manager. Each building has maintain high service and safety programmes in areas such as health dedicated staff to ensure residents standards such as twice-yearly fire drills and safety, process efficiencies and receive the highest possible that exceed regulatory requirements. property management. standards of service.

Photo: Phoenix Park, Dublin. + See more: Phoenix Park Racecourse, Castleknock, Dublin 15. Page 21 THE I-RES ADVANTAGE

Advanced technology Team of tradespeople to maximise efficiency and caretakers

24-hour emergency Dedicated property service line manager for every building

Intensive training and Safety standards development for all Investment exceed regulatory Manager team members requirements

2020 Annual Report 7 DROGHEDA

Slane

Bettystown

Laytown

Duleek

Bellewstown Navan

Stamullen

23 Balbriggan

Skerries

Kilmessan

LUAS Red Line LUAS Green Line DART Line Commuter Train

3,784 Rush Dunshaughlin Units in Dublin Including Phoenix Park acquisition which closed in January 2021.

M1 18 50 Donabate Units in Cork

Swords 25 Malahide Pavillion’s Shopping Centre N2  Portmarnock DUBLIN AIRPORT

M50

20 26 21 Dunboyne James 19 24 22 N3 Connolly Memorial Finglas Baldoyle Kilcock Hospital Santry 30 31 Blanchardstown Shopping Centre Clonsilla Dublin Beaumont Blanchardstown City Hospital Raheny University Howth Castleknock 27 1 M50 Clontarf

M4 4 PHOENIX 6 2 Liffey PARK Heuston Docklands Valley 32 Station TU Dublin 5 Lucan Shopping Bolton St. 3 Celbridge Centre Cherry Connolly Orchard Station Hospital 34 St.James’s 33 Hospital DUBLIN Inchicore Drimnagh Ballsbridge 35 Ranelagh Crumlin Rathmines Children’s Hospital 10 St Vincents N7 Hospital Terenure 12 Blackrock University Dún College N31 Laoghaire Dublin Tallaght TU Dublin Clane Hospital Tallaght 28 29 Knocklyon Dundrum Dalkey N7 Town 8 Tallaght Centre 13 14 15 16 11 M50 17 7 Sandyford M50 9 Rockbrook Cabinteely Killiney 8 I-RES N11

Carrickmines NAAS

N81 Bray N11

15 DROGHEDA

Slane

Bettystown

Laytown

Duleek

Bellewstown Navan

Stamullen

23 Balbriggan

Skerries

Kilmessan MODERN DIVERSE PORTFOLIO

We are committed to investing in communities by providing high- quality housing in attractive, well serviced locations where people want to live, work and build their lives. The focus of our acquisition and development strategy is therefore on family friendly urban Dunshaughlin Rush locations which feature high grade community facilities, good public transportation links, well developed educational and social infrastructure, and sustainable employment opportunities.

M1 18 CITY CENTRE SOUTH DUBLIN NORTH DUBLIN WEST DUBLIN Donabate 1 Richmond Gardens, 7 Time Place, 18 Semple Woods, 27 Phoenix Park Fairview Sandyford Donabate Racecourse, 98 Units 67 Units 40 Units Castleknock 146 Units 2 Kingscourt, 8 Beechwood Court, 19 Charlestown, Swords 25 Malahide Pavillion’s Smithfield Stillorgan Finglas 28 Priorsgate, Shopping 83 Units 101 Units 235 Units Tallaght Centre 108 Units N2  3 The Marker 9 Belville Court, 20 Northern Cross, Portmarnock Residence, Cabinteely Malahide Road 29 Tallaght Cross West, DUBLIN Grand Canal Square 29 Units 128 Units Tallaght AIRPORT 85 Units 460 Units 10 Bessboro, 21 Carrington Park, M50 4 Bakers Yard, Terenure Santry 30 Pipers Court,

20 North Circular Road 40 Units 142 Units Clonsilla 26 21 Dunboyne James 19 24 22 86 Units 95 Units Connolly N3 11 Beacon South 22 The Coast, Memorial Finglas Santry Baldoyle Kilcock Hospital 5 City Square, Quar ter, Baldoyle 31 Hansfield Wood, 30 31 Blanchardstown Gloucester Street Sandyford 52 Units Clonsilla Shopping Centre Clonsilla Dublin Beaumont 24 Units 213 Units 99 Units Blanchardstown City Hospital Raheny University Howth 23 Taylor Hill, Castleknock 6 Xavier Court, 12 Elmpark Green, Balbriggan 32 Coldcut Park, Sherrard Street Upper Merrion Road 78 Units Clondalkin 27 1 M50 Clontarf 41 Units 201 Units 91 Units 24 Heywood Court, M4 4 PHOENIX 6 13 Grande Central, Santry WEST CITY 2 Sandyford 39 Units Liffey PARK Heuston Docklands 33 Tyrone Court, Valley 32 Station TU Dublin 5 65 Units Lucan Shopping 3 Inchicore Bolton St. Connolly 25 Waterside, Celbridge Centre Cherry 95 Units Orchard Station 14 Hospital 34 St.James’s Rockbrook Malahide 33 Hospital DUBLIN Grande Central, 55 Units Inchicore Ballsbridge 34 Camac Crescent, Drimnagh Sandyford Inchicore 35 81 Units 26 Hampton Wood, Ranelagh 90 Units Crumlin Rathmines Finglas Children’s Hospital 15 Rockbrook 128 Units 10 St Vincents 35 Lansdowne Gate, N7 Hospital South Central, 12 Blackrock Drimnagh Terenure Sandyford Dún 224 Units University 189 Units College N31 Laoghaire Dublin Tallaght TU Dublin CORK Clane Hospital Tallaght 16 The Forum, 28 29 Knocklyon Sandyford 36 Hartys Quay, Dundrum Dalkey N7 Town 8 8 Units Co. Cork Tallaght Centre 13 14 15 16 50 Units 11 M50 17 7 17 The Maple, Sandyford M50 9 Sandyford 68 Units Rockbrook Cabinteely Killiney 2020 Annual Report 9 N11

Carrickmines NAAS

N81 Bray N11

15 A PLACE TO CALL HOME

I-RES invests in sustainable communities by providing high-quality homes for people who want to live and work there for the long term. Our round-the-clock service, outstanding levels of care, maintenance and building quality, and commitment to our residents, add up to quality standards of living for residents.

Photo: Lansdowne Gate, Drimnagh Dublin 12 224 Residential Units

10 I-RES Strategic Report

In this Section: Chairman’s Statement 12 Chief Executive Officer’s Statement 15 Manager’s Statement 20 Business Review 21 Market Update 33 Key 2020 ESG Deliverables 35 Business Objectives and Strategy 41 Investment Policy 42 Risk Report 44

Beacon South Quarter 213 Residential Units

2020 Annual Report 11 CHAIRMAN’S STATEMENT

The Company delivered another strong performance and continued growth in a period of uncertainty.

As we reflect on 2020 As we navigate the Covid-19 pandemic Post year end, the Group added to the health and wellbeing of our the growth achieved in 2020 with and the challenging year employees, residents and business the acquisition of 146 residential units that it was, I am happy partners remains our priority. The at The Phoenix Park Racecourse to say that the Board of Group remains focused on delivering in Dublin bringing the total portfolio Directors of the Company the strategic priorities set by the Board to 3,834 residential units as of the and continuing to invest in accretive date of this report. (“the Board”) is very acquisitions and developments to satisfied with the Group’s deliver consistent returns for our We believe the structural drivers of performance, under the shareholders. demand for private rental residential management of our Chief accommodation (including population Portfolio Performance growth, strong inward investment, Executive Officer (“CEO”) economic growth and urbanisation) Margaret Sweeney and As at 31 December 2020, the Group will continue to underpin strong IRES Fund Management. had a portfolio of 3,688 residential demand in the market over the long- units across 34 properties in the term. The Board believes that I-RES The Company delivered Dublin region and one property in is strongly positioned to capitalise another strong Cork. Despite the various public on this demand and we will continue performance and health measures in place as a result to evaluate growth opportunities to continued growth in a of Covid-19, including restrictions further strengthen its position as the on travel and movement, the Group leading provider of private rented period of uncertainty, continued to grow its portfolio during residential homes in Ireland, while demonstrating the the year, with a modest net increase of maintaining a disciplined approach resilience of the multi- 22 units on the prior year. This modest to capital allocation. increase reflects the acquisition of 173 family real estate sector. residential units, offset by the disposal We are very appreciative of our of 151 units as part of a programme to shareholders, our banking syndicate re-cycle and re-deploy capital across and private placement noteholders the business. The Group also has who have all strongly supported I-RES a further pipeline of 673 residential and its financing requirements over units, representing circa 18% growth the course of the last year. potential in the portfolio.

12 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 13 2020 Annual Report Annual 2020 Agreement which can now be now can which Agreement the with In conjunction exercised. Management Investment the of rollover that announced I-RES Agreement, management the augment would it with in line Company the of resources scale. increased and strategy growth its in Party Committee, Related The continues advisers, with conjunction and strategic relative the evaluate to options various of merits financial The Company. the to available option the exploring is Company of management the internalize to to if applicable, and, Company the Ireland of Bank Central the to apply alternative an as authorization for The manager. fund investment continuing the appreciates Company of assistance and co-operation in LP CAPREIT and Manager the Party Committee’s Related the future the on deliberations ongoing Company. the of management at that note should Shareholders been has decision no this point, internalize, to Company the by made Investment the and otherwise, or continues Agreement Management terms. existing the under be made will announcements Further appropriate. as Company the by , was appointed in appointed , was CAPREIT LP CAPREIT agreement between the Company, Company, the between agreement Limited Properties IRES Residential "Investment (the Manager the and Agreement"). Management Management Investment The five of term initial an had Agreement November 1 on expired which years of expiry the of In advance 2020. Management Investment initial the of a committee term, Agreement include did not which Board, the Burns Phillip or Kenney Mark either relationships respective their given to November 2019 (the “Related Party “Related (the 2019 November a scheduled conduct to Committee”) Management Investment the of review Agreement, Services and Agreement available options strategic the evaluate and them to in relation I-RES to matters. related certain consider initial the of date expiry On the Agreement Management Investment the 2020, 1 November on term not had Party Committee Related for terms new on agreement reached Management Investment a revised As a Manager. the with Agreement the terms, its with in accordance result, Agreement Management Investment terms. existing the under continued has rights termination have parties Both Management Investment the under In November 2020, I-RES provided an an provided I-RES 2020, In November management investment the on update The Board is extremely pleased with with pleased is extremely Board The Manager the by made contributions the and management senior with together Partnership Limited CAPREIT of staff the and LP CAPREIT LP”). (“CAPREIT staffing provide to continue Manager supports including essential other and business. the for SAP platform its Investment Management Management Investment Agreement Against a challenging market market challenging a Against strong generated Group the backdrop, the during NRI growth and revenue in investment continued Our year. rental deliver helped properties new while year, the for growth income high a consistently maintaining also portfolio. our across rate occupancy adjusted our 2020, December 31 As of non-recurring for EPS adjusted EPRA 2019, is up on which is 7.0 cents costs share per NAV Basic IFRS our while This 160.3 cents. 3.2% to by grew resulted in 2020, performance strong additional an of declaring in the share per 3.22 cents of dividend ended months twelve the for 2020. 31 December Financial Results Financial Governance & Shareholder ESG To our residents, communities, funders Engagement and shareholders, the I-RES Board I-RES remains fully committed to wishes to thank you for your trust and The Board is committed to maintaining aligning environmental, social and ongoing support as we collectively high standards of corporate governance (“ESG”) measures to our navigate through these challenging governance. business strategy and objectives. times. We recognise that many in our communities and wider society have During 2020, we undertook an Following the formalising of our ESG been deeply impacted by Covid-19 and external Board review, to analyse strategy in 2019, we have remained we look forward to better days ahead. the Board’s composition and to committed to building on our ESG identify any potential gaps in skills or programme throughout 2020. We Outlook expertise. Separately, I have assessed recognise that a critical part of our the performance of each individual ESG journey is identifying and setting In summary, the Board is extremely director and I am pleased that goals that are not just about having pleased with the Group’s performance every director is committed to their enough impact, but the right impact. for the year. The quality of our position, provides meaningful input, The commitments set out in our property portfolio, the strength and contributes sufficient time and Corporate ESG Policy are aligned of our balance sheet, together energy to effectively complete their with the United Nations Sustainable with the experience of our Board, Board duties. Development Goals (“SDGs”) relevant management team and the Manager, to our business. 2021 will see us has allowed I-RES to navigate the We believe that frequent, transparent monitor our progress towards each uncertainty caused by the Covid-19 and constructive engagement with relevant goal and inspire and enable pandemic. Looking ahead, the ever- our shareholders helps us to better a more impactful performance as we evolving situation presented by the understand how we can create further move forward. Covid-19 pandemic, and Government long-term value. During 2020, I-RES restrictions introduced in order to appointed an external advisor to Our goal is not just to own buildings mitigate its spread, could have impacts complete its first independent investor but to create communities which are on the Group's business which we perception study to gain independent positive places to live and work in, cannot foresee at this time. Our insights into investors’ sentiment as well as providing a quality resident priority will continue to be the health towards I-RES and the sector it experience. We have taken this focus and wellbeing of our employees, operates in. During 2020 I-RES to planning for new developments residents, partners and suppliers. appointed Sarah Stokes as Director on our owned sites, as well as in our of Investor Relations and Funding to interaction with partners. In that effort, I would like to thank my fellow Board assist with investor engagement and the Board appointed Tom Kavanagh, members, our CEO, Margaret Sweeney, to continue to expand our investor an Independent Non-Executive as well as the management and relations programme and process as Director, to build the necessary skill staff of IRES Fund Management and the business continues to grow. sets that will advance our Board-level CAPREIT LP for their hard work, focus ESG competency and support the and dedication during the year which multi-year strategy that will drive a ensured that the business continued resilient and adaptative performance. to perform strongly during these uncertain and challenging times. As one of Ireland’s largest landlords, our Board collectively holds years of global operational excellence, and we have the experience to leverage and initiate appropriate practices to manage the challenges and Declan Moylan opportunities affecting our business. Chairman We want to collectively acknowledge I-RES and the Manager’s leadership teams and employees who strive every day to be the employer, landlord and partner of choice. Their combined We recognise that dedication, passion and commitment are what continuously sets I-RES apart a critical part of in the marketplace. our ESG journey is identifying and setting goals that are not just about having enough impact, but the right impact.

14 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 15 2020 Annual Report Annual 2020 As we progress into 2021, Covid-19 Covid-19 2021, into progress As we ongoing present to continues impact long-term the and challenges In late materialise. fully to is yet a entered Ireland 2020, December resulting pandemic, the of wave third coming lockdown severe and in a third which 2021, 1 January from effect into schools, of closure the included and retail non-essential construction, reducing are numbers Case hospitality. some that is envisaged it and strongly in the evolve will restrictions of easing positive are There months. coming for horizon the on emerging signs of commencement the with 2021 programme. vaccination the 2020 Performance properties investment from Revenue million €74.7 to 20.4% by increased 18.3% by grew Income Rental Net and arising period, in the €59.8 million to assets in new investment from mainly results, These 2020. and 2019 during 10 months approximately include which demonstrate Covid-19 of impact the of business. the of resilience strong the profile resident diversified I-RES’s strong and properties our across managed, professionally for demand accommodation rental high quality Covid-19 Statement Covid-19 unprecedented caused has Covid-19 the to disruption economic and social quarter first the since economy Irish lockdowns related Pandemic 2020. of many impacted have restrictions and and country the across businesses our live we way the changed have of priority the this time, During lives. Manager, our with along Group, the health safety, the ensure to been has employees, our of wellbeing and We suppliers. and partners residents, dialogue in continuous stayed have past the over stakeholders these with to diligently worked and 12 months was in what stakeholders support all year. challenging extremely an effectively together worked have We this navigate successfully to I am environment. unprecedented adapted team our say to proud working virtual to transitioning quickly, able were we that ensuring seamlessly, throughout support residents our to to continuing as well as pandemic the We targets. business our on deliver programme active an maintained have residents all with communications of resident support any to continue and to the due difficulties is facing who restrictions. related and pandemic I am delighted delighted I am we that report to have delivered of year another performance strong for 2020. CHIEF CHIEF EXECUTIVE OFFICER’S STATEMENT Against a challenging I-RES’s backdrop, business has remained resilient, underpinned and quality high our by portfoliodiverse of financial robust assets, experienced and position management and Board us saw also 2020 team. on deliver to continue with strategy growth our in investment further homes, new of supply through capital recycling of disposal accretive growth 9.7% and assets in underlying earnings. in the mid-tier range as well as The Dublin and Irish market continued €200 million (Euro equivalent) (the continued investment in new supply to attract significant investor demand "Notes"), with a weighted average of homes, stable rent levels and during 2020 despite the impact of fixed interest rate of 1.92% inclusive of efficient operational management Covid-19 and related restrictions, swap costs. The Notes have provided has underpinned the resilience of the resulting in further yield compression further flexibility in our funding strategy business during 2020. Despite the in residential asset values for good by adding further lengthening to uncertain market backdrop, we saw quality assets in the right locations. our debt maturities. The Notes have strong occupancy of 98.4% at We reported a fair value gain as laddered circa six, nine and eleven-year 31 December 2020 (31 December a result of the revaluation of our maturities, with the first repayment due 2019: 98.3%). Our rent collections investment properties at 31 December in March 2027. for the residential portfolio were 2020 of €19.1 million over the year. consistent at 98.9% for 2020 (2019: We are grateful to our shareholders, 99.0%), and our NRI margin achieved I am pleased to say that we have our banking syndicate and private was 80.0%, further underlining the continued to deliver strong returns and placement noteholders who have all resilient characteristics of the business. growing dividends for our shareholders strongly supported the Group and This represents a very strong outturn during 2020. its financing requirements over the under current market conditions. course of the last year and as we Funding continue to deliver on our strategy. Being cognizant of the challenges faced by many arising from the onset of Managing and maintaining a strong Growth Strategy the Covid-19 pandemic, the Group has balance sheet with adequate liquidity not implemented any rent increases on has been a key priority for us during Sustainable accretive growth in our renewals since 1st April 2020. this period of uncertainty. Our Group residential rental assets portfolio is an Total Gearing as at 31 December 2020 integral part of our strategy. We have We have also continued to support was 39.2%. delivered circa 50% growth in the our commercial tenants (circa 3.5% of portfolio unit size over the last revenue) whose businesses have been Our Revolving Credit Facility (“RCF”) of 3 years and continue to invest in significantly impacted due to public €600 million with our syndicate of five the supply of accommodation for health measures and lockdowns. banks which we put in place in 2019 will rent. Due to the limited supply of We have payment plans in place for support the funding of acquisitions and completed rental properties of scale affected tenants, representing circa development plans. that fit our business model and 18% of our commercial tenants. continued growing demand, we In March 2020, the Group completed a outlined a three-pronged strategy private placement of notes of circa for growth in 2018.

2020 Net Rental Income Performance Highlights: €59.8m

2019: €50.5 m

Net Rental EPRA Basic Income Margin Earnings per share 80.0% 6.5c

2019: 81.4% 2019: 6.9 cents

16 I-RES GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION STRATEGIC REPORT 17

2020 Annual Report Annual 2020 ”), an industry- ”), an ESG Strategy ESG of importance the recognise We we year Last investing. responsible are we and strategy ESG our formalised on further progress significant making it ensuring and this strategy evolving business. the across is implemented presented challenges global the Despite an place to continue we Covid-19, by a particular with ESG, on emphasis In that performance. social our on focus of wellbeing the prioritised we effort, wider the and residents, our people, our 2020. during community a build to remains commitment Our business responsible and sustainable long-term the with is aligned which building investing, to take we approach properties, our maintaining and residents, our servicing supporting and the and partners vendor our employees, operate. we in which community wider our by supported work, actively We business our aligning towards Manager ESG with objectives and strategy growing to important are that measures business, sustainable term a long investors our of needs the meeting ESG the of assessor global leading and assets estate real of performance initiated we In addition, managers. their the with alignment practice business our Association Estate Real Public European standards. reporting (“EPRA”) sustainable approach our evolve to continue As we all across measures ESG integrating to confident are we business, our of levels adaptive and a resilient in delivering our with is aligned that performance objectives. strategic a separate published has Company The date the about or on Report ESG on is available which this Report of https:// at website Company's the contents The investorrelations.iresreit.ie. of part form do not Report ESG the of Report. this Annual and stakeholders. and across stakeholders other and Investors increasingly industry estate real the performance ESG-based expect we 2020, during and disclosures to application inaugural our submitted Sustainability Estate Real Global the (“GRESB Benchmark A fixed price forward purchase purchase forward price A fixed units 69 residential for contract for Dublin due Road, Merrion at in 2022; delivery units residential 61 of Development on currently units 3 commercial and sites; owned to in place permission Planning on units 543 residential develop g comin the years. over sites existing In January 2021, completed the the completed 2021, In January units residential 146 of acquisition and VAT (including €60 million for costs); transaction excluding

The price achieved was in excess of the of in excess was achieved price The 6% circa and cost acquisition original valuation. 2019 December the of ahead portfolio the 2020, 31 December As at well- 3,688 high-quality, of consisted with along homes residential located and space commercial associated 2019: (31 December sites development value a total at units), 3,666 residential residential our of All €1,380.4 million. of area, Dublin in the located are units situated are and in Cork, asset one with links and transportation primary to close centers. employment growth for pipeline a strong have We including: › › › › Investing in future supply through through supply in future Investing local with partnerships development builders and developers of intensification and Development sites owned I-RES Continued acquisition of completed completed of acquisition Continued yields accretive at assets

In 2020, we delivered on this strategy this strategy on delivered we In 2020, new 173 high-quality adding by We portfolio. our to units residential acquisition a further for contracted also acquired were which apartments 146 of In 2021. in January completion on the 2020 in November addition, disposal, first its announced Company portfolio, a non-core of sale the with across units residential 151 comprising capital effective providing 10 properties, accretion. and allocation This approach allows I-RES to both both to I-RES allows This approach accretive and attractive identify in the opportunities development the on capitalising also while market, property other of insight and strength strategies three These developers. various at I-RES by be utilised also can value, maximise to cycle in the points deliver to continue we that ensuring shareholders. our for returns enhanced Our strategy remains focused on: focused remains strategy Our › › › Results IFRS Basic NAV per share increased Despite the impact of Covid-19, by 3.2% to 160.3 cents as at 31 our residential occupancy rate has Below is a table summarising the December 2020 from 155.3 cents as remained strong at 98.4% at Group’s financial position as at at 31 December 2019, post payment of 31 December 2020 (31 December 31 December 2020 and profit or a 3.1 cents dividend per share (€16.2 2019: 98.3%), underpinned by strong loss results for the year ended million) on 23 March 2020, offset market fundamentals in the Irish 31 December 2020. by fair value gains on investment residential rental sector and strong properties on revaluations and profits property management. Property assets at 31 December 2020 generated in 2020. increased by €45.5 million reflecting The NRI margin declined from 81.4% a combination of acquisitions, The Group decreased its Group Total to 80.0% over the 12 months. The development and capital expenditures Gearing to 39.2% at 31 December decline is due to higher bad debts within our portfolio, a €19.1 million 2020, from 39.9% at 31 December and vacancy post declaration of the fair value gain on the investment 2019. The Group’s acquisition of Covid-19 pandemic, compared to prior properties held as at 31 December 146 units located at the Phoenix Park periods. I-RES has a limited number of 2020 which is offset by asset Racecourse for €60 million (including commercial parking and commercial disposals of €43.5 million. The main VAT and excluding transaction costs), leases (in total less than 3.5% of total driver of the valuation increase was which was completed in January 2021, Revenue), which have been more yield compression, offset by reduction will increase the pro-forma Group Total negatively impacted. in market rents. I-RES did not put Gearing to 41.5%. through rent increases on renewals We again delivered a strong earnings during the pandemic period. Average Monthly Rent (“AMR”) per unit performance with Adjusted EPRA was €1,624 as at 31 December 2020 Basic EPS before non-recurring costs (31 December 2019: €1,596). of 7.0 cents for the period ended 31 December 2020. This was due to organic rental growth and accretive acquisitions.

Statement of Financial Position: As at As at % change 31 December 31 December 2020 2019 Investment Properties (€ millions) 1,380.4 1,359.2 1.6% Net Asset Value (€ millions) 841.7 810.2 3.9% IFRS Basic NAV per Share (cents) 160.3 155.3 3.2% Bank Indebtedness and private placement debt (€ millions) 539.1 549.9 Group Total Gearing 39.2% 39.9%

Statement of Profit or Loss and Other Comprehensive Income: FY 2020 FY 2019 % change Revenue from Investment Properties (€ millions) 74.7 62.1 20.4% Net Rental Income (€ millions) 59.8 50.5 18.3% Fair value gain on investment properties (€ millions) 19.1 56.2 EPRA Earnings (€ millions) 34.0 33.1 2.7% Non recurring costs (€ millions)(1) 2.3 - Adjusted EPRA Earnings (€ millions)(2) 36.3 33.1 9.8%

Basic EPS (cents) 11.2 18.0 (37.8%) Diluted EPS (cents) 11.1 17.9 (38.0%) EPRA EPS (cents) 6.5 6.9 (5.8%) Adjusted EPRA EPS (cents) 7.0 6.9 1.4% Interim Dividend per share (cents) 2.75 2.7 1.9% Proposed Dividend per share (cents) 3.22 3.1 3.9%

(1) Refer to page 26 for further details on non recurring costs. (2) Refer to page 30 for further details on Adjusted EPRA Earnings

18 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 19 2020 Annual Report Annual 2020 We remain confident in the long-term long-term in the confident remain We multi-family Irish the of prospects itself proven has which market, rental counter and resilient be highly to pandemic. the during cyclical modern of portfolio balanced our With operational the with together assets, are we Manager, our of excellence deliver to continue to positioned well going value and performance a strong execute to continue We forward. as well as strategy growth our on opportunities all monitor to continuing is resilient. business Our market. in the and position financial Group’s The the have we and is strong, liquidity our manage to flexibility and resources challenges various the through way arise. inevitably will that my convey to like I would Finally, in the employee each to gratitude well as Manager the and Company for directors and Chairman our as focus commitment, incredible their while year, last the support over and challenges many the with dealing all to delivered pandemic the that worked has team I-RES The lives. our this challenging through relentlessly to continue we that ensure to time successfully business the manage all to service excellent provide and our thank to like I would residents. our of foundation the are who residents been also have who and business our significant under working and living with deals country the as restrictions also I would pandemic. Covid-19 the partners many our acknowledge to like continue who providers service and excellent with Group the provide to the all despite service support and brought. 2020 that challenges Margaret Sweeney Margaret Officer Executive Chief Outlook future in the confident remain We we as business the of prospects to solutions housing deliver to continue basis a sustainable on market Irish the pressing most The term. long the for market housing Irish the facing issue of shortage significant the remains while and, accommodation rental 2014, since increasing been has supply see output will Covid-19 of impact the for expectations original below fall levels. 2019 below and 2020 well-located quality, for Demand managed professionally and strong, remains accommodation population steady by underpinned Foreign inward In addition, growth. key across (“FDI”) Investment Direct through resilient remained has sectors in ICT, particularly pandemic, the The Services. Financial and Pharma (“IDA”) Authority Development Industrial employment that reported Ireland in 2020 achieved 3.6% was of growth companies. supported in IDA our across collections rent While strong remained portfolio residential be indicative not this may 2020, during in the collection rent of rate the of ongoing The months. upcoming Covid-19 the to related uncertainty uncertainty including pandemic, mitigate to taken measures surrounding rise could give impacts economic the vacancy and debts in bad increases to the continue will We future. in the levels the as tenants our with dialogue open progresses. situation monitor to continue also will We and risks potential the assess and arising Group the for opportunities the as such events market from deal, Brexit announced recently well as in Ireland, FDI on policy US increased and as taxation risks. regulation We have have We delivered circa in growth 50% portfolio the over size unit 3 years. last the Our ability to continue to deliver a deliver to continue to ability Our despite in 2020, dividend progressive backdrop, market challenging the counter- and resiliency the reflects multi- the of characteristics cyclical high our sector, estate real family assets, of portfolio diverse and quality for performance financial strong and year. the The Board announced an additional additional an announced Board The (€16.9 share per 3.22 cents of dividend ended months twelve the for million) filing the following 2020 31 December for statements financial relevant the of 19 on in Dublin, Ireland Company the be is to This dividend 2021. February 2021. April 20 on paid Under the Irish REIT regime, subject subject REIT regime, Irish the Under distributable sufficient having to distribute to is required I-RES reserves, Income Property the 85% of least at for Business Rental Property its of shareholders to year financial each via dividends. Dividends MANAGER’S STATEMENT

It is our objective to ensures that people simply love to live in our buildings, which leads to the consistently high occupancy rates.

During the current Our highly qualified and talented residents, best practices in employee operations team, which features a development, and innovative strategies pandemic, we have member dedicated to each building and for attracting and retaining residents, continued to put an offers extensive supports such as a 24- we continually improve our offerings to emphasis on protecting hour emergency line, leads the way in residents with the objective to ensure the health and safety of professional management of residential that the services we provide exceeds rental accommodation nationally. residents’ expectations. our employees, I-RES’s The team builds close relationships tenants, partners and with residents and ensures that our I-RES has a well-diversified, high-quality suppliers, and continue reputation for quality assets is sustained portfolio distributed around Dublin with through proactive and attentive one asset in Cork and located close to implement appropriate maintenance. In the midst of the current to transport hubs, schools and major cautionary measures to pandemic, our team follows all of the employers. In these areas, we have address potential risks. Irish Health Service Executive guidelines expanded our community engagement The Manager continues to ensure the safety of our residents activities and worked with local and our employees. We continue residents to deepen our relationships to deliver strong results to provide communication with our with neighbours and residents. These despite these uncertain residents to ensure that they feel safe in activities are all part of our effort to times. In particular, we our buildings. We continued to provide deliver exceptional living experiences have enhanced our essential repairs and maintenance to the that encourage residents to put down buildings throughout the early stages of roots and stay. capacity to deliver high- Covid-19. It is our objective to ensures quality accommodations that people simply love to live in our Ireland has remained one of the most and services for residents buildings, which leads to the consistently resilient economies in the European high occupancy rates we have delivered Union during the pandemic, and while continuing to pursue year after year. the consistently high demand for our strategy for growth. quality rental properties, combined Our local capabilities are amplified by with a growing appreciation of the our access to the global expertise, value of I-RES’ professional property systems and technology platforms of management approach, is perfectly CAPREIT LP, a Canadian leader in the aligned with the I-RES model of long- professional property management of term commitment to a residential market. rental accommodation. During 2020, we have a new resident portal to provide an additional channel for our residents to communicate with us. Building on the CAPREIT LP's model, which features Scott Cryer open and regular communication with Director of IRES Fund Management 20 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 21 2020 Annual Report Annual 2020 attractive position close to Dublin City Dublin City to close position attractive access easy 6kms), with (circa Centre are There motorway. M50 the to the links to transport public excellent station train Ashtown with Centre, City service bus frequency a high and Phoenix the and Castleknock by. close and after sought is a much Park providing location, residential mature amenities, finest Dublin’s of some sporting facilities, schools, including employment. and shopping and Purchase Forward completed Contracts Development 2020 in delivered and Units) Residential (173 Malahide, Waterside, apartments - 55 Co Dublin in contract into entered I-RES of purchase forward the for 2019 at duplexes and apartments 55 a Co Dublin for Malahide, Waterside, €18.5 million of price purchase total other excluding but VAT, (including residential 55 The costs). transaction of end the by received were units in two phases. 2020 March excellent to close located is Waterside transport, including infrastructure, employment, and parks retail schools, a approximately Airport Dublin with scale Large away. drive 10-minute Investing in future supply supply in future Investing with partnerships through Rented Private of developers assets. (“PRS”) Sector intensification and Development sites. owned I-RES of nued acquisition of completed completed of acquisition nued Conti yields. accretive at assets

The I-RES long term strategy for future future for strategy term long I-RES The around: is focused growth During 2020, I-RES continued to to continued I-RES 2020, During with strategy growth its on execute and delivered homes 319 residential follows: as for contracted Acquisitions Racecourse, Park Phoenix Units) 15 (146 Residential Dublin 2020 in December contracted I-RES residential 146 of acquisition the for Park Phoenix in The located units Dublin 15 Castleknock, Racecourse, in closing on ownership took and price purchase total The 2021. January but VAT (including €60 million was costs). transaction other excluding west in the is located property The and Castleknock of Dublin suburb the Park, Phoenix the to is adjacent European any of park enclosed largest an occupies scheme The city. capital › › ›

During 2020, 2020, During continued IRES its on execute to strategy. growth BUSINESS BUSINESS REVIEW

146 Units Residential Photo: Racecourse, Park Phoenix Dublin 15 The Irish residential residential Irish The to continues market new of levels low see buildings apartment backdrop the against supply a significant of and demandimbalance. employers in the area include Ryanair, Hansfield Train Station lies next to the The price achieved was in excess of Siemens, Kellogg, Fujitsu, C&C, Hertz, development and offers a regular rail the original acquisition cost and circa Nightline Group and Fyffes. The area is link to Dublin City Centre (Connolly 6% ahead of the December 2019 well serviced by Dublin Bus, the DART Station), with a journey time of circa valuations. I-RES recognized a gain rail services and the M50 and 30 minutes. on disposal of investment property of M1 motorways. €4.4 million. The purchaser was a fund Priorsgate, Tallaght, Dublin 24 - managed by Orange Capital Partners, Hansfield Wood, Dublin 15, Phase 2 5 apartments an international investment manager (Pipers Court) - 95 apartments The Company received planning with its office in Dublin and an existing During 2018, I-RES entered into permission for the conversion of footprint in the Irish market. a contract to acquire a 1.3-acre unused commercial space into development site in Hansfield Wood five residential units. Construction Future Growth Pipeline for a total purchase price of €3.3 commenced in 2020 and was million (including VAT but excluding completed in Q4 2020. Three of the Forward Purchase Contract transaction costs). The Company five units are now leased and occupied. for 69 homes at Merrion Road, also entered into a development Dublin 4 agreement to develop 95 apartments Tallaght Cross West, Dublin 24 - I-RES entered into contract for the and duplexes on the Hansfield Site for 18 apartments forward purchase of 69 residential a total consideration of €26.7 million In March 2018, the Company received units at Merrion Road in a transaction (including VAT, but excluding other a grant of planning permission for valued at €47.6 million (including transaction costs). The handover the conversion of unused commercial VAT, but excluding other transaction of the apartments to I-RES was space to 18 residential apartments. costs). Construction commenced in completed on 1 August 2020. Construction began in 2019, and 2019. It is now anticipated that the the residential units were completed residential units will be completed and Hansfield is surrounded by excellent in 2020. These are currently awaiting handed over to I-RES in 2022 and this infrastructure and amenities including occupancy approval from the date could be further impacted by road and rail transport, schools, retail Local Authority. restrictions on construction activity as and leisure facilities. The village of a result of the Covid-19 pandemic. Ongar provides all day to day services Disposal of 151 apartments including supermarket, café, pharmacy The property is located circa 7km and health centre, whilst the close I-RES completed the disposal of 151 from Dublin City and is well serviced by Blanchardstown Shopping Centre non-core residential units, as well as by Dublin Bus and the DART rail (circa 3.5km), which is one of Ireland's three small commercial units, across services. The property is located largest shopping destinations, provides 10 properties in Dublin in November close to good amenities including 180 shops, restaurants, hotel and 2020. The sales price of circa €48 schools, universities and numerous leisure facilities. million (net of costs) was achieved hospitals (St. Vincent’s University and following a competitive sales process Private Hospitals, Blackrock Clinic) in Located on the west side of Dublin which attracted significant international the immediate vicinity. The area also City, the development is 7kms from and domestic interest. The objective of benefits from a number of leisure Castleknock village and 17kms from the sale was to deliver operations and facilities with Elm Park Golf and Sports Dublin airport. The Blanchardstown asset management efficiencies from Club, Railway Union Sports Club and area provides a population in the the portfolio. Blackrock Park on its doorstep. order of 75,000 people.

Disposal of 151 apartments

Property Number of Units Other Land & Property The Laurels 19 1 Commercial Unit, 190 Sq M Beacon South Quarter 12 Russell Court 29 Belville & The Mills(1) 21 St. Edmunds 18 1 Development Site, 0.16 Ha The Oaks 14 Spencer House 12 East Arran Street 12 Coopers Court 14 2 Commercial Units, 126 Sq M Total 151

(1) There are two properties at Belville & The Mills

22 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 23 2020 Annual Report Annual 2020 The application was was application . The Site B3, Beacon South Quarter, Quarter, South Beacon B3, Site Sandyford planning has previously which B3 Site onto fronts offices commercial for the is within and Drive Blackthorn use mixed Quarter South Beacon was application A planning scheme. in units residential 51 for submitted June 2020 and authority local the by refused to submitted been has appeal an Pleanala. An Board the Status Construction Completed in 2019 Completed Construction Construction Completed in 2020 Completed Construction Construction Completed in 2020 Completed Construction Under Construction Under Planning Permission Granted Permission Planning Planning Permission Granted Permission Planning Granted Permission Planning Planning Application refused and and refused Application Planning Pleanála An Bord to appealed now 1 5 18 51 61 31 84 679 428 at Completion at No. of Residential Units Units Residential of No. Photo: Photo: Tallaght, Priorsgate, Dublin 24 108 Units Residential Development Pipeline on on Pipeline Development Sites Owned I-RES years, three past the During on progress significant made has intensification and development 31 As at assets. existing its of completed has I-RES 2020, December units residential 24 on construction currently are units residential 61 and planning has I-RES construction. under (Bruce Priorsgate at permissions (B4) and South Square Beacon House), 543 residential of a total for Rockbrook planning obtain to is working and units at units residential 51 for permission (B3). Quarter South Beacon Location Coldcut (Conversion) Coldcut Priorsgate (Conversion) Priorsgate Tallaght Cross West Cross Tallaght Bakers Yard Bakers Priorsgate (Bruce House) (Bruce Priorsgate Beacon Square South (B4) South Square Beacon Rockbrook (B3) South Square Beacon Development and Intensification of Existing Assets Existing of Intensification and Development sites. 8 existing across units residential 679 circa build to applications planning submitted I-RES years, three past the During In September 2018, planning planning 2018, In September 61 proposed the for permission was development unit residential clearance and Demolition granted. 2019. in Q2 completed was site the of a contract into entered Company The the of construction commence to Construction 2020. in Q1 units 61 and in January commenced work the to due in March halted was Construction pandemic. Covid-19 closed but May in restarted work to due 2021 8 January on again restrictions. government latest the when of factors unknown the to Due expects I-RES reopen, will sites the in be completed will site the that earliest. the at 2022, Q2 Construction of 61 apartments apartments 61 of Construction Yard, Bakers at site own on 1 Dublin North, Street Portland a 0.18 ha owns Company The at site development (0.45 acre) site The scheme. Yard Bakers the walking within located well is very Financial International the of distance and College Trinity Centre, Services Hospital. Mater the Development and Intensification Intensification and Development Assets Existing of Other Land & Property Land Other 2 Commercial Units, 126 Sq M 126 Units, 2 Commercial 1 Development Site, 0.16 Ha Site, 1 Development 1 Commercial Unit, 190 Sq M Unit, 1 Commercial 18 14 14 21 12 12 12 19 29 151 Number of Units of Number (1) St. Edmunds St. Property Laurels The The Oaks The House Spencer Street Arran East Court Coopers Total Beacon South Quarter South Beacon Court Russell Mills & The Belville Disposal of 151 apartments 151 of Disposal Mills & The Belville at two properties are (1) There Property Portfolio Overview The following table provides the Group’s property portfolio valuation as at 31 December 2020.

Property # of # of Apts. Commercial Average Monthly Rent Occupancy Location Buildings Owned(1) Space Owned Rent Per Apt. as at (/sqm/month) (1)(2) (sq.m)(1) 31 December (1)(2)(3) Total South Dublin 11 1,062 6,854 €1,741 €22.7 96.9% Total City Centre 6 417 2,544 €1,752 €23.2 97.6% Total West City 3 409 — €1,617 €21.6 98.5% Total North Dublin 9 897 — €1,563 €20.4 99.8% Total West Dublin 5 853 17,412 €1,502 €18.2 99.1% Cork 1 50 — €1,294 €16.2 98.0% Total Portfolio 35 3,688 26,810 €1,624(4)(5) €20.9 98.4%(4)

(1) As at 31 December 2020. (2) Based on residential units. (3) Average monthly rent (AMR) is defined as actual monthly residential rents, net of vacancies, as at the stated date, divided by the total number of apartments owned in the property. Actual monthly residential rents, net of vacancies, as at 31 December 2020 was €5,989,312 divided by 3,688 units (which are the total units owned as at 31 December 2020) resulting in AMR of €1,624. (4) Refer to page 29 for further discussion on average monthly rent per apt. and occupancy (5) IRES’s external valuers indicated that IRES’s current rents (on a weighted average 2020 is estimated to be approximately below market by 12.5%).

24 I-RES Operational and Financial Results

Net Rental Income and Profit for the Year Ended 31 December 2020 31 December 2019 €’000 €’000 STRATEGIC REPORT Operating Revenue Revenue from investment properties(1) 74,744 62,097 Operating Expenses Property taxes (754) (669) Property operating costs (14,215) (10,891) (14,969) (11,560) Net Rental Income (“NRI”) 59,775 50,537 NRI margin 80.0% 81.4%

General and administrative expenses(2) (5,062) (4,288) Non recurring costs(2) (2,334) — Asset management fee (4,444) (4,024)

Share-based compensation expense (322) (236) GOVERNANCE EBITDA(3) 47,613 41,989 Depreciation of property, plant and equipment (526) (32) Lease interest (241) (4) Financing costs (12,816) (12,036) Costs associated with early redemption of debt instrument - 3,153 EPRA Earnings 34,030 33,070 Costs associated with early redemption of debt instrument - (3,153) Gain on disposal of investment property 4,432 - Net movement in fair value of investment properties 19,092 56,234 Gain on derivative financial instruments 709 131

Profit/(Loss) for the Year 58,263 86,282 FINANCIAL STATEMENTS

(1) Includes residential vacancy loss of €1.9 million (31 December 2019: €0.7 million) and commercial vacancy loss of €1.3 million (31 December 2019: €1.1 million) for the year ended 31 December 2020. The residential vacancy was 2.5% (31 December 2019: 1.1%) of the total gross rental revenue for the year ended 31 December 2020. (2) The non-recurring costs of €2.3 million and general and administrative expenses of €5.1 million incurred in 2020 totals the general and administrative expense costs of €7.4 million reflected on the Consolidated Financial Statements for the year ended 31 December 2020. (3) EBITDA represents earnings before lease interest, financing costs, depreciation of property, plant and equipment, gain or loss on disposal of investment property, net movement in fair value of investment properties and gain or loss on derivative financial instruments to show the underlying operating performance of the Group. SUPPLEMENTARY INFORMATION

Photo: Tallaght Cross West, Dublin 24 460 Residential Units

2020 Annual Report 25 Operating Revenue Non recurring Costs Gain on Derivative Financial The non recurring G&A costs total Instruments For the year ended 31 December €2.3 million for 2020. These costs On 28 February 2017 and 15 2020, total operating revenue primarily includes costs for transactions September 2017, I-RES entered increased by 20.4% compared to the that could not be closed in H1 due to into interest rate swap agreements year ended 31 December 2019, due Covid-19 pandemic and other third aggregating to €204.8 million. The to a full-year of contributions from party advisory services. agreements effectively convert prior year acquisitions and completed borrowings on a EURIBOR-based forward purchases during 2020 and Asset Management Fee floating rate credit facility to a fixed organic rental growth. Pursuant to the Investment rate facility, the fixed portion being Management Agreement between I-RES, EURIBOR rate of circa minus 0.09% Net Rental Income IRES Residential Properties Limited and per annum and will mature in January The NRI margin has been presented IRES Fund Management effective on 2021. For the year ended 31 December as the Company believes this measure 1 November 2015, as amended and 2020, there was a fair value gain of is indicative of the Group’s operating restated from time to time, I-RES pays circa €0.7 million recorded in the performance. For the year ended 31 3.0% per annum of its gross rental consolidated statement of profit or December 2020, NRI increased by income as property management fees loss and other comprehensive income 18.3% primarily due to acquisitions (included under “property operating compared to a fair value gain of circa completed in the prior period having costs” above) and 0.5% per annum of €0.1 million for 2019. a full-year impact, and completed its net asset value to the Manager. The forward purchases during 2020. asset management fee for the year On 12 February 2020, I-RES entered The NRI margin for the current year ended 31 December 2020 was €4.4 into a cross-currency swap to (i) decreased to 80.0% compared to million compared to €4.0 million for hedge the US-based loan of USD $ 75 81.4% for last year due to higher the year ended 31 December 2019. million into €68.8 million effective 11 allowance for bad debt and vacancy It is higher due to higher net asset March 2020 and (ii) convert the fixed costs as a result of the Covid-19 value compared to the same period interest rate on the US-based loan to pandemic. I-RES also has a limited last year. See note 21 of the a fixed Euro interest rate, maturing in number of commercial parking and Consolidated Financial Statements 10 March 2027 and 10 March 2030. commercial leases (in total less than for further details of the Investment Hedge accounting has been applied 3.5% of total Revenue), which have Management Agreement. for the cross- currency swap. For been more negatively impacted. The the year ended 31 December 2020, allowance for bad debt expenses Share-based Compensation there was a fair value loss of circa increased to €1.0 million (1.3% of Expenses €4.37 million recorded in the cashflow total operating Revenue) for the year Under the Company’s long term reserve in the statement of changes ended 31 December 2020 due to incentive plan, in 2017 and 2019, options of equity and a reclassification of a Covid-19, compared to €0.6 million were granted to the Company’s CEO €4.29 million loss to consolidated for the year ended 31 December and in 2020, restricted shares were statement of profit or loss and other 2019. Given the economic uncertainty awarded in line with the Remuneration comprehensive income. resulting from the Covid-19 pandemic, Policy. See note 12 of the Consolidated I-RES is paying close attention to Financial Statements. Financing Costs the allowance provided for bad debt Financing costs, which include the expenses and has been monitoring Net movement in fair value of amortisation of certain financing tenant receivables on a daily basis. We Investment Properties expenses, interest and commitment believe growth in the long term will I-RES recognises its investment costs, increased for the year ended 31 be supported by the strong economic properties at fair value at each reporting December 2020 to €12.8 million from fundamentals of the Irish economy as period, with any unrealised gain or loss €12.0 million for the year ended 31 well as the continued strong demand on remeasurement recognised in the December 2019. Recurring financing arising from population growth and consolidated statement of profit or loss costs have increased by €3.9 million the ongoing supply and demand and other comprehensive income. The in 2020 compared to 2019 (after imbalance in the Irish residential fair value gain on investment properties adjusting for non-recurring financings property market. is mainly due to the continued rental costs of circa €3.1 million incurred growth from income properties and in 2019 relating to the termination of General and Administrative yield compression offset by a reduction the previous facility of €350 million). (“G&A”) Expenses in market rents which has led to an The increase is mainly due to higher G&A expenses include costs directly increase in value of €19.1 million for leverage during the year due to attributable to head office, such as the year. investments, commitment fees on executives’ salaries, director fees, the undrawn balance of the RCF, and professional fees for audit, legal and Gain on disposal of investment higher interest rate on the private advisory services, depository fees, property placement compared to the RCF. See property valuation fees, insurance note 10 of the Consolidated Financial costs and other general and On 10 November 2020, I-RES disposed Statements. administrative expenses. of 151 non-core residential units and three small commercial units spread across 10 properties. As a result of the disposal, I-RES recognized a gain on disposal of investment property of €4.4 million.

26 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 27 2.29% 44,980 555,020 (€’000) 600,000 2020 Annual Report Annual 2020 31 December 2019 December 31 The Group is in compliance with its its with compliance is in Group The its in contained covenants financial Bank Barclays with agreement facility DAC, Ireland Bank Ulster PLC, Ireland the of Company and Governor The P.L.C Banks, Irish Allied Ireland, of Bank Notes. its and PLC Bank HSBC and Gearing Total Group consists capital 2020, At 31 December Total Group with debt, and equity of the is below which 39.2%, of Gearing Irish the by allowed maximum 50% financial debt its and REIT Regime, use seeks to I-RES ratio. leverage shareholder enhance to gearing term. long the over returns 2.33% 245,980 354,020 (€’000) 600,000 2020 December 31 management company to resolve these resolve to company management approved were levies 2017, In matters. South Beacon the of members the by company management owners’ Quarter and ingress water these to in relation of portion I-RES’ works. remedial fire 2020 31 December at as levies these an is also There €0.6 million. is circa to respect with claim insurance active damage. related and ingress water the Condition Financial and Liquidity to approach a proactive takes I-RES Group the ensure to strategy debt its and maturities, debt of laddering has interest and ratio leverage Group’s the a at maintained are ratio coverage level. sustainable (1)

Weighted Average Cost of RCF of Cost Average Weighted Available Borrowing Capacity Borrowing Available Less: Drawdowns Less: Committed Facility Committed As at I-RES’s RCF borrowing capacity is as follows: is as capacity borrowing RCF I-RES’s

Residential Units Residential 213 213 Photo: Quarter, South Beacon Sandyford Dublin 18 (1) Includes commitment fee of 0.7% per annum is charged on the undrawn portion of the facility and deferred financing cost amortised per annum. amortised per cost financing deferred and facility the portion of undrawn the on is charged annum 0.7% per of fee commitment (1) Includes At Beacon South Quarter, in addition in addition Quarter, South At Beacon that work expenditure capital the to water completed, been already has were works remediation fire and ingress working is I-RES and 2016, in identified owners’ Quarter South Beacon the with Property Capital Investments Capital Property capital all capitalises Group The the to related investments For properties. its of improvement 2020, 31 December ended year the capital property made Group the an €10.0 million, of investments year the for €8.0 million from increase 2019. 31 December ended Property Portfolio Overview Portfolio Property On 12 June 2019, I-RES exercised its sheet by creating more liquidity and Photo: option under the Company’s facility flexibility, while keeping the interest noted above to extend its committed rates at attractive low levels, and Phoenix Park Racecourse, facilities from €450 million to €600 attracting high quality investors for Dublin 15 million and has amended the credit this transaction. In addition, it also facility to include a new uncommitted enhanced I-RES’ funding alternatives. accordion facility in the amount of €50 million. The Group have a weighted average €60m debt maturity of 5.3 years and no Purchase Price In March 2020, I-RES successfully debt maturities before April 2024. closed the issue of €130 million The weighted average cost of debt Notes and IRES Residential Properties is 2.33% for 2020 including deferred Limited, its subsidiary closed the issue financing costs (2019: 2.29%). I-RES of USD $75 million notes on a private also has undrawn facilities of €144 placement basis (collectively, the million available for investment (at 45% “Notes”), together circa of €200 million Loan To Value ratio) and €11.2 million (Euro equivalent), with a weighted of cash as at 31 December 2020. average fixed interest rate of 1.92% Starting in 2020, I-RES maintains a inclusive of swap costs. The Notes minimum cash balance of €10 million have a weighted average maturity of for liquidity purposes. 9.0 years as at 31 December 2020, laddered over circa six, nine and Beyond the committed capex costs of eleven-year maturities, with the first circa €2.1 million, circa €54 million to repayment due in March 2027. The complete the acquisition of Phoenix net proceeds of the Notes were used Park, and committed development to pay down the RCF. This issuance costs of €12.9 million for 2021, there is of Notes strengthened I-RES’ balance no other current exposure.

28 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 29 % Occ. 98.7% Properties AMR 2020 Annual Report Annual 2020 Acquired After After Acquired €1,778 €1,778 31 December 2019 31 % AMR (0.2)% change change (1) % ”). Each EPRA NAV metric serves serves metric NAV EPRA ”). Each Occ. 2019 99.3% period. It has been presented as the as presented been It has period. is this measure believes Company performance Group’s the of indicative operations. its of Net Asset Value Practices Best issued EPRA in recently most Recommendations guidelines gives which 2019, October matters. performance for introduced EPRA 2019, In October replace to metrics NAV EPRA three that calculation NAV EPRA existing the The being presented. previously was Net EPRA are metrics NAV EPRA three (“EPRA), NRV’ Value Reinstatement ”) (“EPRA Asset NTA Tangible Net EPRA (“EPRA Value Disposal Net EPRA and NDV NRV EPRA The purpose. a different net of value the highlight is to measure NTA EPRA basis. term a long on assets assets, sell buy and entities assumes levels certain crystallising thereby No deferred liability. tax deferred of as I-RES for is calculated liability tax the at paid are taxes and is a REIT, it distributions. the on level shareholder a of sale the from arising gains Any be to either expected are property the 85% of or growth for reinvested the to distributed are proceeds net REIT the maintain to shareholders the provides NDV EPRA Lastly, status. deferred where a scenario with reader certain and instruments, financial tax, to calculated are adjustments other liabilities. their of extent full the AMR €1,614

% 31 December 2019 2019 December 31 Occ. 98.4% Properties owned prior to to prior owned Properties (Like for Like properties) Like for (Like 2020 AMR €1,610

1.8% AMR change% %. Occ. 2019 98.3% Gross Yield at Fair Value Fair at Yield Gross the as is calculated Yield Gross the at as Rents Passing Annualised market fair the by divided date, stated properties investment the of value excluding date, reporting the at as land development of value fair the under properties investment and generating Through development. the to compared revenue higher high maintaining and year prior is objective I-RES’s occupancies, Passing Annualised the increase to will which portfolio, total the for Rent Yield. It Gross the impact positively Company the as presented been has of is indicative this measure believes capacity generating income rental the portfolio. total the of Estate Real Public European Earnings (“EPRA”) Association Share per earnings the represents Earnings EPRA activities operational core the from Group. the for items) (recurring indicator an provide to It is intended of performance underlying the of therefore and portfolio property the relevant not components all excludes recurring and underlying the to including portfolio, the of performance from results and results revaluation any EPS is EPRA properties. of sale the Earnings EPRA dividing by calculated to attributable period reporting the for the by Company the of shareholders ordinary of number average weighted reporting the during outstanding shares Total AMR Portfolio €1,596 % Occ. 98.4% 2020 AMR €1,624 As at 31 31 As at December Residential AMR and Occupancy and AMR (1) Adjusted for properties that were disposed in 2020. were that properties for (1) Adjusted Occupancy as is calculated rate Occupancy units residential of number total the of number total the over occupied the at as owned units residential through strives, I-RES date. reporting the to approach hands-on a focused, that occupancies achieve to business, market than, higher or with, in line are locations the of in each conditions rate Occupancy operates. it in which AMR to with in conjunction is used of performance Group’s the measure operations. its Average Monthly Rent (“AMR”) Rent Monthly Average monthly actual as AMR is calculated as vacancies, of net rents, residential total the by divided date, stated the at in owned units residential of number property active Through property. the lease the strategies, management proactive and system administration I-RES programmes, investment capital conditions market as rents increases applicable to subject and permit the as presented been It has laws. is this measure believes Company performance Group’s the of indicative its operations. of The Group, in addition to the the to addition in Group, The results Financial and Operational business defined has above, presented measure to indicators performance and operating its of success the strategies: financial Business Performance Measures The Group’s AMR increased 1.8% at properties in the portfolio and the “rent pressure zone” as per the rent 31 December 2020 to €1,624, while moratorium on rent increases on regulation. The renewal notices were residential occupancy remained high renewals since April 2020. For like served only in the first quarter of 2020. at 98.4%, indicative of the strong for like properties, AMR is used as a The Government of Ireland introduced market fundamentals in the Irish measure for sustainable year over year rent legislation providing for a rent residential rental sector. For like for changes in revenue. moratorium on renewals for residential like properties, the AMR decreased units as a response to the Covid-19 to €1,610 per residential unit as at 31 During the year, circa 18% of the pandemic during the period April to December 2020, down 0.2% from portfolio units were turned, with September 2020. I-RES is conscious of €1,614 at 31 December 2019. The majority of the units having rental the challenging times that many people decrease is due to the slight decrease increases in line with maximum annual face during the pandemic and has of occupancy from 99.3% to 98.4%, rent increase of 4% per annum therefore not served rental increases lower AMR at one of the high end permitted for properties located in on renewals from April 2020.

Gross Yield at Fair Value

As at 31 December 2020 31 December 2019 (€’000) (€’000) Annualised Passing Rent(1) 74,249 72,798 Aggregate fair market value as at reporting date 1,346,683 1,293,241 Gross Yield 5.5% 5.6%

(1) 31 December 2020 Annualised Passing rent consist of residential annualised passing rent of €71.6 million and commercial annualised passing rent of €2.7 million.

The portfolio Gross Yield at fair value was 5.5% as at 31 December 2020 compared to 5.6% as at 31 December 2019, excluding the fair value of development land and investment properties under development. The NRI margin was approximately 80.0% for the year ended 31 December 2020 (81.4% for the year ended 31 December 2019).

EPRA Earnings per Share

For the year ended 31 December 2020 31 December 2019 Profit for the year (€’000) 58,263 86,282 Adjustments to calculate EPRA Earnings exclude: Costs associated with early redemption of debt instrument (€’000) — 3,153 Gain on disposition of investment properties (4,432) — Changes in fair value on investment properties (€’000) (19,092) (56,234) Changes in fair value of derivative financial instruments (€’000) (709) (131) EPRA Earnings (€’000) 34,030 33,070 Non recurring costs (€’000) 2,334 — Adjusted EPRA Earnings adjusted for non recurring costs (€’000) 36,364 33,070

Basic weighted average number of shares 522,069,110 478,563,272 Diluted weighted average number of shares 524,130,528 481,508,009

EPRA Earnings per share (cents) 6.5 6.9 Adjusted EPRA EPS adjusted for non recurring costs per share (cents) 7.0 6.9 EPRA Diluted Earnings per share (cents) 6.5 6.9

An increase in EPRA Earnings of 2.9% to €34.0 million (31 December 2019: €33.1 million).

30 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 31 ) ² ( — — 166.8 160.3 36,219 877,914 841,695 526,289,910 525,078,946 EPRA NDV 2020 Annual Report Annual 2020 ) ¹ Photo: Park, Carrington Santry 142 Units Residential ( — — 84 159.9 160.3 841,695 841,779 EPRA NTA 526,289,910 525,078,946 allowance for bad debt expense expense debt bad for allowance the to respect with recognized I-RES’s the portion of commercial a result as properties, mixed-used pandemic. Covid-19 the of — 84 171.8 160.3 62,138 841,695 903,917 EPRA NRV 526,289,910 525,078,946 commercial parking revenue, higher higher revenue, parking commercial the post vacancy and debt bad declaration pandemic Covid-19 trending historical their to compared bad The costs. financing higher and higher a to due is also increase debt (3) Fair value of derivative financial instruments (€’000) instruments financial derivative of value Fair Fair value of fixed interest rate debt (€’000) debt rate interest fixed of value Fair (€’000) tax transfer estate Real EPRA net assets (€’000) assets EPRA net Number of shares outstanding shares of Number Adjustments to calculate EPRA net assets exclude: assets EPRA net calculate to Adjustments Net assets (€’000) assets Net As at Diluted number of shares outstanding shares of number Diluted EPRA Net Asset Value per share (cents) share per Value Asset EPRA Net Basic Net Asset Value per share (cents) share per Value Asset Net Basic 31 December 2020 December 31 EPRA NAV per Share per EPRA NAV EPRA EPS for the period was was period the EPS for EPRA 31 ended year the for 6.5 cents 6.9 to compared 2020 December year. last period same the for cents primarily EPS is in EPRA decline The lower costs, non-recurring the due 31 December 2019

As at EPRA NRV EPRA NTA(¹) EPRA NDV(²) Net assets (€’000) 810,169 810,169 810,169 Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 788 788 — Adjustments to calculate EPRA net assets include: Real estate transfer tax (€’000)(3) 56,753 — —

EPRA net assets (€’000) 867,710 810,957 810,169 Number of shares outstanding 521,678,946 521,678,946 521,678,946 Diluted number of shares outstanding 524,529,943 524,529,943 524,529,943 Basic Net Asset Value per share (cents) 155.3 155.3 155.3 EPRA Net Asset Value per share (cents) 165.4 154.6 154.5

(1) Following changes to the Irish REIT legislation introduced in October 2019, if a REIT disposes of an asset of its property rental business and does not (i) distribute the gross disposal proceeds to shareholders by way of dividend; (ii) reinvest them into other assets of its property rental business (whether by acquisition or capital expenditure) within a three-year window (being one year before the sale and two years after it); or (iii) use them to repay debt specifically used to acquire, enhance or develop the property sold, then the REIT will be liable to tax at a rate of 25% on 85% of the gross disposal proceeds, subject to having sufficient distributable reserves. For the purposes of EPRA NTA, the Company have assumed any such sales proceeds are reinvested within the required three year window. (2) Deferred tax is assumed as per the IFRS balance sheet. To the extent that an orderly sale of the Group’s asset was undertaken over a period of several years, during which time (i) the Group remained a REIT; (ii) no new assets were acquired or sales proceeds reinvested; (iii) any developments completed were held for three years from completion; and (iv) those assets were sold at 31 December 2020 valuations, the sales proceeds would need to be distributed to shareholders by way of dividend within the required time frame or else a tax liability amounting to up to 25% of distributable reserves plus current unrealised revaluation gains could arise for the Group. (3) This is the purchaser costs amount as provided in the valuation certificate. Purchasers’ costs consist of items such as stamp duty on legal transfer and other purchase fees that may be incurred and which are deducted from the gross value in arriving at the fair value of investment for IFRS purposes. Purchasers’ costs are in general estimated at 9.96% for commercial and 4.46% for residential.

EPRA cost ratios have not been disclosed in the annual report as the related information is largely available in the consolidated statement of profit or loss.

Photo: Elmpark, Merrion Road Dublin 4 201 Residential Units

32 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 33 2020 Annual Report Annual 2020 While job gains gains job While 5 ”) and the Employment Employment the ”) and borrowing increased significantly significantly increased borrowing Ireland forecasts. previous of ahead in of €19 billion a deficit recorded a to compared GDP), of (5.5% 2020 deficit The in 2019.⁴ surplus €2 billion EU, the in smallest the is amongst and income resilient up by held taxes. corporate in place supports remain Income businesses and individuals for to due disruption job experiencing supports, income The Covid-19. Unemployment Pandemic primarily (“PUP Payment ”), help (“EWSS Scheme Subsidy Wage individuals’ subsidies, or replace, either from ranging payments with salaries, to linked week per €350 to €203 has government The earnings. prior income the maintaining to committed 2021 30 June least at supports until these extend will it that signalled and necessary. as a third entered Ireland 2021 In January in a resulting pandemic, the of wave 2021; 1 January from lockdown third schools, of closure the this includes and retail non-essential construction, The sectors. other among hospitality, resulted has economy the of lockdown to claimants in PUP increase in a sharp implying 2021, February 23 at 473,000 unemployment adjusted a Covid-19 602,000 the This is below 26%. of rate 2020. in April peak are likely when the economy re- economy the when likely are pace expect forecasts most opens, the with slow, to recovery job of remain to expected rate unemployment 2021.² of end the by in double-digits measures businesses, to In relation liquidity, increasing on focused were payments, taxation deferred including loans, business on breaks payment Direct SMEs. for guarantees loan and by for, provided also were transfers on waivers and grants ‘Restart’ of way instruments Taxation rates. commercial a tax with implemented, also were out-of- boost to designed rebate accommodation for demand season as well as (‘stay-and-spend’), food and standard in the reduction a temporary boost 21% to to 23% from VAT of rate spending. consumer personal vaccination its commenced has Ireland more is providing which programme to improvements relation in confidence 2021. of half second in the Irish Economic Outlook Economic Irish March from Covid-19 of spread The unprecedented caused 2020 disruption social and economic economic initial While in Ireland. ‘double- a sharp envisaged forecasts year, the for in GDP contraction digit’ has performance economic overall resilient. been of strength the to due This is primarily sector, Investment Direct Foreign the pharmaceuticals in ICT, concentrated IDA The technology. medical and employment that reported recently by grew companies in IDA-supported revenue tax As a result, 3.6% in 2020. resiliently more much performed falling expected, than 2020 during ("yoy").¹ year on 4% year just by government-imposed In contrast, in a resulted have restrictions spending, in consumer drop sharp financial in the decline in a and as such sectors of performance tourism and hospitality aviation, retail, sharpest the amongst were which in Europe. recorded is effect economic resulting The of one report to is due Ireland that in performances GDP stronger the European other to compared 2020 upgraded recently CBI The countries. +2.5% for to forecast GDP its The 2021. +3.8% for and 2020 circa was which rate, unemployment set is now year, the of start the 5% at 2020.² through 18.4% average to Economic Covid-19 Government Supports & Financial the pandemic, the Throughout to continued has Government supports financial of a range provide public. wider the and businesses to over of supports fiscal In 2020, mostly provided, were billion³ €25 and taxation ‘direct’ of form in the the Given measures. expenditure pandemic, the of presence continuing committed also has Government the as supports for these maintaining to Budget the with necessary, as long stabilisation further providing 2020 for €12.5 billion¹ circa of measures economy. Irish the Covid-19 significant the of As a result Government supports, Irish financial Department of Finance - Finance of Department Return Exchequer End-2020 Commentary Economic - Quarterly ESRI 2020 Winter Stock: - Taking Finance of Department Covid-19 to Response Fiscal The Finance of Department - Protection Social of Department for awarded payments on Update Unemployment Pandemic Covid-19 Benefit Illness Enhanced and Payment Overall economic economic Overall performance has been resilient. MARKET UPDATE 1 2 3 4 5 Photo: Bakers Yard North Portland Street, City Centre, Dublin 1 86 Residential Units

There remains a significant supply Despite Covid-19, the various › Measures of rent price inflation have and demand imbalance for all tenures measures of housing demand have softened. The official Residential of housing stock in Ireland. Annual remained resilient. Tenancies Board (RTB) measure demand is estimated at 34,000 units, increased nationally by 1.4% yoy in driven by our young and growing › Irish house prices have remained Q3 2020. Similarly, Daft.ie reported population, however, supply has been relatively stable to date, with the that rents increased +0.9% yoy in consistently below this level. Irish Residential Property Price Index Q3 2020. The CPI Private rents Index (“RPPI”) up marginally at (+0.2%) for December was down (2.9%) Due to the various social distancing in November 2020 compared to on the year. These rent indices and other requirements put in place November 2019. The performance have declined from levels that had in response to Covid-19, including the is stronger than the projections exceeded growth permitted by the closure of non-essential construction earlier in the year for high single, or annual 4% rent caps. sites, the CSO reported that house double-digit declines. › The stock of available units completions decreased to circa › The mortgage market has for rent has increased over the 20,700 in 2020. This is below the performed strongly with Banking & year, albeit from a very low base. original estimate of 26,000 for 2020 Payments Federation Ireland (‘BPFI”) As at 1 February 2021 there were and the over 21,000-unit completions data indicating that December 2,600 units available for rent in in 2019. The Central Bank of Ireland mortgage approvals were up 40.5% Dublin (Daft).6 forecasts new house completions of yoy to €979 million. December around 21,500 in 2021 and 23,500 in marked the fourth consecutive 2022 compared to its estimate of the month where mortgage approvals required level of more than 34,000 have registered strong growth per year. following some weakness earlier in 2020. This period of catch-up means that mortgage approvals equaled €10.3 billion in 2020, down only 6.7% from €11.1 billion in 2019. The average approval for house purchase in December was €253,200, pointing to inflationary pressure, up 4.4% on the year.

6 Daft.ie - Q4 2020 Rental Price Report

34 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 35 2020 Annual Report Annual 2020 our key stakeholders* to to stakeholders* key our

necessary frameworks, frameworks, necessary ongoing engagement with with engagement ongoing and monitor ESG cross- ESG monitor and standardized, transparent, and and transparent, standardized, Empower ESG of enablers and be advocates through performance and transparency engagement. active and training Conduct frequent through stakeholders* key our and consultations, active reporting, programs. Establish build to practices and platforms, data. ESG investment-grade our of progress the monitor and Identify Development Sustainable Nations United goals. (“SDG”)-aligned Goals Build disclosures. ESG comprehensive Develop and objectives, policies, functional and I-RES among accountability Manager. our

Set Report Deliver Targets Engage Advance Integrate Integrate Oversight & Disclose Competency Stakeholders Transparency Transparency Stakeholders include I-RES REIT and IRES IRES and REIT I-RES include Stakeholders residents, employees, Management Fund shareholders. and partners vendor I-RES’ Multi-Year ESG Strategy Strategy ESG Multi-Year I-RES’ I-RES Manager, our and Directors of Board our support the of With ESG adaptive and a resilient of delivery in the accountable remains look will We objectives. strategic our with is aligned that performance to commitments company our with strategy ESG multi-year our align to deliver and retention, resident enhance service, customer superior deliver approach: multi-year our deliver will we is how . Here homes quality *

DELIVERABLES Tom Kavanagh Supporting the the Supporting development and of execution strategy ESG I-RES's for value creates its stakeholders. KEY 2020ESG 1. Integrating Oversight 2. Advancing Competency

With support from the Board and led I-RES empowers our people and by the CEO, I-RES’s integrated ESG BOARD OF DIRECTORS our Manager to be advocates and strategy is championed by an ESG enablers of ESG transparency and Steering Committee, which enables performance. In collaboration, I-RES and influences oversight into the continues to build corporate-wide ESG Board Member Appointment daily management of our operations competency through the following to Build ESG Competency and decision making. As of 2020, the actions: ESG Steering Committee oversees the Green Ambassadors, which is represented by our Manager’s various Building Board-level EXECUTIVE MANAGEMENT business functions and tasked with Competency driving our social performance. Starting in 2021, we will formalize Providing regular updates and the Environmental Management ESG Steering Committee delivering board-level training on: Performance Committee, represented Chief Executive Officer by members of the acquisitions, (Cross departmental representation: development, operations and, › ESG reporting frameworks and Director of ESG at CAPREIT LP, procurement teams of the Manager, industry best- practices CFO, VP of Acquisitions, VP of and the ESG team at CAPREIT LP, › Inaugural GRESB results Operations and Corporate Secretary) who will be responsible for supporting our operational footprint performance. In addition, Tom Kavanagh was appointed by the Board to complete Refer to pages 61 to 70 of this Report for CORPORATE AND a course from the Cambridge details on our corporate governance. SITE-LEVEL STAFF Institute for Sustainability Leadership in 2020. Alongside our CEO, Tom will support the advancement of Green Environmental ESG measures and applications in Ambassadors Management our corporate strategy. (Social Performance** Performance (Operational Committee) Performance) Delivering Cross-Functional Competency ** To be formalized in 2021 In 2020, we launched regular interview series between I- RES and our Manager. Holding interviews with various departmental-guests within six months, the series has proven to be an engaging and successful platform to enhance ESG competency and celebrate the collaborative culture between I-RES and our Manager team.

36 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 37 2020 Annual Report Annual 2020 Formalised committee committee Formalised engagement assurance Third-party ESG Policy Policy ESG Policy Investment Policy Treasury Safety Statement Retention & Record Data Statement Privacy External Policy Whistleblower Inclusion and Diversity Board resource Enterprise and finance planning management software system management Learning

A full list of our policies is available on our on our is available policies our of list A full iresreit.ie at website Practices Company Policies Platforms › › › › › › › › › › › › *  4. Deliver Transparency Transparency 4. Deliver We recognize the increasing increasing the recognize We and stakeholders from pressure reliability the ensure to regulators reporting ESG of robustness and the to commitment company and As such, sustainability. of principles investment build to striving are we strengthening by data ESG grade of completeness and integrity the and policies, practices, internal our we these, achieve To programs. independent an undertaken have process, assurance third-party our of quality the assesses which processes. reporting and disclosures 3. Engaging Stakeholders Residents information meetings pre pre meetings information Residents phase development during and Resident satisfaction survey satisfaction Resident rollout Portal Resident stakeholder Placemaking forum engagement District) Business (Sandyford Independent Investor Investor Independent Study Perception updates reporting Semi-annual conferences and meetings Investor intranet Employee Management) Fund IRES and (I-RES

Every year we focus on ensuring ensuring on focus we year Every transparent and consistent stakeholders our with engagement resources. of a wide range utilizing and communicated we In 2020, via: stakeholders our with engaged Clearly defining our priorities is priorities our defining Clearly strategic our informing for essential process. planning and integration ESG an adopted Board the In 2020, our affirmed we and policy ESG practice best integrate to commitment investment, estate real our throughout talent and risk asset, development, deliver To processes. management recognize we commitments, policy our stakeholder of role essential the and priorities ESG Our engagement. cooperative on centered are goals shareholders, our with engagement authorities local residents, Manager, chain supply communities, and regulators and makers policy partners, bodies. industry and › › › › › › › › 5. Setting Targets and Photo: Monitoring Progress Phoenix Park Racecourse, Dublin 15

We recognize that an important part of our ESG journey is identifying and 146 setting goals that are not just about Residential Units having enough impact but also the right impact. The commitments set out in our company ESG Policy are measured against the United Nations SDGs.

A summary of our current SDG alignment is listed below:

Our ESG Measures Progress* SDG Alignment

Investment And Development

Investing in sustainable resource In progress management practices.

Incorporate new technologies. Not started

Invest in climate change Not started mitigation and adaptation.

ESG life cycle analysis of In progress investment opportunities.

Asset Management

Implement environmental and In progress socially responsible practices.

Implement environmental and In progress socially responsible technologies.

Energy, water and waste audits. Not started

Operational performance targets Not started

Health, safety and Met environmental assessments

* Not Started - will be addressed following our Materiality Assessment in 2021

38 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 39 2020 Annual Report Annual 2020 SDG Alignment Met Progress In progress In progress In progress Met Not applicable In progress In progress In progress

community and management engagement Procurement Resident Energy Water Waste

Manager Alignment Alignment Manager sustainability industry Implement for: practices best Our ESG Measures ESG Our › › › › › Invest in either natural spaces spaces natural in either Invest engagement community and/or Collaborate on ESG agenda agenda ESG on Collaborate bodies industry with in employee invest and Support development and training Stakeholder Engagement protection and respect Promote diversity, rights, human of equity and inclusion, 6. Reporting on Our Performance

We are proud to demonstrate our commitment to transparency by preparing our 2020 ESG Report in alignment with EPRA Best Practices Recommendations for Sustainability Reporting (“EPRA sBPR”) and the United Nations SDGs. The contents of the 2020 ESG Report do not form part of this Report. As a testament to the effective formalization of our ESG strategy, we submitted our inaugural 2020 GRESB submission, the results of which will underpin our ongoing strategy.

We understand that our ESG-related performance is rapidly becoming critical to sustainable investment and operating plans for I-RES. We look forward to advancing our ESG strategy and benchmarking against relevant standards in conjunction with our Manager.

Margaret Sweeney, Chief Executive Officer

40 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 41

2020 Annual Report Annual 2020 and further acquisition opportunities opportunities acquisition further and arise. that Development of Existing Existing of Development Properties I-RES accretive pursue to continuing While to is responding I-RES acquisitions, asset for competition increased the Irish the in opportunities purchase focus its increasing by market residential intensification and development on portfolio, existing its within opportunities identified been has potential where 543 apartments estimated an add to These properties. owned currently at that a cost at be built can apartments for values market current than is lower because partly properties, comparable in place, infrastructure already is there In parking. and groundworks as such of construction completed I-RES 2020, 18and Priorsgate at units residential five West. Cross Tallaght at units residential of construction commenced also I-RES to continues it as Yard Baker’s at units 61 this strategy. pursue Partnerships Development Local beneficial mutually pursuing is I-RES and builders local with partnerships strong its Leveraging developers. deploy can I-RES sheet, balance secure and rates attractive at financing in approved units acquire to option the to I-RES enabling developments, accretive at homes new deliver the completed I-RES yields. In 2020, Hansfield at 95 units of development took and this strategy II under Phase Waterside. at units 55 of ownership Financial Management approach a conservative takes I-RES exposure its manage to strives and proactively by volatility rate interest to reduce to facility credit its managing to strives I-RES In addition, rates. interest liquidity overall a conservative maintain in its a balance achieve and position requirements resource capital overall In 2020, equity. and debt between placement a private completed I-RES (Euro million €200 circa of Notes of average a weighted with equivalent), of of 1.92% inclusive rate interest fixed provided have Notes The costs. swap strategy funding in our flexibility further our to lengthening further adding by strategy Company’s The maturities. debt levels prudent maintaining on is founded 31 As at gearing. and cover interest of Group Company’s the 2020, December 39.2% (39.9% as was Gearing Total the below well 2019), 31 December at REIT Irish the by allowed maximum 50% our use to continue will We guidelines. costs development our fund to RCF

Acquisitions Existing of Development Properties I-RES Partnerships Development Local Management Financial Provide shareholders with long-term, long-term, with shareholders Provide dividends predictable and stable value asset net and income Grow - prop of management active through and acquisitions erties, accretive financial strong and developments, management

Acquisitions acquisitions, and developments For opportunities on is focused I-RES environs its in Dublin and growth for centres urban main other as well as is I-RES Going forward, in Ireland. to include building asset its refining and in developments investing markets in commuter acquisitions meet Dublin that Central of outside local 1) strong criteria: key three 2) good transportation employment; 3) family-friendly connections; schools. nearby with neighbourhoods Business Strategy Business market rental residential Irish The market strong exhibit to continues of growth increasing fundamentals: growth continued economy; Irish the in Ireland; companies multinational of high-quality for demand substantial highly- from accommodation rental workers; local and international trained available of shortage a significant and circumstances These housing. I-RES’ of execution the supported the despite and in 2020, strategy Covid-19, posed by challenges current we fundamentals market strong these growth I-RES’ underpin will believe going forward. strategy has I-RES objectives, its meet To strategies following the established growth: deliver to high-quality residential space. To To space. residential high-quality will I-RES commitment, fulfil this in investment pursue to continue pathways strategic and acquisitions value. long-term add that Objectives with Ireland’s growing need for for need growing Ireland’s with The I-RES business model is based is based model business I-RES The the to commitment a long-term on is aligned and market residential › › › › › ›

continue to to continue investment pursue in acquisitions strategic and add that pathways value. long-term I-RES will will I-RES BUSINESS BUSINESS OBJECTIVES AND STRATEGY Focus Activity Gearing INVESTMENT The Group’s aim is to assemble a The Group will seek to use gearing portfolio within its focus activity of to enhance shareholder returns over POLICY acquiring, holding, managing and the long term. The Group’s gearing, developing investments primarily represented by the Group’s aggregate focused on residential rental borrowings as a percentage of the accommodations and ancillary and/ market value of the Group’s total or strategically located commercial assets, will not exceed the 50% property on the island of Ireland, maximum permitted under the Irish principally within the greater Dublin REIT Regime. The board of the area and other major urban centres Company (the “Board”) reviews the on the island of Ireland (the “Focus Group’s gearing policy (including the Activity”). The vast majority of such level of gearing) from time to time properties will form the Group’s in light of then-current economic property investment portfolio for conditions, relative costs of debt The Group’s aim is to third party rental. The Group may and equity capital, fair value of the assemble a portfolio also acquire indebtedness secured Group’s assets, growth and acquisition by properties (including in respect of opportunities and other factors the within its focus buy-to-let properties) within its Focus Board may deem appropriate, with the activity of acquiring, Activity where it intends to gain title result that the Group’s level of gearing holding, managing and to and control over the underlying may be lower than 50%. The Board property. There is no limit on the may also from time to time consider developing investments proportion of the Group’s portfolio hedging or other strategies to mitigate primarily focused that consists of indebtedness secured interest rate risk. on residential rental by properties. Investment Structures accommodations. Consistent with the Focus Activity, the Group may consider property The Group also has the ability to enter development, redevelopment or into a variety of investment structures, intensification opportunities, in including joint ventures, acquisitions particular, the completion of building of controlling interests, acquisitions of out the Group’s current development minority interests or other structures sites, where the directors of the (whether by way of equity or debt) Company consider it appropriate including, but not limited to, for having regard to all relevant factors revenue producing purposes in the (including building risk, lease up ordinary course of business, within the risk, expected returns and time parameters stipulated in the Irish REIT to complete). Regime. There is no limit imposed on the proportion of the Group’s portfolio The Group may also acquire properties that may be held through such and portfolios which include other structures. assets outside of the Focus Activity, subject always to a maximum limit of 20% of the overall gross value of the Group’s property assets, provided there is a disposal plan in place in connection with such assets which have been deemed non-strategic and do not meet the Group’s investment objectives or which could otherwise have an adverse effect on the Group’s status as an Irish real estate investment trust.

Photo: Bakers Yard North Portland Street, City Centre, Dublin 1 86 Residential Units

42 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 43 2020 Annual Report Annual 2020 in accordance with the Listing Rules Rules Listing the with in accordance to notified Dublin and Euronext of a Regulatory through market the Company If the Service. Information Policy, Investment its breaches make to is required Company the Regulatory a via a notification the of details of Service Information may or may it actions of and breach change A material taken. have not Policy Investment published in the of consideration the include would Focus the of outside investments permitted as than other Activity, Policy. this Investment under ordinary Company's the as long as For Official the on listed remain shares changes Dublin, any Euronext of List Policy Investment Company’s the to the with in accordance be made must of Rules Listing the of requirements Dublin. Euronext with in accordance invested has I-RES to refer Please policy. investment the page on table overview property the details. further for 24 Restrictions Regime, REIT Irish the to Pursuant other amongst is required, Group the Rental Property a conduct to things, three least at of consisting Business of value market the with properties, than more being no property one any the of value market total the 40% of Property Group’s in the properties 75% least at Further, Business. Rental Aggregate annual Group’s the of from be derived to need will Income at and Business Rental Property its its of value market the of 75% least will cash, uninvested including assets, Rental Property its to relate to need foregoing, the to In addition Business. that do anything not will Group the its lose to Group the cause would investment estate a real as status REIT Regime. Irish the under trust Policy Investment the to Changes Group’s the to changes Material may above out set Policy Investment resolution ordinary by be made only Company the of shareholders the of

the directors of the Company. the of directors the If the Group is unable to participate participate to unable is Group If the property for processes in sales insufficient has it because investments available financing debt and/or funds is at gearing its where including it, to permitted maximum the to close or REIT Regime, Irish the under level acquire to is permitted Group the the meet that investments property Investment its in specified criteria of acquisition the (including Policy companies) holding in property shares in accordance time to time from or warehousing of terms the with entered arrangements pipeline with it by into be entered to or into without case, in each parties, third a price for and approval shareholder has that a basis on calculated by in advance approved been Warehousing / Warehousing Agreements Pipeline RISK REPORT

Risk Management & Internal Control Systems The Board has The Group employs a three lines of defence approach to risk management. reviewed the effectiveness of The Board has overall responsibility for maintaining and monitoring the Group’s system the risk management Board of risk management and internal control and and internal control assessing its effectiveness. Such a system is designed to identify, manage and mitigate systems and no financial, operational and compliance risks inherent to the Group and allow the Group material failings to meet its strategic objectives. or weaknesses were identified. The Board relies on the Audit Committee to assist with certain responsibilities relating Audit to internal controls, risk management and reporting. Refer to the Report of the Audit Committee Committee on page 71 to 75 for the procedures established by the Audit Committee to discharge these responsibilities.

The Manager has a board of directors that is comprised of independent and Manager's non-independent directors and has Board oversight of the Manager’s activities.

The Manager’s employees and management team are responsible for designing, Manager implementing and carrying out a system of internal controls to mitigate key risks facing the Group and allow it to meet its strategic objectives.

Management & Employees Risk Management Function Internal Audit

1st 2nd 3rd

44 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 45 2020 Annual Report Annual 2020 Monitoring of financial results results financial of Monitoring financial operational, key and performance compliance and net value, asset (net indicators capitalisation income, operating average occupancy, rates, debt and gearing rents, monthly revenue compliance, covenant REIT status and collectability compliance) Preventive and detective detective and Preventive and compliance financial, level transaction operational controls controls technology Information and financial key surrounding systems operational monitoring and Establishing plans, business and budgets risk of consideration including

› › › › Process Controls Process risk management function, since they they since function, management risk mitigation actionable require may with discussion to In addition activities. management risk the owners, process from seek guidance also may function certain to in relation advisors outside risks. emerging or external, inherent, also function management risk The the of assessment an out carries risk the of occurrence of likelihood each with associated impact the and of results The register. risk in the risk a and process assessment this risk emerging and key the of summary presented are register risk in the risks the and Committee Audit the to risk The basis. a quarterly on Board register risk and process assessment in determining Board the assist also and risks principal Group’s the been have which uncertainties, 56. 48 to pages on included Asset valuation procedures valuation Asset practices and policies Operations and technology Information procedures and policies security Signing Authority and Delegation Delegation and Signing Authority day-to-day governing Policy corporate larger and transactions initiatives and processes, management Risk practices monitoring regulatory policies, decision Investment policies diligence due including procedures and risk and reporting Financial processes management Corporate governance policies governance Corporate Employee and Conduct Code of Handbook

› › › › › › › › › Policies and Procedures Policies process owners. The risk management management risk The owners. process process with meeting upon function, a risk established has owners, strategic, key of consisting register compliance/ and financial operational, Group the impacting risks regulatory mitigating associated with along the year, the Throughout controls. meets function management risk maintain to owners process with any incorporate and register risk the any including risks, the to changes mitigating and risks emerging or new register This risk controls. or factors include assessments related and both relating discussion and content key other as well as risks principal to emerging including risks, business not may risks emerging While risks. are they risks, principal become always throughout monitored and identified the and owners process by year the Tone at the top the at Tone lines clear and structure Defined of authority disclosure and Communication management as such controls compliance and meetings certifications Board oversight of the Manager Manager the of oversight Board and operational financial, and matters compliance and personnel Experienced the by established oversight Manager

Entity Level Controls Level Entity › › › › › The Manager has a risk management management a risk has Manager The for is responsible which function with assessments risk out carrying In addition to the above, the Board Board the above, the to In addition party third engage Manager the and in assist to needed, where expertise, provide to and processes out carrying has Board The services. advisory firms valuation third-party appointed property- the of valuations provide to The Group. the of investments related assumptions the reviews Manager party third- the by used inputs and of results as the well as firm, valuation Additionally, process. valuation their its for policy a rotation has Group the additional An firms. valuation third-party 2019 in appointed was firm valuation to continues Group the such, as and in the involved firms two valuation have portfolio. Group’s the of valuation The Manager’s risk management Audit Committee has direct access to by management and the directors. function is also responsible for the Manager’s internal audit function Sensitivity analysis has been applied to assessing the Group’s risks that require through quarterly Audit Committee reflect the potential impact of some of insurance and ensuring that adequate meetings, including in-camera sessions the principal strategic and commercial insurance is procured to protect the as required. Furthermore, the Audit risks of the Group, as described on Group from significant exposures. Committee plays a key role in assessing pages 48 to 56. The principal strategic From time to time, the Manager’s risk the annual internal audit plan put forth and commercial risks that were management function engages third by the Manager’s internal audit function factored in the analysis were Prolonged party expertise to assist it in carrying and also in reviewing any significant pandemic, Economy, and Regulations out risk assessments and to provide findings resulting from the audit work and legislation. Sensitivity analysis risk advisory services, as well as in carried out under this plan. In 2021, the included stress testing for decline in procuring optimal insurance coverage Audit Committee has appointed the revenues to ensure the Group has for the Group on the most cost- professional services firm, EY Ireland, sufficient cash resources to continue in effective basis. to supplement the work performed by operation for at least the next 12 months the Manager’s internal audit function. given the Covid-19 pandemic and its The Board is satisfied that the This arrangement, similar to an internal impact on the overall economy. Manager’s risk management function audit co-sourcing model, will allow has the necessary authority, resources, for optimized geographical coverage After reviewing assumptions about expertise and access to relevant and provide added independence to future trading performance, valuation information to fulfil its role and is the internal audit mandate but is not projections, capital expenditure, debt operating effectively as at the date of necessarily viewed as the Group having requirements contained within the next this Report. its own internal audit function. three years and the options available to it, the directors have a reasonable The Group has not established an Taking into account the information expectation that the Group will have internal audit function but instead relies on principal risks and uncertainties sufficient funds available to meet on the Manager’s internal audit function provided on pages 48 to 56, and the liabilities as well as other planned in order to assist the Audit Committee ongoing work of the Audit Committee expenditures as they fall due in the and Board assess the effectiveness in monitoring the risk management and foreseeable future. The Directors of the Group’s risk management and internal control systems on behalf of also considered potential risks and internal control systems. For further the Board, the Board: uncertainties in the business, credit, details regarding the Audit Committee’s market and liquidity risks, including the annual assessment of the need for › is satisfied that it has carried out a availability and repayment profile of an internal audit function, refer to the robust assessment of the principal bank facility and other debt obligations, Report of the Audit Committee on risks and emerging risks facing the as well as forecast covenant page 75. The Manager’s internal audit Group, including those that would compliance. Based on the above, the function consults with the Manager’s threaten its business model, future directors continue to adopt the going staff, the Manager’s risk management performance, solvency or liquidity; concern basis of accounting for the function and the Group’s Board of and preparation of the financial statements directors to determine its mandate. In › has reviewed the effectiveness of for the year ended 31 December 2020. shaping its mandate, the Manager’s the risk management and internal internal audit function also considers control systems, including all material Viability Statement the work performed by the Manager’s financial, operational and compliance risk management function. This controls (including those relating to Assessment of prospects mandate includes auditing the design the financial reporting process), and The Group’s strategy is outlined on and operating effectiveness of key no material failings or weaknesses page 41. Under this strategy, the operational, financial and compliance were identified. key factors underlining the Group’s related internal controls making up risk prospects are: mitigation activities. The Manager’s Going Concern Statement internal audit function has adequate Growth: The Group is targeting organic authority and access to the personnel, The directors, after making enquiries, net rental income growth supplemented processes and records of the Manager reviewing assumptions and considering by increased income from acquisitions and the Group in order to perform options available, have a reasonable and development of assets. its work. The Manager’s internal audit expectation that the Company, and function meets with the Group’s the Group as a whole, have adequate The Board has considered the changes external auditor regularly throughout resources to continue operating for at in the risk profile of the Group that this the year to discuss internal control and least 12 months. For this reason, the entails and has determined that they audit matters. Additionally, the Group’s going concern basis of accounting are acceptable in the context of the external auditor has access to the continues to be adopted in preparing risk profile of the Group as a whole. internal audit function’s findings and the financial statements included in reports. The Manager’s internal audit this Report. The assessment period function presents quarterly to the Audit The Group’s viability assessment Committee on its work related to the Assumptions are built in for the includes the budget for the next internal controls of the Group, including statement of profit or loss and other financial year, together with a forecast those internal controls which are comprehensive income, statement of for the following two financial years. carried out by the Manager in relation financial position and statement of cash Achievement of the one-year budget to the Group’s business activities. The flows, and these are rigorously tested has a greater level of certainty and

46 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 47 2020 Annual Report Annual 2020 can be managed to reduce costs. The costs. reduce to be managed can of any renew to required is not Group the of end the by obligations debt its considered. period the assessed have directors The a three- over Group the of viability 2023, December to period year current Group’s the of account taking of impact potential the and position severe the While risks. principal the the hypothetical, are tests stress mitigation and control has Group or withstand to in place measures impacts unfavourable potential avoid reducing as such scenarios, the under seeking expenditure, non-essential the with agreement a consensual acquisitions of deferment for vendors of disposition and development and this assessment, on Based assets. a reasonable have directors the be able will Group the that expectation operation its sustain to continue to due fall they as liabilities its meet and 2023, December to period the over The covenants. financial its meet and sheet, balance a strong has Group maturities, debt term near no with headroom sufficient has currently and RCF. on its directors the this statement, In making the of resilience the considered have current its account into taking Group, the facing risks principal the position, reasonable but in severe business of effectiveness the and scenarios, actions. mitigating any Residential Units Residential Phoenix Park Racecourse, Racecourse, Park Phoenix Dublin 15 Castleknock, 146 The Group considered the prolonged prolonged the considered Group The legislation, and regulation pandemic, the in (included risks economic and Uncertainties and Risks Principal the on impact negatively section), and covenants banking and flows cash testing stress additional performed in continue to ability Group's the on this for assumptions key The operation. scenario plausible but stress severe to due in revenue reduction include year, first the for decreases rental turnovers, and renewals applied on bad and vacancy in increase significant properties existing from expenses debt expansion yield and acquisitions and debt bad and vacancy The assets. on first in the doubled were assumptions in noted trends the to compared year was pandemic Covid-19 The Q4, 2020. year. first full the for extend to assumed a long on based are valuations The economy. the of view term the recession, prolonged a Under has Company the that believe directors by flows cash and liquidity for mitigants with agreement a consensual seeking future our of deferment for vendors the purchases, forward on commitments capital in discretionary reduction non of dispositions and expenditure further as well as units, residential core if required. deleverage to raise equity expenses maintenance and Also, repair expenses management property and components two significant are which a to are, expenses operating the of that expenses variable extent, certain

These scenarios are intended to to intended are scenarios These are believe directors the what illustrate and outcomes plausible of a range worst the capture necessarily do not vary may results actual The cases. scenarios. these from significantly Assessment of viabilityAssessment of considered has assessment viability The values, capital profitability, Group’s the key other and flows cash gearing, These period. the over metrics financial severe alternate to subject are metrics a number in which scenarios, stress assumptions underlying main the of of some on based changed are as Group, the of risks principal the 56, to 48 to pages on described of range a comprehensive reflect possible outcomes. The key assumptions within the the within assumptions key The include: forecasts financial Group’s supplemented growth revenue organic in acquisitions investment by by supported development, and trends. market key assumptions key are forecasts financial Detailed rolling a to subject and prepared, year. the throughout process forecast are forecasts the of years Subsequent based year, first the from extrapolated strategic the of content overall the on budgets financial against Progress plan. in detail is reviewed objectives key and and Group the by basis a monthly on a quarterly on Board the with shared taken, are actions Mitigating basis. actual through identified whether rolling the or performance trading process. forecast The assessment process and and process assessment The The directors concluded that three three that concluded directors The for period appropriate an was years is the this that given assessment the Group’s the within focus of period key fits it and process, planning strategic development Group’s the with well strategic the of objectives The cycle. the consider to are process planning Group the facing choices strategic key financial a consolidated build to and scenarios, stress various with model risks principal the account into taking Group. the facing uncertainties and is used to set near-term targets targets near-term set to is used the of Achievement Group. the across than certain is less plan three-year a longer- provides but budget the strategic which against outlook term be made. can decisions Principal risks and uncertainties Manager and CAPREIT LP, as well as the combined expertise of its Board. The directors of the Company set The principal risks and uncertainties, out below the principal risks and along with their strategic impact on uncertainties that the Group is the business and mitigating factors, exposed to and that may impact have been outlined. The Group has performance in the coming financial also provided its belief on how the year. The Group proactively identifies, risk has trended (remained stable, is assesses, monitors and manages these increasing or is decreasing) from the risks with the assistance of the year ended 31 December 2019.

Risk Prolonged Pandemic A widespread and prolonged pandemic will have a negative effect on Ireland’s economy and capital markets, and in turn may have an adverse impact on the performance of the Group.

Strategic High Impact The global spread of Covid-19 has resulted in major disruptions to both businesses and personal lives. The Group, its Manager, and its key vendors and service providers will experience disruptions to day-to-day operations if a significant portion of their employees become ill or are required to be quarantined for extended periods. The Group’s growth strategy will be affected due to severe government restrictions impacting construction sites, in- suite works, physical viewing of properties and travel restrictions to within a 5km radius. There is significant uncertainty as to what the overall economic impact will be and how long a recovery will take. This could result in a negative impact to the Group’s cash flows due to increased unemployment, reduced business activity, increased costs and further government measures related to the property rental industry taken to ease the economic impact of the Covid-19 pandemic

Mitigation The Group and its Manager actively monitor and manage the evolving risks and measures being implemented Strategy by Government in relation to the pandemic, and their effect on the business and macroeconomic environment. The Group convened regular crisis management team meetings from the outset as well as an ongoing communications programme with all stakeholders. The board met regularly to monitor the evolving situation and receives regular updates from the CEO and Manager. The crisis management team consists of senior leadership and subject matter experts in order to provide direction to various elements of the business. The Manager activated its business continuity plan, requiring all head office employees to work from home where possible, and reduced work at the properties to essential works only, while implementing social distancing protocols, and adhering to guidance by the Health Services Executive. The Group is taking steps to ensure the safety, health and well-being of all employees, residents in our properties, business partners, shareholders, and other stakeholders to ensure the ongoing operation and performance of the business, including increased sanitization, communications programmes, increased use of technology, ensuring adherence to public health guidelines and Government regulations, as well as providing ongoing support to tenants and employees. Given the difficult environment for tenants, the Group continues to work with tenants, and housing authorities to minimize the impact of the Covid-19 virus on tenants and their homes.

Risk Trending Increasing Since 31 While governments around the world, and health authorities are taking significant measures to slow the spread December of the Covid-19 virus and roll out vaccines, it does appear that there will be an economic and health impact 2019 through much of 2021. In line with the measures introduced by the Irish government, the Group has implemented a temporary moratorium on rent increases (to 12 April 2021) and longer notice periods for termination of tenancies based on rent arrears (90 days but no earlier than 13 April 2021) , for those tenants who are deemed “Relevant Persons” under the Planning and Development, and Residential Tenancies Act, 2020. Relevant Persons are, broadly, tenants who are in receipt of Government Covid-19 related payments and unable to pay their rents. Rent increases that would have applied were it not for the emergency period cannot be retrospectively claimed once the emergency period is over. The Residential Tenancies Act 2020 also provides for a ban on evictions taking effect for all tenancies (subject to limited exceptions) when there is a 5km travel restriction in place. Additionally, the Irish government is currently providing support measures for workers, and business affected by the Covid-19 pandemic until the end of June 2021. Given the restrictions that continue to be in place, it will take a prolonged period of time for businesses to return to normal operations.

48 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 49 2020 Annual Report Annual 2020

Economy economy. Irish the of weakening A general Medium There continues to be a significant supply constraint in the Irish housing market, coupled with increasing increasing coupled with market, housing Irish in the constraint supply be a significant to continues There the to due exacerbated further been This has factors. demographic other and growth population to due demand as Housing activity. construction on restrictions of a result as constrained housing new of supply with pandemic Government. for Programme in the measure policy key as a features and issue political is a significant a result in including housing affordable and social of supply direct increase to measures announced has government The reviewing currently are Housing of Department and Housing for Minister The sector. private the with partnership in Ireland development and planning housing, for strategy as well as policies regulatory and planning housing, going forward. Covid-19 a temporary implemented has Group the government, Irish the by introduced measures the with In line on based tenancies of termination for periods notice longer and 2021) 12 April (to increases rent on moratorium Persons” “Relevant deemed are who tenants those , for 2021) 13 April than earlier no but (90 days arrears rent tenants broadly, are, Persons Relevant 2020. Act, Tenancies Residential and Development, and Planning the under increases Rent rents. their pay to unable and payments related Covid-19 government of in receipt are who the once claimed be retrospectively cannot period emergency the for not it applied were have would that effect taking evictions on a ban for provides also 2020 Act Tenancies Residential The is over. period emergency in place. restriction is a 5km travel there where exceptions) limited to (subject tenancies all for Residential tenancies legislation has continued to evolve over the past few years. Amongst other requirements, requirements, other Amongst years. few past the over evolve to continued has legislation tenancies Residential pressure in “rent rent”) “market the exceed to (not annum 4% per to increases rent annual limits currently it in applying restrictions increase rent current The properties. investment Group’s the of all covers which zones”, will legislation amending or new that It is expected 2021. December 31 on end to due are City Cork Dublin and be. will legislation amending or new any of effect the what is uncertain it but be introduced the that understanding Company’s It is the formed. was government coalition a new 2020, June On 27 increasing including market, housing in the issues resolving to approach a multi-pronged plans government on impact an could have which ownership home incentivizing as well as housing, affordable of availability the a negative could have regulations amended or New going forward. accommodation rented private for demand new implement to continues government The values. asset and earnings, revenues, Group’s the on impact measures. public health of part as tenancies of termination and rents to in relation including regulations to costs incremental incur to have may Manager the and Company the changes, legislation as Additionally, with consultations and systems, technology and procedures of modification training, staff as such comply, advisors. professional in environment, economic the as well as legislation rent regulations, current the of account takes Group The growth. and performance financial of expectations decisions, investment its strategy, Group’s the considering growth. revenue on limitations any in mind keeping costs manage and monitor also Manager its and Group The compliance ensure to in order education and training receive will staff relevant is enacted, legislation new If any legislation. and regulations with Increasing Regulation and Legislation and Regulation the on impact adverse an has that legislation rent and tax including legislation, introduce may government The REIT. the of performance Medium Covid-19 The in Ireland. activity economic and employment on impact a significant had has pandemic Covid-19 The Covid-19 the by affected business and workers, for support measures providing is currently government Irish pandemic the since increases rent served not has Group the and 2021, June of end the until pandemic future. the in tax policy may impact pandemic the from arising deficits government Significant declaration. be determined to is yet Covid-19 of impact economic long-term The Reduced economic activity could have a negative impact on business performance, asset values and net rental rental net and values asset performance, business on impact a negative have could activity economic Reduced forward. going flows cash could affect which income, areas other than economically resilient more been has Dublin, which on focused is primarily business Group’s The economic performance, business monitors Manager the and CEO the basis, ongoing On an past. in the Ireland of a regular on Board the to reports and developments, sector residential and reviews environment macro and Group’s the on outlook macro and economic wider the of impact the considers regularly Board The basis. strategy. Increasing Risk Strategic Impact Risk Trending Trending Risk Since 31 December 2019 Mitigation Mitigation Strategy Strategic Strategic Impact Risk Mitigation Mitigation Strategy Trending Risk Since 31 December 2019 Prolonged Pandemic and markets, capital and economy Ireland’s on effect a negative have will pandemic prolonged and A widespread Group. the of performance the on impact adverse an have may in turn High While governments around the world, and health authorities are taking significant measures to slow the spread spread the slow to measures significant taking are authorities health and world, the around governments While impact health and economic be an will there that appear does it vaccines, out roll and virus Covid-19 the of 2021. of much through a temporary implemented has Group the government, Irish the by introduced measures the with In line on based tenancies of termination for periods notice longer and 2021) 12 April (to increases rent on moratorium Persons” “Relevant deemed are who tenants those , for 2021) 13 April than earlier no but (90 days arrears rent tenants broadly, are, Persons Relevant 2020. Act, Tenancies Residential and Development, and Planning the under increases Rent rents. their pay to unable and payments related Covid-19 Government of in receipt are who the once claimed be retrospectively cannot period emergency the for not it applied were have would that effect taking evictions on a ban for provides also 2020 Act Tenancies Residential The is over. period emergency the Additionally, in place. restriction is a 5km travel there when exceptions) limited to (subject tenancies all for Covid-19 the by affected business and workers, for support measures providing is currently government Irish 2021. June of end the until pandemic return to businesses for time of period prolonged a take will it be in place, to continue that restrictions the Given operations. normal to The global spread of Covid-19 has resulted in major disruptions to both businesses and personal lives. The Group, Group, The lives. personal and businesses both to disruptions in major resulted has Covid-19 of spread global The if a operations day-to-day to disruptions experience will providers service and vendors key its and Manager, its The periods. extended for quarantined to be required are or ill become employees of their portion significant in- sites, construction impacting restrictions government severe to due be affected will strategy growth Group’s a 5km radius. within to restrictions travel and properties of viewing physical works, suite will recovery a long how and be will impact economic overall the to what as uncertainty is significant There reduced unemployment, to increased due flows cash Group’s the to impact in a negative This could result take. taken industry rental property the to related measures government further and costs increased activity, business pandemic Covid-19 the of impact economic the ease to being implemented measures and risks evolving the manage and monitor actively Manager its and Group The environment. macroeconomic and business the on effect their and pandemic, the to in relation Government by ongoing an as well as outset the from meetings team management crisis regular convened Group The and situation evolving the monitor to regularly met board The stakeholders. all with programme communications Manager. and CEO the from updates regular receives provide to in order experts matter subject and leadership senior of consists team management crisis The all requiring plan, continuity business its activated Manager The business. the of elements various to direction essential to properties at the work reduced and possible, where home from work to employees office head Services Health the by guidance to adhering and protocols, distancing social implementing while only, works in residents employees, all of well-being and health safety, the ensure to steps is taking Group The Executive. and operation ongoing the ensure to stakeholders other and shareholders, partners, business properties, our of use increased programmes, communications sanitization, increased including business, the of performance providing as well as regulations, Government and guidelines public health to adherence ensuring technology, employees. and tenants supportongoing to to authorities housing and tenants, with work to continues Group the tenants, for environment difficult the Given homes. their and tenants on virus Covid-19 the of impact the minimize Increasing Risk Strategic Impact Mitigation Mitigation Strategy Trending Risk Since 31 December 2019 Risk Access to Capital The ability to access capital may become limited, which would impact the growth strategy of the Group.

Strategic Medium Impact If the Group is unable to source debt financing at attractive rates or raise equity, it may not be able to meet its growth objectives through acquisitions and development or preserve its existing assets through maintenance or capital expenditures.

Mitigation The CEO and CFO have developed relationships with lenders, both in Ireland and internationally, which provide Strategy ongoing financing possibilities for the Group. The quality of the Group’s property portfolio and the gearing target of 45% on total assets (particularly apartments) are attractive credit characteristics for potential lenders, which to date have facilitated the raising of debt financing. The Group currently has a revolving and accordion credit facility of up to € 600 million and Notes Private Placement of €200 million equivalent. The Group invests in properties that generate a strong rate of return for its investors and, in turn, increases the attractiveness of its shares and dividends. The Group actively manages its liquidity needs and monitors capital availability.

Risk Trending Stable Since 31 At 31 December 2020 the Group had drawn on its credit facility in the amount of €354 million and Notes December Private Placement of €198.9 million. The Group continues to monitor liquidity needs to ensure that future capital 2019 requirements are anticipated and met within the limits of its leverage thresholds. Based on its financial position and performance, as well as its relationships with lenders and current and potential investors, the Group believes that it has the ability to obtain debt financing and to raise equity at the appropriate time.

Risk Cost of Capital and Loan to Value Ratio Interest rates increase, and/or property valuations decrease, resulting in higher debt service costs and restrictiveness of future leveraging opportunities. Investors’ expected rate of return increases, resulting in pressure to increase dividend yields.

Strategic Medium Impact The Group is exposed to risks associated with movements in interest rates on its floating rate bank debt, as well as movements in property valuations. Significant Increases in interest rates, and the cost of equity, could, affect the Group’s cash flow and its ability to meet growth objectives or preserve the value of its existing assets. Additionally, property valuations are inherently subjective but also driven by market forces. A contraction in property values could make the Group too highly geared, which would result in higher interest costs and covenant breaches.

Mitigation The Company’s revolving credit facility was refinanced during 2019, increasing the committed facility to €600 Strategy million (with an uncommitted accordion facility of €50 million), lowering the interest fixed margin to 1.75% and extending the maturity to 2024, with the option to extend further to 2026 (subject to certain conditions). The Group completed a private placement of Notes of circa €200 million equivalent in March 2020, with a weighted average fixed interest rate of 1.92% inclusive of swap costs. The Notes have a weighted average maturity of 9.7 years, laddered over seven, ten and twelve-year maturities, with the first repayment due in 2027. As of 31 December 2020, the Company has €11.2 million of cash and €246 million of committed undrawn debt under its RCF. The Group has €15 million in current committed capital and development expenditure. The Group maintains an active programme of engagement with its debt and equity providers, including an ongoing Investor Relations programme. The Group’s Group Total Gearing was 39.2% as at 31 December 2020, below the 50% maximum allowed under the Irish REIT rules and the financial covenants under the Group’s debt agreements. The Company also maintains significant headroom on its interest coverage ratio. The Group has a proven track record of strong results. Strong results, combined with being in a residential industry with strong real estate fundamentals, helps manage shareholders’ expectations and thus, the cost of equity.

Risk Trending Stable Since 31 The European Central Bank is not expected to significantly increase interest rates over the short to medium December term given the current and anticipated levels of uncertain economic indicators. As such, the Group does not 2019 anticipate a material increase in debt financing costs. The valuation of the portfolio as at 31 December 2020, when compared to year end 2019 has increased. This has positively impacted the Group Total Gearing. The increase in valuation is due to continued demand for residential assets by investors and transactions continue to close in 2020 post pandemic with competitive yields.

Covid-19 The Covid-19 situation continues to evolve, and it may adversely impact the valuation of the Group’s investment properties. The Group’s reasonable expectations is that the residential asset class should continue to perform well in the long term. In the interim, the Group is making prudent decisions about capital expenditures to ensure that the Group Total Gearing remains under 50%.

50 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 51

2020 Annual Report Annual 2020 exploring the option option the exploring

Investment Management Agreement Termination or Material Decline in Manager Performance Manager in Decline Material or Termination Agreement Management Investment The Manager has continued to have strong performance as evidenced by the returns being generated on the the on being generated returns the by evidenced as performance strong have to continued has Manager The material any anticipate not does Group The matters. operational day-to-day manage to ability and assets Group’s AIFMD regulations. with comply to ability its or this performance continue to ability Manager’s in the changes Party Related the 2020, 1 November on term Agreement Management Investment initial the of date expiry On the the with Agreement Management Investment a revised for terms new on agreement reached not had Committee In addition, terms. existing the under continued has Agreement Management Investment the As a result, Manager. its with in line Company the of resources management the augment would it that announced Company the scale. increased and strategy growth strategic relative the evaluate to continues advisers, with in conjunction Party Committee, Related The is Company The Company. to the available options various of merits financial and to internalize the management of the Company and, if applicable, to apply to the Central Bank of Ireland for for Ireland of Bank Central the to apply to if applicable, and, Company the of management the internalize to co-operation continuing the appreciates Company The manager. fund investment alternative an as authorization the on deliberations ongoing Party Committee's Related in the LP CAPREIT and Manager the of assistance and internalize, to Company the by made been has decision no At this point, Company. the of management future terms. existing the under continues Agreement Management Investment the and or otherwise, Covid-19 home from work to employees office head all requiring plan, continuity business its activated Manager The distancing social implementing while only, works essential to properties the at work reduced and possible, where Executive. Services Health the by guidance to adhering and protocols, The Manager, through its asset management and property management functions, plays an integral part in the in the part integral an plays functions, management property and management asset its through Manager, The performance its in decline significant a As result, a assets. Group’s the of management and operations day-to-day a to lead could services its terminate to notice serve to chooses if it or mandate its out carry to inability an or operations. Group’s the to disruption significant and performance, operating and financial Group’s in the decline the and Act (Regulation) Services Property the including regulations certain with comply must Manager The do so, could result to Failure Union. European the (AIFMD) of Directive Management Fund Investment Alternative Investment the under services management asset and/or management property provide to ability its losing in it Group. the to Agreement Management there manager, investment the internalize to chose or manager investment another select to had Group If the assets. telecommunications and IT systems as well as operations, day-to-day to be interruptions may finance and property qualified of team multi-disciplinary a well-regarded up of is made Manager The investments. property of management and financing selection, in the experienced professionals indicators performance key monitoring including Manager the of work the evaluates and oversees Board The Additionally, values. asset net and rents of collectability income, rental net revenues, rental occupancy, as such a close has also Board The budgets. against expenditures and revenues actual reviews periodically Board the Manager. the with relationship working compliance ensuring of time amount a considerable spend professionals financial and compliance Manager’s The compliance impact that changes any for AIFMD regulations monitoring as well as AIFMD requirements, the with in changes any incorporate to regularly reviewed are procedures and policies Manager’s The processes. procedure. or legislation and AIFMD with in complying it assist to firms and party advisors third engaged has Manager the Additionally, Bank. Central to the filings required making as, well as functions, associated out carrying and Company, the of Board the AIFMD to to relating activities compliance its on reports regularly Manager The regulatory its meets Manager the that ensure AIFMD to the with compliance oversees Manager the of Board the time. all at obligations serve may Management Fund IRES 2019, 1 November after that, provides Agreement Management Investment The Manager the Company, the by if requested and, agreement the terminate to intention its of notice 12 months’ Management Investment The cost. Company’s the at (3) months of a period for services transition provide will and Company the of management the internalise to option the has Company the that provides also Agreement business)/cash of course ordinary in the liabilities than (other free a liability on Manager the of shares the acquire 2020. 1 November after or €1 on for basis free Company, the between agreement management investment the on update an provided I-RES 2020, In November term initial an had Agreement Management Investment The Manager. the and Limited Properties Residential I-RES Management Investment initial of the expiry of the advance In 2020. on 1 November expired which years five of review a scheduled conduct to 2019 in November appointed was Party Committee Related the term, Agreement to available options strategic the evaluate Agreement, Services and Agreement Management Investment the of matters. related certain consider and them to in relation I-RES Stable A material decline in the Manager’s performance, or if it is unable to carry out its duties under the Investment Investment the under duties its out carry to is unable if it or performance, Manager’s in the decline A material of terms the with in accordance services its terminate to notice serves Manager the or Agreement, Management Agreement. Management Investment the services.. their terminate to notice 12 months’ serve can Manager The Medium Risk Mitigation Mitigation Strategy Trending Risk Since 31 December 2019 Strategic Strategic Impact Risk Opportunity to Acquire or Develop Assets Investment opportunities may become limited.

Strategic Medium Impact The Group may not grow in number of apartments relative to the past if there is a lack of development and acquisition opportunities. Additionally, investment opportunities could be limited if they become overly costly or there is excess competition. If growth opportunities are limited, it will impact the Group’s ability to generate growing returns for its shareholders.

Mitigation The Group has become a sought-after investor for new investment opportunities that arise in the market. Strategy The Company and its Manager have deep market knowledge and have established strong industry relationships, which provide for new growth opportunities. Additionally, the Manager has dedicated staff focused on identifying and evaluating a pipeline of acquisition and development opportunities. The Group focuses on a three-pronged strategy for growth. This involves acquisitions, development opportunities within existing assets, and partnering with developers in relation to new development opportunities.

Risk Trending Stable Since 31 Completed assets are in limited supply, and new supply is coming online more slowly than expected. Prior to the December recent Covid-19 crisis, competition via new entrants and funds, though moderated, had continued to increase, 2019 leading to continued cap-rate compression and reduced opportunity for accretive acquisitions.

Covid-19 The Covid-19 pandemic has led to restrictions that has slowed activity in the real estate sector, including the buying and selling of assets, as well as construction. It is however, too early to establish the competitive environment post Covid-19.

52 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 53 2020 Annual Report Annual 2020

Construction in defects or projects development of completion in delays or overruns cost costs, construction Increasing standards. building with non-compliance or construction Medium As a withdrawal agreement between the UK and EU has been reached, the Group will monitor for and adapt to to adapt and for monitor will Group the reached, been EU has and UK the between agreement As a withdrawal materials. and labour construction of supply the on impacts Covid-19 the for procedures safety and health implementing (including requirements compliance Covid-19 of addition The the over experienced lockdown the with along and cost, added has site) on workers construction of protection and projects of a backlog cause this may While projects. construction of timelines increased has months, few past uncertain. are projects and industry construction the on Covid-19 of effects long-term the build, to cost increased The Group may not meet its performance targets if there are material cost overruns in excess of budget budget of in excess overruns cost material are if there targets performance its meet not may Group The or permissions planning in securing delays unanticipated works, maintenance or development for estimates projects. maintenance or development new with associated works construction for in timelines delays projects. construction on take to ability Group’s the or returns impact could also construction of costs Increasing be discovered may code building with non-compliance or deficiencies structural construction, post Furthermore, returns. impact could also which Manager the strategy, Company’s the with in line opportunities, development potential In sourcing/reviewing Board The Board. and CEO the to is presented This analysis analysis. viability and investment a detailed undertakes commencement. to prior opportunities development material approve must process, tender open an complete will Company the of behalf on Manager the process, this approval of As part ability proven the has contractor main chosen the ensuring thereby analysis, quantitative and qualitative including in estate in real specializing advisers legal retains Company The project. construction the complete to capacity and in diligence due adequate performs Manager The standard. market are development for contracts all ensure to order or CEO the to engagement their recommending before contractors main on party consultants 3rd with conjunction Board. the historic be provided, to warranties additional contract, of form the on advice provide typically consultants These where ponds, performance and requirements insurance scale, and size a similar of projects on performance applicable. and necessary this is actively and project the of course the throughout is retained Company the by engaged team, A technical and safety and health quality, as such items specific on project the of delivery reviewing Manager the by managed in are billings contractor the ensure to manager cost independent an engages also Company The timelines. project risk inflation cost to minimize price contracts fixed sum lump uses Group The completed. work actual the with line phase. construction the during that ensures Manager the standards, building with non-compliances and defects structural against protect To regulations) building and permissions of planning respect (in of Compliance Opinions and certificates completion inspect to Company the by engaged are party professionals third necessary, where and contractor main the from years of number last in the supplemented been This has construction. of completion upon and during building the and team design the reviews and manages who Certifier Assigned an engage to requirements statutory the by standards. building the with compliance for project the during contractor and contractor, main team, design the from warranties collateral and contracts of a suite receives Company The contract, building the of is part 12 months) (typically period liability a defects Additionally, sub-contractors. specialized months 12 arisen have may that defects any for as collateral retained be will holdback a financial time which during a for are contracts contractor and consultant works’ high-risk and High value works. the of completion practical post this period. within arise defects. build or if design upon be called can these and period 12 year Stable

Risk Strategic Impact Mitigation Mitigation Strategy Trending Risk Since 31 December 2019

Residential Units Residential 335 335 Photo (CGI): (CGI): Photo Rockbrook Sandyford Risk Political Material changes to the political environment in areas significantly impacting the Group’s operations

Strategic Medium Impact In Ireland, a general election was held on 8 February 2020 and on 27 June 2020 a new coalition government was formed. It is the Company’s understanding that the government plans a multi-pronged approach to resolving issues in the housing market, including increasing the availability of affordable housing, as well as incentivizing home ownership. On 23 June 2016, the UK voted to leave the European Union (EU). This withdrawal took place on 31 January 2020, and following a transition period ending 31 December 2020 an agreement was reached between the UK and EU. There continues to be some uncertainty around potential effect of the withdrawal on the Irish economy as the UK is one of Ireland’s largest trading partners. The withdrawal will also likely impact immigration, foreign investment, economic and fiscal policy, and regulatory practices.

Mitigation The Company engages a public affairs firm to advise in relation to these matters as well as actively participating Strategy in industry groups to ensure ongoing consultation and engagement with relevant authorities, regulators and government departments on significant policy and regulatory matters likely to impact on the Company’s affairs

Risk Trending Stable Since 31 It is the Company’s understanding that the new coalition government in Ireland is focused on housing policy as December well as increasing housing supply and is engaging with the industry on significant regulations and policy matters. 2019 Additionally, as the UK and EU have reached an agreement, the Group will continue to monitor for and adapt to any impacts the withdrawal may have on the Group’s operations.

Risk Concentration Risk The Dublin market experiences material circumstances that results in lower occupancy or demand for rental properties

Strategic Medium Impact A lack of geographical or asset diversification could lead to a material financial impact to the Group in the event of a decrease in occupancy or lower rents in the Dublin market.

Mitigation Dublin has continued to be an economically resilient market. While the bulk of the existing portfolio is diversified Strategy across various districts within Dublin, the Company now owns property in Cork and continues to explore opportunities in other areas of Ireland with strong economic fundamentals. The CEO continuously reviews and updates the Board on economic, demographic, social, legal and policy changes or trends that could impact the Group’s strategy and business performance. The Manager monitors supply and demand for rental apartments in operating areas where the Group’s investment properties are located. Additionally, the Manager monitors and reports on certain key metrics around investment performance and risk, as well as compliance with the Group’s stated investment policy, on a quarterly basis to the Board.

Risk Trending Stable Since 31 Residential Real estate and economic fundamentals in key urban areas in Ireland continue to remain strong December including continued population growth notwithstanding the impact of Covid-19. 2019 The level of concentration in Dublin market is within the Group’s risk appetite given the diversity of locations across the city, and county as well as the ongoing growth in investment, population and economic activity in the Greater Dublin Area. Accretive opportunities still presented by being focused on the Dublin market.

54 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 55 2020 Annual Report Annual 2020

Stable Cybersecurity and Data Protection Data and Cybersecurity being data Company’s the or Manager or Company the by legislation protection data with comply to Failure attack. a cybersecurity to subject Medium The Manager’s due diligence practices have not changed substantially since last year as they continue to be to continue they as year last since substantially changed not have practices diligence due Manager’s The appetite. risk Group’s the with align and norms industry with consistent Covid-19 to leading practices diligence due of modification led to have measures compliance Covid-19 Additional expense. and delay incremental With respect to newly constructed buildings or forward purchase agreements, a suite of market standard construction construction standard market of a suite agreements, purchase forward or buildings constructed newly to respect With warranties collateral period, liability defects a 12 month include; typically will which vendor the from is sought protections are which In buildings policy. insurance defects structural a 10 year and team design the and contractor main the from assign to be possible may it constructed was building the when the on dependant and acquisition of date the at older acquisition. of time the at warranties and insurance defects structural of in respect coverage outstanding the Investment assets may decrease in value or result in material unanticipated expenditures subsequent to to subsequent expenditures unanticipated in material result or in value decrease may assets Investment deficiencies structural including purchase, of time the at conditions and risks unknown of a result as acquisition code. building with non-compliances or due environmental and technical operational, legal, financial, out in carrying consultants engages Manager The fit with its determine to projects) development and acquisitions (both opportunity investment every on diligence and structure building the evaluate to investigations, standard all This includes policy. investment stated Group’s the over expenditures capital of magnitude likely the and regulations, building and planning with compliance condition, the with work to experts third-party with agreements framework in place has Company The period. 5 year a 3 to developments, acquisitions, potential on investigations and studies engineering and technical out in carrying Manager to and diligence due legal out carry to lawyers property specialist engaging as well as contracts purchase forward or anticipated the of in respect is completed review a full Additionally, contracts. development and purchase on advise asset. the managing with associated costs operational and expectations income future and current risks of consideration €1m including over for proposals investment approves and reviews Board and CEO The Board. by the executed are contracts material All process. diligence due the during Manager by the identified related property any manages and monitors practices, operating prudent through Manager, the Post-acquisition, are progress diligence due the during identified actions Remedial arise. as they deficiencies, building including issues, issue. the of nature the on dependant acquisition post timelines relevant within actioned As technological change has occurred at a rapid pace, the inherent risks surrounding cybersecurity and data data and cybersecurity surrounding risks inherent the pace, a rapid at occurred has change As technological Protection Data Union European pace. rapid equally an at evolve to continue and evolved also have protection obligation in prescriptiveness, is increasing ePrivacy) and Regulation Protection Data General (e.g. legislation pose complexities, risk vendor and transfers data border cross as such issues Additionally, administration. and and II case, Schrems the particularly and developments legal recent to due challenges compliance increasing “business online criminal to due pace accelerating an at continue attempts engineering social and phishing transfer. wire via fraud financial basic and deployment ransomware hit high volume/quick on focusing models” Covid-19 world business the measures, home from work implement to companies for requirement the and Covid-19 With The attempts. phishing including threats, and attacks in cybersecurity increase a sizeable experienced has this risk. of section strategy mitigation in the referenced measures protective the employ to continues Manager have and risks cybersecurity around employees to training and awareness the increased have they Additionally, landscape. technology information the to threats potential of monitoring up the stepped also Acquisition Risk conditions. and risks all of consideration without be made may decisions Investment Medium Failing to comply with data protection legislation and practices could lead to unauthorized access and fraudulent fraudulent and access unauthorized to could lead practices and legislation protection data with comply to Failing belonging that particularly data, or personal information business confidential/non-public surrounding activities the and/or Group the to penalties stakeholders, to losses in direct result This could residents. Group’s the to Group. the to damage reputational and parties third to liability potential non-compliance, for Manager remains and Group the and itself of behalf on protection and privacy data for is responsible Manager The on training awareness regular receive Employees change. legislative and technological constant to adaptable protection. data and privacy cybersecurity, alarm locations, storage and offices locked (e.g. measures physical through is controlled data personal to Access destruction data policies, retention data minimization, data (e.g. measures administrative cameras), monitoring, detection intrusion antivirus, firewalls, protection, password (e.g. measures IT security and audits) and practices, to required, where engaged are consultants/advisors third-party and personnel security Cyber encryption). and risks. cyber and IT environment the assessing with assist continues and Group the and itself of behalf on coverage insurance cybersecurity maintains Manager The and protection, transfer, disclosure, storage, processing, collection, surrounding risks assess and monitor to data. personal for practices retention/destruction Increasing

Since 31 December 2019 Risk Trending Risk Strategic Impact Mitigation Mitigation Strategy Risk Strategic Strategic Impact Mitigation Mitigation Strategy Trending Risk Since 31 December 2019 Risk Tax Compliance Risk Failure to comply with tax legislation including REIT rules, VAT, and stamp duty.

Strategic Low Impact If the Group fails to comply with REIT rules or there are changes to tax policies it could result in the loss of REIT status and/or change the tax treatment of the Group’s income and thus, decrease the attractiveness of the Company as an investment to current or potential shareholders.

Mitigation The Manager proactively monitors and tests the Group’s compliance with the rules and regulations affecting Strategy REIT status and regularly reviews and considers how the Group’s planned operations may impact compliance with these rules. The results of these compliance reviews are reported to the Board on a quarterly basis, at a minimum. The Company and Manager also engage independent tax and legal advisors in relation to compliance monitoring, where needed. There is regular reporting to the Company’s Audit Committee of compliance with REIT Rules, tax legislation and regulations as well as other relevant laws and regulations and likely future changes including impacts on the Group. The Manager has dedicated risk and compliance personnel are alert and vigilant regarding these matters and any impending or emerging changes in REIT rules and regulations or tax policies.

Risk Trending Stable Since 31 The Group does not believe the risk of non-compliance has changed from last year and the Audit Committee December and Manager continue their review and monitoring as well as taking expert advice when necessary. 2019

Risk Planning Delays in obtaining planning permissions in respect of the Group’s development sites leading to delays in commencement and delivery of residential units, and failure to develop on sites with planning permissions may result in levies.

Strategic Low Impact Planning permission is required from the relevant planning authority prior to the development of the Group’s development sites. Delay in achieving planning permission may result in a slower level of portfolio growth and income generation from the development assets.

Mitigation The Manager appoints competent professional teams in respect of each development opportunity (including Strategy architectural and planning consultants) to advise on the preparation of planning applications. Additionally, the Manager has dedicated resources to actively manage the development process on behalf of the Group. The appointed project management team continuously reviews project specific risks matrices for each project stage.

Risk Trending Stable Since 31 The Strategic Housing Development planning application process allows for greater consultation with authorities December prior to submission of planning applications. This process relates to residential developments of over 100 units. 2019

56 I-RES Governance

In this Section: I-RES Board of Directors 58 Corporate Governance Statement 61 Report of the Audit Committee 71 Report of the Remuneration Committee 76 Report of the Nomination Committee 90 Report of the Directors 94 Statement of Directors’ Responsibilities 103

Grande Central, Sandyford 146 Residential Units

2020 Annual Report 57 BOARD OF DIRECTORS

Declan Moylan Phillip Burns Independent Non-Executive Chairman Non-Independent Non-Executive Director

Appointed: 31 March 2014 Appointed: 23 March 2016 Nationality: Irish Nationality: American and British

Committee membership: Committee membership:

Audit Committee: Remuneration Committee: Appointed 31 March 2014 to 18 April 2017 Appointed 23 March 2016 to 31 March 2017

Remuneration Committee: Nomination Committee: Appointed 31 March 2014 Appointed 23 March 2016

Nomination Committee: Appointed 31 March 2014

Declan Moylan is former Managing Phillip Burns is the Chief Executive Officer Partner and Chairman of Irish law and trustee of European Residential Real firm Mason Hayes & Curran. During Estate Investment Trust (ERES) (TSX:ERE.UN), his legal career his practice focused an unincorporated, open-ended real estate investment trust, a position Mr. Burns holds on advising international corporates as a senior employee of CAPREIT LP, which establishing businesses in Ireland. is the majority unitholder of ERES. ERES is Canada’s only European-focused residential Mr. Moylan has extensive board REIT and currently owns a portfolio of 131 experience in commercial and not-for- multi-residential properties, comprised of profit organisations. He is currently approximately 6,000 residential units in the a director of Nitro Software EMEA Netherlands. Mr. Burns is also the Founder Limited, the Europe, Middle East and a Principal of Maple Knoll Capital. and Africa division of Nitro Software During his career, he has been involved as Limited, which listed on the Australian a principal or advisor in transactions with an aggregate value of over €20.0 billion, with Securities Exchange in 2019, and more than 70% centred around real estate Monster Energy Limited, subsidiary across multiple geographies. Mr. Burns has of Monster Beverage Corporation of also been involved with raising in excess of Corona, California listed on NASDAQ. €11.0 billion of equity for principal investment, including over €2.5 billion Mr. Moylan is Chairman of Butler dedicated to real estate. Corum European Hospitality Fund, an investment fund focused on hotel Previously, Mr. Burns was Chief Executive properties across the Eurozone. He Officer of Corestate Capital, an investment is a member of the Audit Committee manager focused on distressed real estate transactions in Europe. Prior to this, he of the Office of Director of Public was a Managing Director at Terra Firma Prosecutions which supervises Irish Capital Partners, where he specialised in State prosecutions of criminal matters infrastructure, real estate and credit. Mr. and referendum petitions. He is Burns also worked for Goldman Sachs, Chairman of WEEE Ireland Limited, the where he focused on mortgage finance, country's largest compliance scheme real estate and general corporate finance, for the disposal of Waste Electric and Skadden Arps, where he worked as a and Electronic Equipment (WEEE) in corporate attorney. compliance with European Directive 2012/19/EU. Mr. Burns holds a Bachelor of Science in Aerospace Engineering from the University of Michigan and a Juris Doctor, summa cum Mr. Moylan is a former member of laude, from Syracuse University. Dublin City University Governing Authority. He is a former director of the Irish Museum of Modern Art in Dublin and of the Crawford Art Gallery in Cork, both on appointment by the Minister for Arts, Regional, Rural and Gaeltacht Affairs in Ireland. 58 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 59 2020 Annual Report Annual 2020 Mark Kenney Director Non-Executive Independent Non Nominee) (Manager 1 January 2019 Appointed: 1 January Canadian Nationality: On 1 January 2019, Mark Kenney was was Kenney Mark 2019, On 1 January Board the of a member as appointed nominee. Management’s Fund IRES as Apartment Canadian joined Kenney Mr. Trust Investment Estate Real Properties has in 1998 and (“CAPREIT”) (TSX.CAR.UN) multi- in the experience of years 25 over is a Kenney Mr. sector. estate real family the and CAPREIT of board the on trustee of Officer Executive Chief and President Chief and President as In his role CAPREIT. the oversees Kenney Mr. Officer, Executive CAPREIT’s of allocation the and strategy including Europe, and in Canada capital Management’s Fund IRES the to in relation Mr. 2019, to Prior in Ireland. operations at Officer Operating Chief the was Kenney charged was he in which a role CAPREIT, CAPREIT’s implementing and creating with asset the directing policies, operational and team, management property and procurement, marketing, the overseeing departments. acquisitions and development held Kenney Mr. CAPREIT, joining to Prior Management Realstar at position a senior in portfolios overseeing Partnership, Ontario. Northern and Canada Western roles leadership various held also He has and Management Property Greenwin at in portfolios managed he where Tridel, is a Kenney Mr. Area. Toronto Greater the Federation the of member board former Ontario of Providers Housing Rental- of the of member board a founding was and Association Apartment Toronto Greater Economics of a Bachelor He holds (GTAA). University. Carleton from degree Tom Kavanagh Director Non-Executive Independent 1 June 2018 Appointed: 1 June Irish Nationality: Committee membership: membership: Committee Committee: Audit 2018 1 June Appointed Committee: Remuneration 2018 1 June Appointed Tom Kavanagh is a former partner at at partner is a former Kavanagh Tom on left firm the and Ireland Deloitte has Kavanagh Mr. 2018. 31 December in professional experience wide-ranging corporate adviser, a business as practice insolvency and expert restructuring the over included, This has practitioner. restructuring the on advising 10 years, last Mr. assets. property Irish distressed of the on a director as served has Kavanagh companies private of a number of boards the of board the of a member was and REBO, Board, Restructuring Union Credit a holds Kavanagh Mr. 2014. to 2012 from University from Commerce of Bachelor Chartered of is a fellow Dublin. He College having since (FCA) Ireland Accountants executive Kavanagh’s Mr in 1982. qualified in Harvard a course includes education Creation Value on IESE School/ Business a and in 2019 Boards Effective through for Institute Cambridge in the course in 2020. Leadership Sustainability Irish 18 April 2017 18 April Joan Garahy Joan Director Non-Executive Independent Appointed: Nationality: Nomination Committee: Committee: Nomination 2017 1 November Appointed Remuneration Committee: Committee: Remuneration 2017 18 April Appointed Advisor Financial is a Qualified Garahy Ms. an has She stockbroker. a registered and is a and Science of Bachelor Honours a holds She graduate. Science of Master (ACCA). & Finance in Accounting C.Dip Audit Committee: Committee: Audit 2017 18 April Appointed founder was Garahy Ms. Formerly ClearView of Director Managing and an Limited, & Pensions Investments company, advisory financial independent Ms. 2020. in July acquired was which of 30 years than more has Garahy managing and on advising experience a founder was She funds. investment HBCL of Director Managing former and Director former and & Pensions Investments Services. HC Financial at Investments of the with worked Garahy Ms. that, to Prior Agency Management Treasury National National the at Research of Head as Head also was and Fund Reserve Pension Investment Hibernian with Research of early In her Investors). Aviva (now Managers a stockbroker as 10 years spent she career, and Stockbrokers Goodbody both with NCB in Dublin. Committee membership: membership: Committee of board the of is a member Garahy Joan since plc (ISE:KRZ) Group Kerry of directors its of Chair been has and 2012 January of a member and Committee Remuneration 2012. February since Committee Audit its the as named was Garahy Ms. 2018, In May Group Kerry at Director Independent Senior of board the of a member is as plc. She plc (NASDAQ:ICLR) ICON of directors is Chair and 2017 in November appointed & Organisation Compensation the of the of a member and Committee 2020, In August committee. Nominations ipb of Board the to appointed was she a as served also has she and clg Insurance companies private of a number of director Irish the of director is a non-executive and (charity). Orchestra Chamber Aidan O’Hogan Margaret Sweeney Independent Non-Executive Director Non-Independent Executive Director and Senior Independent Director and Chief Executive Officer

Appointed: 31 March 2014 Appointed: 23 March 2016 Nationality: Irish Nationality: Irish

Committee membership: Committee membership:

Audit Committee: Audit Committee: Appointed 31 March 2014 Appointed 23 March 2016 to 1 November 2017 Remuneration Committee: Appointed 31 March 2014 Remuneration Committee: Appointed 31 March 2017 to Nomination Committee: 1 November 2017 Nomination Appointed 31 March 2014 to 23 March 2016 and re-appointed 31 March 2017 Nomination Committee: Appointed 23 March 2016 to 1 November 2017

Aidan O’Hogan is a Fellow of the Royal Margaret Sweeney is the Chief Executive Institution of Chartered Surveyors and of Officer of the Company since 1 November The Society of Chartered Surveyors in 2017. Ms. Sweeney has held a number of Ireland and a past President of the Irish senior positions including Chief Executive Auctioneers and Valuers Institute. He Officer of DAA plc (Dublin Airport is Managing Director of Property Byte Authority), Chief Executive Officer and Limited, a property and asset management board director of Postbank Ireland Limited, consultancy business. In 2009 he retired and Director in Audit and Advisory Services as Chairman of Savills Ireland (previously at KPMG, a firm she worked with for 15 Hamilton Osborne King) after 40 years years. Ms. Sweeney is currently a non- as a real estate professional, and was executive director on the board of Dalata previously Managing Director and Chairman Hotel Group plc and Chair of the board of Hamilton Osborne King with almost 30 of Irish Institutional Property, real estate years’ experience there prior to which he association. She has in the past served spent 9 years at Lisney. He is a Council as a non-executive director on a number Member of Property Industry Ireland, having of boards in Ireland and internationally, been its Chair from 2012 to 2015. He is including Aer Rianta International plc, Chair of the Investment Committee at Pearl Flughafen Düsseldorf GmbH, Birmingham Property Managers Limited and a member International Airport and Hamburg Airport, of the Investment Committee of Friends including managing significant investments First, Property Advisory Committee. He is in these companies. She is a member of also a former non-executive director of the Council of Chartered Accountants Cairn Homes plc and the Cluid Housing Ireland, a Fellow of Chartered Accountants Association. Ireland and a Chartered Director of the Institute of Directors. She also served as President of the Dublin Chamber of Commerce from 2008 to 2009. Ms. Sweeney is Chair of the Advisory Board for Dublin City University (DCU) Business School and was previously a member of the Governing Body of DCU.

60 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 61 2020 Annual Report Annual 2020 any acquisition/disposal of a of acquisition/disposal any into entry or investment property acquire/dispose to agreement any investment; a property of refinancing, or financing new any hedging associated including in into entered arrangements, investment; a property of respect a on expenditure capital any of in excess investment property budget; approved an the where event lease proposed any is lease relevant the to referable rent aggregate the 7.5% of than greater Company; the of income rental any into entry or acquisition any property any acquire to agreement venture a joint through investment structure; co- investment or effectiveness of, the Company’s risk risk Company’s the of, effectiveness control internal and management to seeks also Board The systems. its towards obligations its that ensure stakeholders other and shareholders met. and understood are ensuring for is responsible Board The business and financial of accuracy the shareholders to provided information information such that ensuring for and and balanced a fair, presents the of assessment understandable prospects. and position Company’s Reserved Board and Manager Matters Fund IRES appointed Company The alternative its as Management 1 of as manager fund investment the to pursuant 2015, November Management Investment the of terms Company the provide to Agreement, risk management, portfolio with management property management, assets to in relation services other and be acquired, may which properties or and Group, the by disposed of or held power authority, day-to-day with act to and assets such for responsibility and the oversees Board The properties. and Manager the of performance reviews and activities Company’s the contractual and performance the Manager. the with arrangements discretionary has Manager The for transactions into enter to authority except Company, the of behalf on and to, reserved are that matters certain for Board. the of consent the require and the by be performed to required Unless in order or law of a matter as Manager emergency, fide a bona to respond to is approval written prior Company’s the including: matters, certain for required a) b) c) d) e) ”. This ”) (found at https://www.ise.ie/ at ”) (found ), together the “Codes the ), together Governance Framework governance corporate Company’s The ended year financial the for practices governed were 2020 31 December and requirements relevant the by the by prescribed procedures Code Governance Corporate UK to applies ) which Code” “UK (the January 1 beginning years financial https://www.frc.org. at (found 2019 uk/getattachment/88bd8c45-50ea- 4841-95b0-d2f4f48069a2/2018- Governance-Code- UK-Corporate- Corporate Irish the FINAL.pdf) and UK the to Annex Governance (“Irish Code Governance Corporate Annex Products-Services/Sponsors-and- Advisors/Irish-Corporate-Governance- Annex Corporate Governance Statement Statement Governance Corporate applied has Company the how outlines Codes. in the out set principles the Experienced and Effective Leadership there this Report, of date the As at Board. the on (7) directors seven are is an Sweeney, Margaret CEO, The (the Moylan Declan director. executive Garahy, Joan Burns, Phillip Chairman), Aidan and Kenney Mark Kavanagh, Tom Director) Independent (Senior O’Hogan The directors. non-executive are appear directors the all of biographies 60. 58 to pages on in this Report Strategy responsible is collectively Board The success sustainable long-term the for value of delivery and Company the of the leads Board The shareholders. for purpose, culture, the of development Company the of strategy and values Residential IRES subsidiary, its and ensure aims to and Limited, Properties aligned. are these that provide is to Board the of role key The the set Group, the of leadership Company, the for objectives strategic and these of achievement the monitor of extent and nature the determine in take to is willing it risks principal the objectives. strategic these achieving Performance and monitoring for responsible is also Board The policy, dividend Company’s the of approval governance, corporate shareholder and statements financial formulating, and documents the reviewing and monitoring The Board is is Board The collectively for responsible long-term the success sustainable and Company the of for value of delivery shareholders. CORPORATE GOVERNANCE STATEMENT f) any hedging or use of derivatives, Key Activities of the Board in 2020 › Enhanced the Group’s governance including those related to debt framework and procedures facilities, interest or property In addition to the key operational through the review and update (as investments, which may only be and financial reports presented and relevant) of the Group’s policies used to the extent (if any) permitted considered by the Board at each of its and procedures including those by any regulatory requirements meetings, the following were considered regarding EMIR, data protection, applicable to the Company and/or by the Board during the year: market abuse, share dealing, code the Manager; of ethics, diversity, signing authority g) the entry by the Company into Strategy and delegation and treasury. any transactions for the purchase › Disposal of non-core portfolio of 151 › Reviewed the effectiveness of of assets from, or provision of apartments across 10 properties for the Company’s risk management services of a material nature by, circa €48 million (net of costs) in systems and internal controls. any affiliate of the Manager, or for November 2020. the sale of assets or provision of › Acquisition of 146 residential units Leadership and people services of a material nature to any at Phoenix Park Racecourse › Undertook an external board affiliate of the Manager; was completed in January 2021. evaluation to evaluate the Board, h) any disposal of any right, title or Contracts were exchanged in its main committees, the Chairman interest in any of the Company’s December 2020. and the individual directors. properties at less than its acquisition cost; and Financing Key Services i) in relation to the valuation of the › Completed a secured private › Reviewed the Company’s Company’s properties, any variation placement of notes of €200 arrangements with its Manager from the RICS Red Book. million (equivalent) in March 2020. including annual evaluation of the › Entered into a cross currency performance of the Manager. The Board is at all times free to offer interest rate swap in order to › Reviewed quarterly reports from ideas to the Manager relating to hedge the USD tranche of the the Manager. the structure of a transaction so private placement notes. › Reviewed quarterly Risk as to provide the Company the › Approved an extended Management reports. greatest value. Treasury Policy. Key Priorities for 2021 Under the Investment Management Governance and risk Agreement references to the Company › Received updates from the CEO › Continued critical oversight of the includes reference to the subsidiaries on the impacts of the Covid-19 Group’s strategy. of the Company, where the context pandemic on the operations and › Continue to enhance the Board’s requires. performance of the Company. information and education on › Updated the Company’s Board issues around sustainability and Skills and Experience Diversity and Inclusion Policy environmental awareness in the to include targets for female context of the Group’s business and The Board collectively has strong representation on the board of the activities. experience of acquiring and managing Company. › Continued investment to build real estate assets providing the › Discussed the results of Company’s resilience of the business and Company with a good knowledge base. inaugural GRESB submission. enable the Group to grow in a As highlighted in the biographies of the › Received a presentation on the measured fashion. directors on pages 58 to 60, each of Company’s independent investor › Enhanced reporting of risk and the directors brings a different set of perception study. controls. skills and experience to the Board. The › Constituted a committee of the directors’ diverse skill sets facilitate the Board to consider related party Committees of the Board consideration of issues at meetings of matters concerning the Company’s the Board from a range of perspectives relationship with CAPREIT LP and/or As recommended by the Codes, and these diverse skills are relied upon the Manager, in particular the review the Board has established the in addressing major challenges facing of the Investment Management following three (3) committees: the the Company. Please refer to the Agreement with IRES Fund Audit Committee, the Remuneration Report of the Nomination Committee Management. Committee and the Nomination on page 93 for information on the › Received updates and monitored Committee. The duties and Board Skills Matrix. The division of developments relating to the responsibilities of each of these responsibilities between the Chairman, migration of Irish participating committees are set out clearly in the CEO and the senior independent securities from CREST to Euroclear written terms of reference which are non-executive director (the “Senior Bank (the Central Securities approved by the Board and published Independent Director”) has been Depositary migration). on the Company’s website. The terms clearly established, set out in writing and › Approved new terms of reference of reference for each committee were agreed to by the Board and are publicly for the Audit Committee, Nomination revised with effect from 29 October available on our website. Committee and Remuneration 2020 based on the model terms Committee based on the model of reference published by ICSA in For information on the Company’s terms of reference published by January 2020. Board Diversity and Inclusion the ICSA The Chartered Policy, please refer to Report of the Governance Institute. Nomination Committee on page 92.

62 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 63 2020 Annual Report Annual 2020 Committee 5 of 5 5 of Nomination 5 of 5 5 of n/a 5 5 of n/a 5 5 of n/a

Committee Information, Support and Support and Information, Independent Advice to access direct have Directors the Elise Lenser, supportthe of Board The Secretary. Company for a procedure approved also has seek to appropriate, where directors, the at advice professional independent if necessary. Company the of expense Remuneration of remuneration the of Details Report in the out set are directors on Committee Remuneration the of 82. page Induction the support the of with Chairman, The is responsible Secretary, Company a co-ordinating and preparing for programme induction comprehensive This is directors. appointed newly for introduction a broad give to intended of areas its business, Group’s the to new enable to and risk significant Company’s the understand to directors so that values and purpose core from directors be effective can they this induction of As part outset. the receive directors new programme, a includes which pack information an policies, key overview, structure Group of reports, schedule financial historical how on information and meetings board portal. board Company’s the access to are matters governance of A number duties, directors’ including outlined, also Abuse Market and of interest conflicts is Secretary Company The Regulation. member board each advise to available concerns. or queries on induction the of elements key Other of part of a tour include programme 8 of 8 8 of Remuneration n/a n/a 8 8 of 8 8 of 8 8 of n/a Committee n/a Audit n/a n/a 7 7 of 7 7 of 7 7 of n/a

(3) (2 (3) (1) 16 of 16 16 of 16 15 of 14 of 16 of 14 16 16 of 16 16 of 16 16 of 16 16 of and board papers are circulated circulated are papers board and portal board a secure via electronically there that ensure to directors the to be read to them for time is adequate informed and robust facilitate to and to used is also portal The discussion. and documents reference distribute Company The resources. useful other the for is responsible Secretary aspects procedural and administrative meetings. board the of (16) meetings sixteen held Board The with In accordance 2020. during Code and UK the 12 of Principle Senior as O’Hogan Aidan led by non- the Director, Independent the without met directors executive the discuss to present Chairman of evaluation external the of results to and Performance Chairman’s the performance. Chairman’s the appraise the 13 of Principle with In accordance the during met Chairman the Code, UK directors non-executive the with year CEO. the of presence the without Meetings and Attendance at records attendance Directors’ the of meetings committee and Board until 2020 1 January from Company in the out set are 2020 31 December committee and Board For below. table as is expressed attendance meetings, out attended meetings of number the was director each that number the of attend. to eligible the and directors’ the of Details in the interests Secretary’s Company’s set are Company the of capital share and Directors of Interests the in out 96. page on capital in share Secretary other any have not does Chairman The commitments. significant Board

No director was absent from any quarterly board or committee meeting (as applicable). (as meeting committee or board quarterly any from absent was No director commitment. a prior to due notice short on called meeting a board attend to unable was Kenney Mark business to the relation in of interest a conflict to due meeting board one at in attendance not were Burns Phillip and Kenney Mark be considered. to Declan Moylan Declan Burns Phillip Mark Kenney Joan Garahy Kavanagh Tom O’Hogan Aidan Sweeney Margaret (1) (2) (3) The Board meets a minimum of four four of a minimum meets Board The and year calendar each (4) times such to Prior required. as otherwise agenda an place, taking meetings At each quarterly meeting of the the of meeting quarterly At each standing certain are there Board, strategy example, (for items agenda investment on update discussion, review plans, development and financial and operations risk, of progress ESG on update reports, relations). investor on update and Board the that ensure This seeks to in-depth have to opportunity the has all across issues key on discussions activities. Group’s the of aspects year. following the for Directors are expected to participate participate to expected are Directors as meetings board scheduled in all meeting. general annual each as well is meetings board of A schedule in advance Board the to circulated the for end year financial the of year. following Board Meetings Board Company the and Chairman The directors the that ensure Secretary all on information timely clear, receive assist to necessary matters relevant their of performance the in them approves also committee Each duties. plan work a committee A report from each of these these of each from A report Other below. out is set committees may and been have committees in time to time from be established Company’s the with accordance connection in including Constitution, administration and negotiation the with equity facility, credit Company’s the of development, acquisition, or raises and transactions leasing commercial party matters. related the Group’s property portfolio with risk management and internal control so on a voluntary basis periodically, the CEO or a senior representative systems are operating effectively. They most recently for the board of IRES Fund Management in order are assisted in this assessment by the effectiveness review process in to familiarise the new director risk management and internal audit 2020 which was facilitated by with the Group’s operations, functions of the Manager. Independent Audit, which has no property management, a segment other connection with the Company. of the property portfolio and key The Board and the Audit Committee stakeholders. This meeting also receive periodic reports from the The review consisted of an evaluation provides new directors with an Manager’s internal audit function and of the performance of the Board, opportunity to ask any questions risk management function surrounding its main committees, the Chairman they may have on the nature and the risk management and internal and the individual directors. It was operations of the business, and on control systems and their operating conducted by means of Independent the implementation of the Group’s effectiveness. For further details on Audit’s online questionnaire which business strategy. The new director these systems, please see the Risk was completed by each director and is also invited to meet with other key Management and Internal Control the company secretary. A scoping people at IRES Fund Management Systems section of the Risk Report exercise agreeing the areas of focus and CAPREIT LP responsible for risk, on pages 44 to 46. and questions were agreed between insurance, internal audit, acquisitions the facilitator and the Chairman (and and development, operations and The Board confirms that there is between the facilitator and the Senior financial reporting. an ongoing process for identifying, Independent Director, in the case of measuring and managing the the evaluation of the performance of Development of Directors significant risks, including any principal the Chairman). The review covered risks, and emerging risks, faced by many aspects of board effectiveness; The Nomination Committee, on behalf the Group in achieving its strategic some limited examples include how of the Board, assesses the training objectives, that this process has the Board has been working during needs of the directors on at least an been in place for the year ended 31 the Covid-19 pandemic, its approach annual basis. A combination of tailored December 2020 and up to the date to strategic leadership, strategic risk Board and committee agenda items of approval of this Report, and that oversight, information flows, and the and other Board activities, including this process is regularly reviewed focus of the Committees and how briefing sessions, further assist the by the Board. For further details on they are operating. The review did directors in continually updating the principal risks being faced by not include observation of meetings their skills, and their knowledge of the Group, please see the Principal or a review of board papers by the and familiarity with the Company, Risks and Uncertainties section of the external reviewer. as required to fulfil their roles. The Risk Report on pages 48 to 56. The Board also arranges for presentations process adopted complies with the The facilitator then collated the from IRES Fund Management and the guidance contained in Guidance on responses to the questionnaires and Group’s other advisors on matters Risk Management, Internal Control prepared a report for the Board, which relevant to the Group’s business. and Related Financial and Business was discussed in the draft with the Reporting (2014) as published by the Chairman and then presented at a During 2020, the Board received Financial Reporting Council. board meeting in February 2021. presentations by external experts on directors’ duties, environmental social Board Evaluation and Effectiveness Each committee of the Board and governance (ESG), corporate considered the report as part of the governance, capital markets and the The Board recognises the need annual review of its own performance. Company’s stakeholder environment. to continually strengthen Board processes, including: The Senior Independent Director Risk Management and › Reflecting on past performance met with the directors (other than Internal Control and implementation of previous the Chairman) to review the results recommendations or actions; of the external evaluation relating to the The Board has overall responsibility for › Consideration of future training, performance of the Chairman and to the effectiveness of the Company’s skills and diversity requirements; discuss any additional feedback relating system of risk management and to the performance of the Chairman. › Identification and implementation of internal control. The Board has new recommendations or actions to delegated responsibility for the The outcome of the evaluation was improve performance; and monitoring of the effectiveness of this positive and concluded that the system to the Audit Committee. The › Ensuring the Board understands the Board's strengths include: work done by the Audit Committee in needs of stakeholders, including › A good mix of skills and experience considering any conflicts. this area is set out in the Report of the › Clear strategic oversight Audit Committee on pages 71 to 75. › Communication with stakeholders The Board and the Audit Committee As the Company is a smaller company have ensured that the Manager has for the purposes of the Irish Annex, › Directors understand their duties maintained a robust system of risk the Company is not required to and feel the Board is making management and internal control. engage an external facilitator to a difference. The Board and the Audit Committee conduct the annual performance periodically review and consider if the evaluation process; however, it does

64 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 65 2020 Annual Report Annual 2020 Committee on page 93 for more more for 93 page on Committee Matrix. Skills Board the on information Moylan Declan of effectiveness The part as considered was Chairman as evaluation. board external this year’s of were review the of results The is Board the confirmed and positive role his is fulfilling Declan that satisfied Chairman. as effectively be will actions these on Progress next the of part as considered reported and evaluation performance Report. Annual year’s in next on Committee and Board 2019 Progress and Actions Evaluation: 2019 the from actions The evaluation committee and board in these against progress and below: summarised are 2020 the Board’s overall ESG competency. ESG overall Board’s the

Review the Board's oversight of of oversight Board's the Review arrangements outsourcing the Manager. the with structure Organisation Review and Development CEO including plan. succession skills on views building Continue future for required experience and directors non-executive a local whether on Agree is resource Secretarial Company accordingly. action and required The CEO, who is also an Executive Director, attended the EPRA ESG ESG EPRA the attended Director, Executive an is also who CEO, The Estate Real European other with liaised conference, and Sustainability investment institutional with discussions had approaches, ESG on Companies the chaired and requirements and policies ESG their ascertain to funds Committee. Steering ESG Company’s to updated and reviewed thoroughly were risks principal Group’s the In 2020, pandemic. Covid-19 the of impact the address from arising matters significant of apprised Board the kept also CEO The ensure to in part, formed, was that Team Management Crisis the of meetings managed. and identified could be quickly Covid-19 to relating risks any that the for auditor internal the from a presentation received also Board The cybersecurity. on Manager In 2020, the Board considered GRESB’s assessment of the Company’s current current Company’s the of assessment GRESB’s considered Board the In 2020, situation. ESG A discussion on ESG related matters is a standing agenda item on each each on item agenda is a standing matters related ESG on A discussion agenda. meeting board quarterly with designated was Kavanagh, being Tom director, A non-executive his enhancing and matters ESG on Board the to reporting for responsibility competencies. ESG for Institute Cambridge the from a course attended Kavanagh Tom In 2020, in 2020. Leadership Sustainability ESG Company’s the from a presentation received Board the In 2020, improve to consultant There has been enhanced information flow and reporting to the Board in Board to the reporting and flow information enhanced been has There Company the and CEO the from reports written formal including 2020, updated that ensuring and basis a quarterly on Board the to Secretary through directors the to available are minutes and memorandums policies, portal. board online Company’s the

Progress 6. 7. 8. 9. to asked also were directors The results the matrix, a skills complete Nomination the by used are which of gaps skills any identify to Committee in assessing considered are and director the during candidates refer Please process. nomination Nomination the of Report the to › › › › › › › › › › Deepen the Board's information information Board's the Deepen inputs, technology about as well as risks including opportunity. strategic better of process the Advance company into ESG integrating strategy. and objectives develop and assess to Continue at risks principal of picture the risks. cyber including level, board in crisis role Board's the Review of context in the management stakeholders. all on impacts enhanced gives Board the Ensure all of interests to consideration stakeholders. 2019 Evaluation Action Evaluation 2019 processes Board of Reinvigoration have members the that ensure to to information and resources the effectively function Recalibration and enhancement enhancement and Recalibration assessment risk of methods of and identification maximise to issues relevant of analysis Development of an enhanced enhanced an of Development of members among awareness and sustainability affecting issues from arising impact environmental activities Group’s the 2. 3. 4. 5. 1. The Board has reviewed the feedback feedback the reviewed has Board The and evaluation 2020 the from plan action following the produced priorities: 2021 and 2019 Evaluation Action Progress

Further development of methods › In 2020, a Related Party Committee was constituted to consider related of assessing and reviewing party matters relating to the Manager (or any affiliate of the Manager). performance of the Manager to › In 2020, crisis management meetings were held by the CEO with various ensure maximum benefit for the representatives from the Manager to monitor performance during the Company and its shareholders Covid-19 pandemic. › The CEO continued to receive monthly reports and hold monthly meetings with the Operations, Finance and Acquisition and Development teams at the Manager. › The CEO continued to review periodic cash flow reports from the Manager. › The CEO continued to review quarterly compliance certificates. › The Board reviews on a quarterly basis reports from various functions at the Manager.

Enhancement of the number of › A training session for the Board was arranged in Q3 2020 covering directors’ preparatory and training sessions duties, ESG and corporate governance matters. to aid the development and › As noted above, Tom Kavanagh also attended a course from the Cambridge understanding of Board members Institute for Sustainability Leadership in 2020.

Increase in the number of external › In Q2 2020, the Company’s public relations advisor provided a presentation guests and speakers to supplement to the Board on the Group’s Stakeholder Environment in 2020. understanding and perspectives of › The Board received a presentation from the external consultants who members regarding relevant market conducted the Company’s independent investor perception study that was and business conditions completed in 2020. › The Company’s external valuers met with the Audit Committee to provide the members of the Audit Committee an overview of the macro economic environment and Irish residential market, so the Audit Committee could understand the impact on the Group’s portfolio valuations. › The Board received a presentation from its corporate broker and listing sponsor on capital markets.

Independence to Phillip Burns, further details of ERES and CAPREIT, pursuant to which which are disclosed directly below. CAPREIT indirectly acquired control of Declan Moylan (Chairman), Aidan ERES, Phillip Burns was appointed as a O’Hogan (Senior Independent At the time of his appointment as a senior employee of CAPREIT LP, which Director), Joan Garahy and Tom director, Phillip Burns was regarded has a material business relationship Kavanagh are each considered as an independent non-executive with the Company as it is the parent independent for the purposes of director. company of the Manager and (ii) the Listing Rules. this appointment together with the Following a decision of the Board transaction completed between ERES Margaret Sweeney is not considered on 29 March 2017, Phillip Burns and CAPREIT gives rise to a significant to be independent as she is the CEO was no longer considered to be link with another director on the of the Company. independent, having regard to certain Board of the Company, Mark Kenney, cross-directorships with another President, Chief Executive Officer and Mark Kenney is not considered to be director concerning the Company a trustee of CAPREIT. independent due to his connection and European Residential Real Estate with CAPREIT, which is a significant Investment Trust (formerly, European Senior Independent Director shareholder of the Company. Also, Commercial Real Estate Investment CAPREIT is the parent company of Trust) (“ERES”), a Canadian company The role of the Senior Independent CAPREIT LP and the Manager is wholly that has its shares listed for trading Director is mainly to: owned and controlled by CAPREIT LP. on the Toronto Stock Exchange › Provide a sounding board for Mark Kenney is the President the Chief (“TSX”) and in respect of which Phillip the Chairman and to serve as an Executive Officer and a trustee of Burns is the Chief Executive Officer, intermediary for the other directors CAPREIT. Pursuant to the terms of the a director and a shareholder. While when necessary; Investment Management Agreement, such cross-directorships no longer › Be available and respond to IRES Fund Management is entitled to exist, Phillip Burns is still considered shareholders where contact nominate and require the Company to be non-independent having regard through the normal channels of the to appoint one person as a non- to Euronext Dublin Listing Rule 2.10.11 Chairman or the Manager has failed executive director. Mark Kenney acts and the provisions of the UK Code to resolve any concerns, or for as IRES Fund Management’s nominee. given that, (i) in connection with a which such contact is inappropriate; Mark Kenney also has a significant link transaction entered into between

66 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 67 2020 Annual Report Annual 2020 together with the need to clearly clearly to need the with together and shareholders with communicate to dialogue in appropriate engage to a as shareholders of views the obtain both to made are Presentations whole. institutional prospective and existing the of release the after shareholders, of part as results, annual and interim brokerage by organised days investor Investment Berenberg, EPRA, firms, following and others, amongst banks, Major announcements. significant announced also are acquisitions Company’s the and market the to (https://investorrelations. website all of text full the provides iresreit.ie) also website The announcements. reports interim and annual contains presentations. investor show slide and the of informed is kept Board The CEO the by shareholders of views on reports analysts receives and relevant Furthermore, Company. the is meetings investor from feedback a regular on Board the to provided other the and Chairman The basis. opportunity the have also directors analysts and shareholders address to annual Company’s the at questions meeting. general of MAR relating to dealings in the in the dealings to MAR relating of in particular, and, securities Company’s obtain to persons such requiring in dealing before clearance prior share The securities. Company’s the periods the out sets code also dealing prohibited. are dealings share in which this that consider directors The code is appropriate dealing share are shares whose a company for Euronext on trading to admitted to continues Company Dublin. The ensure to steps appropriate take Company PDMR’s, the by compliance applicable and CFO the Secretary, the of terms the with employees relevant the code and dealing share MAR. of provisions in interests director’s each of Details in the out set are shares Company’s the 96. page on Directors the of Report with Communications Shareholders Company the that believes Board The and shareholders between fairly acts this of importance the recognises Obtain updates from the CEO and and CEO the from updates Obtain major of views the on Manager the upon, called when and shareholders range a sufficient meet seek to personally, shareholders major of a develop help to case in each the of understanding balanced major of concerns and issues shareholders. Hold a meeting with non-executive non-executive with Hold a meeting (and annually least at directors are as occasions other such on appraise to appropriate) deemed performance, Chairman’s the the of view the account into taking and (if any); directors executive 460 Units Residential Photo: West, Cross Tallaght Dublin 24

In order to comply with the provisions provisions the with comply to In order Regulation Abuse EU Market of Company (“MAR”), the (596/2014) code for dealing a share adopted managerial discharging persons its ”), the (“PDMRs responsibilities and CFO the Secretary, Company for Group the of employees applicable compliance ensuring of purpose the provisions the with persons such by Share Dealing Code Dealing Share › › Engagement with Shareholders participated in various conferences Sarah Stokes as Director of Investor and took ad-hoc meetings, calls and Relations and Funding to assist with Due to the Covid-19 pandemic, a site visits. The Senior Independent investor engagement. significant amount of engagement Director/ Chair of Remuneration in 2020 was carried out by virtual Committee also held discussions with If shareholders wish to communicate meetings or by conference calls. a number of shareholders. In addition, directly with the Board, they should In 2020, Margaret Sweeney, the the Chairman and Senior Independent contact Margaret Sweeney, CEO, CEO of the Company, attended Director are also available to meet with or Elise Lenser, Company Secretary, approximately 167 separate meetings shareholders should they have any contact details for whom are provided and conference calls. In addition issues or concerns that cannot in the Shareholder Information section the Company facilitated property be resolved through the usual on page 177 of this Report. tours with existing and prospective investor relations channels. shareholders, investment banks and During 2020, I-RES appointed external General Meetings of Shareholders analysts in early 2020. The CEO and advisor, Rothschild & Co to complete CFO undertook thorough roadshows its first Investor Perception Study For a description of the operation following the FY19 and H1 20 results, to gain, independent insights into of general meetings, the key powers meeting a range of investors in Ireland, investors’ sentiment towards I-RES of such meetings, shareholders’ the UK, Europe, North America and and the sector it operates in. During rights and the exercise of such rights Canada. In addition, the Company 2020 the Company appointed at general meetings, see General Meetings in the Report of the Directors on page 102.

Section 172 of the U.K. Companies Act 2006 (“section 172’)

The UK Code provides that outside of shareholders, the Board should understand the views of the Company’s other key stakeholders and describe how their interests and the matters set out in section 172 have been considered in Board discussions and decision making. While section 172 is a provision of UK company law, and there is no direct comparator in the Irish Companies Act 2014, the Board acknowledges that, as an issuer on the primary listing segment of Euronext Dublin, it is important to address the spirit intended by such provisions.

Each stakeholder group requires a tailored engagement approach to foster effective and mutually beneficial relationships. By understanding stakeholders, the Board can factor the potential impact of its decisions on each stakeholder group and consider their needs and concerns, having regard to section 172.

The Board also recognises that by engaging further with all stakeholders, the Company can continue to deliver on its culture and purpose.

Assessing and Monitoring Photo: Our Company Culture Semple Woods, Donabate In developing a collaborative and partner-focused organisation that clearly defines how it intends to lead, the Board and CEO actively 40 engage with the Manager to support Residential Units a company culture that promotes integrity, openness, diversity and active

68 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 69 2020 Annual Report Annual 2020 Presentation from external external from Presentation Corporate on consultant update ESG and Governance conferences and meetings Investor perception investor Independent completed study and (I-RES intranet Employee Management) Fund IRES survey satisfaction Resident rollout Portal Resident stakeholder Placemaking (Sandyford forum engagement District) Business interviews committee Residents initiatives giving Community Presentation from ESG consultant, consultant, ESG from Presentation results assessment GRESB on

Employee, resident, investor and and investor resident, Employee, community-level engagement under see above also Please for Shareholders” with “Engagement Company the how of a description shareholders. its with engages further Workforce three only has As Company the on sits whom of (one employees the and CEO is the and Board the and assistant two being her other Relations Investor of Director the workforce is no there Funding), and can Board the whom with such as the that given Further, engage. has it managed, is externally Company remuneration the for responsibility no Manager the of workforce the of As policies. remuneration its of or portions of the a consequence, of 41 2, 5, 33, 38, 40 and provisions relate that s.172 Code and UK the not are engagement workforce to Company. the to applicable Manager the of Review the reviewed has Board The Manager the of performance overall the with is satisfied and the for Manager the of performance For 2020. 31 December ended year business the of review a detailed see pages indicators, performance Performance Business 32 in the to 29 Measures section. pleased is extremely Board The by made contributions the with senior with together Manager the LP. CAPREIT of staff and management › › › › › › › › › › Presentation from legal counsel, on on counsel, legal from Presentation Duties Directors’ sponsor listing from Presentation equity on broker, corporate and markets public relations from Presentation Stakeholder the on advisor, Environment Annual community stakeholder stakeholder community Annual events and initiatives engagement meetings team management Crisis members with CEO, the by chaired ensure to team Manager the of of well-being and safety the that other and residents employees, supporting ongoing the personnel being prioritized was business Ad-hoc department-level department-level Ad-hoc the to delivered presentations Manager the by Board CAPREIT with meets CEO I-RES’s times several management senior year each

The Board has the opportunity to to opportunity the has Board The corporate I-RES’s monitor and assess organic and ongoing through culture Board, the between interactions team Manager’s the and CEO the and practices policies, ensure to the with aligned are behaviours and values purpose, Company’s board annual Board’s The strategy. includes also process evaluation culture. company to relating questions of examples are below Listed in 2020: taken measures engagement Stakeholder Engagement Business Code of the to Pursuant deliver aim to we Conduct, and Ethics accountability of commitment our on agenda Board The stakeholders. our to ensure to reports regular includes of promotion and protection the continue interests stakeholders’ our By advising mind. of top remain to strategy corporate right the on governance effective applying and Board the oversight, and measures associated risks principal identify helps ensures and business I-RES’s with appropriate of implementation the while risks, these manage to systems for opportunities suitable identifying continued of creation the and growth value. long-term of examples are below Listed in 2020: taken engagement stakeholder engagement Board-level › › › › › › ›

- Balance the - Balance short- and long-term views of our of views long-term and short- when composure maintain business, strong build challenges, with faced vision. a clear communicate and teams, financial - Improve Minded Investment and good judgement using by returns capital. of optimization the value to time the - Take Thoughtful others, good, respect common the to trust, earn win support and effectiveness. team maximize – Value innovative ideas ideas innovative – Value Creative and collaborating, listening, by ideas. sharing high – Achieve Ambitious remain best, the for push performance, challenges. overcome and positive overlook initiative, - Take Proactive on act and teams lead boundaries, a positive, cultivate to opportunities do” attitude. “can results, - Achieve Results-Focused and actions, adjust success, monitor continuous ensure to feedback give improvement. Executive-Minded Adopted in IRES Fund Management’s Management’s Fund in IRES Adopted decision- and behaviors everyday leadership seven CAPREIT’s making, of bedrock the form competencies values. and culture collaborative our Leveraging CAPREIT’S 7 CAPREIT’S Leveraging Competencies Leadership I-RES’s collaborative culture is also is also culture collaborative I-RES’s Management’s Fund IRES by supported policies, CAPREIT’s of adoption through behaviours and practices leadership seven following the referred commonly competencies, “7Cs”. the as to responsiveness with our shareholders shareholders our with responsiveness by Elected stakeholders. wider and the oversee to shareholders our I-RES’s Company, the of management long-term the that ensures Board advanced are shareholders of interests the balancing while responsibly, stakeholders, other our of interests our and residents our including the has Board The communities. monitor and assess to opportunity through culture company I-RES’s the between engagements ongoing Manager’s the and CEO the Board, practices policies, ensure to team with aligned are behaviours and values purpose, Company’s the strategy. and CAPREIT LP and the Manager continue Shareholders should note that at The Board considers that the Company to provide staffing and other essential this point, no decision has been has complied with the provisions set supports including its SAP platform for made by the Company to internalize, out in the Codes throughout the last the business. or otherwise, and the Investment financial year under review except Management Agreement continues that, as disclosed in prior years, In November 2020, I-RES provided under the existing terms. Further option awards granted as part of the an update on the investment announcements will be made by remuneration of the executive director management agreement between the the Company as appropriate. under the long-term incentive plan Company, I-RES Residential Properties (“LTIP”) prior to the 2020 financial Limited and the Manager. Remuneration Policy of year do not comply in full with the Manager Provision 36 of the UK Code, as there The Investment Management is no minimum holding period under Agreement had an initial term of five The Manager has established a the LTIP for shares acquired upon years which expired on 1 November remuneration policy it applies in exercise of such options and options 2020. In advance of the expiry of accordance with AIFMD and the vest over three years from the date the initial Investment Management guidelines on sound remuneration of grant on the basis of one third per Agreement term, the Related policies under AIFMD as issued by completed year the recipient of the Party Committee was appointed the European Securities and Markets option completes in respect of the in November 2019 to conduct a Authority from time to time. relevant service which has qualified scheduled review of the Investment her for the option grant. Although the Management Agreement and Services In the implementation of its Company is not fully compliant in this Agreement, evaluate the strategic remuneration policy, the Manager aims respect in relation to such options options available to I-RES in relation to ensure good corporate governance previously granted, any Restricted to them and consider certain and promote sound and effective risk Shares (as defined under the rules of related matters. management. It will not encourage any the LTIP) awarded to the executive risk taking which would be considered director under the LTIP as and from On the expiry date of the initial inconsistent with the risk profile of the 2020 are subject to the Company’s Investment Management Agreement Group. The Manager will ensure that new remuneration policy and term on 1 November 2020, the any decisions are consistent with the arrangements described in the Report Related Party Committee had not overall business strategy, objectives, of the Remuneration Committee (the reached agreement on new terms for values and interests of the Group and remuneration policy was approved a revised Investment Management will try to avoid any conflicts of interest by shareholders at the 2020 annual Agreement with the Manager. As which may arise. general meeting), and comply with a result, in accordance with its Provision 36 as any new LTIP share terms, the Investment Management The Manager ensures that awards issued to the executive director Agreement has continued under annually the remuneration policy is thereunder are subject to a total the existing terms. Both parties reviewed internally. vesting and holding period of five years have termination rights under the (three-year performance period and Investment Management Agreement The total remuneration paid in the two-year holding period thereafter). which can now be exercised. In period to the staff of the Manager, all conjunction with the rollover of the of whom are engaged in managing Investment Management Agreement, the Group’s activities, was €3.8 million, I-RES announced that it would of which €3.6 million comprised fixed augment the management resources remuneration and €0.2 comprised of the Company in line with its growth variable remuneration. The number strategy and increased scale. of staff employed as at 31 December 2020 was 65 (65 as at 31 December The Related Party Committee, in 2019), of which 35 site employees (41 conjunction with advisers, continues site employees as at 31 December to evaluate the relative strategic and 2019) were charged to the Company. financial merits of various options There are no senior managers or available to the Company. The members of staff of the Manager Company is exploring the option whose actions have a material impact to internalize the management of on the risk profile of the Company. the Company and, if applicable, to apply to the Central Bank of Ireland Compliance with Relevant Codes for authorization as an alternative investment fund manager. The The directors are committed to Company appreciates the continuing maintaining high standards of co-operation and assistance of corporate governance and this the Manager and CAPREIT LP in Corporate Governance Statement the Related Party Committee’s describes how the Company has ongoing deliberations on the future applied the Codes in 2020. management of the Company.

70 I-RES STRATEGIC REPORT FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION

GOVERNANCE 71 2020 Annual Report Annual 2020 processes within the business, and and business, the within processes financial, of oversight its maintain evolving and taxation valuation, In terms requirements. regulatory Audit the controls, and process of on focus to continues Committee operational the and design the controls. internal the of effectiveness report this find will you that I trust the in understanding be useful to Audit the of activities and operations year. the during Committee Garahy Joan Committee Audit the of Chair (Chair), Garahy Joan Members: O’Hogan. Aidan and Kavanagh Tom by is chaired Committee Audit The non- independent an Garahy, Joan the of members All director. executive independent were Committee Audit when directors non-executive continue and Board the by appointed Accordingly, be independent. to is constituted Committee Audit the and Codes the with in compliance the regarding Association of Articles Committee. Audit the of composition initial an for appointed are members All which (3) years, three up to of term Board. the by be extended may Joan for appointment of term The and 2020 17 April on expired Garahy Aidan for appointment of term the 2020. 30 March on expired O’Hogan that agreed Board the Accordingly, Garahy Joan of appointment the additional an for be extended shall years three approximately of term and 2020 18 April on commencing AGM 2023 the of end the at expiring meet to continuing her to (subject the of membership for criteria the further Board The Committee). Audit Aidan of appointment the that agreed an for be extended shall O’Hogan three approximately of term additional 2020 31 March on commencing years 2023 the of end the at expiring and to him continuing to (subject AGM of membership for criteria the meet Committee). Audit the Tom for appointment of term The 2021. 31 May on expires Kavanagh agreed has Board the Accordingly, Kavanagh Tom of appointment the that additional an for be extended shall Introductory Statement from from Statement Introductory Chair Committee Audit the Shareholder, Dear Committee, Audit the of On behalf Report the present to pleasure is my it year the for Committee Audit the of 2020. 31 December ended how demonstrates report The its fulfilled Committee Audit the under year the during responsibilities frameworks. regulatory appropriate the focus a key years, As in previous to was Committee Audit the of and semi-annual the that ensure property investment end year 2020 conducted were processes valuation valuations, both For appropriately. portfolio property investment the valuation of purposes for split was valuers. two external by valued and objectively Committee Audit The prepared valuations the assessed was and valuers independent the by and assumptions the that satisfied were being used methodologies reasonable. and appropriate to continues Committee Audit The objective remains KPMG that monitor Committee Audit The independent. and of their findings the KPMG with reviews issues major no that noted and work its of As part audit. the during arose independence, KPMG’s of assessment the assessed Committee Audit the services non-audit of value and amount not has it that noted and provided independence. their impaired with meets also Committee Audit The ensure to advisors tax Company’s the anticipated of informed keeps it that regulations and laws tax to changes As Company. the impact may that the with meet to continues it well, the that ensure to Manager Company’s effectively. working are controls internal the assisted Committee Audit The Annual the that in determining Board Financial Consolidated and Report is a whole, as taken when Statements, and understandable and balanced fair, for necessary information the provides Company’s the assess to shareholders model business performance, position, strategy. and Looking ahead financial 2021 the to ahead Looking remain will Committee Audit the year, assurance and audit the on focused A key focus of the the of focus A key Audit Committee that ensure to was semi-annual the and 2020 year end property investment processesvaluation conducted were appropriately. REPORT REPORT THE OF AUDIT COMMITTEE term of approximately three years accessed electronically at https:// › to assess independent valuers’ commencing on 1 June 2021 and investorrelations.iresreit.ie/company- competence and effectiveness. expiring at the end of the 2024 AGM and-strategy/corporate-governance. (subject to him continuing to meet Risk and Internal Control the criteria for membership of the The Audit Committee reviews its terms › to monitor and keep under review Audit Committee). of reference on an annual basis and, if the scope and effectiveness of necessary, proposes for formal Board the Group’s risk management and The Board is satisfied that the Audit adoption amendments to the Audit internal control systems; and Committee members are appropriately Committee’s terms of reference. The › to assess and review regular reports qualified and experienced to fulfil Audit Committee evaluates its own on such matters from the Manager, their roles and have a broad mix of performance relative to its terms of internal auditors (if any) and skills and experience arising from reference. Following the 2020 annual management. senior roles they hold or have held review, it was concluded that the Audit with other organisations, and that Committee was operating effectively. the Audit Committee as a whole has Other competence relevant to the sector The Audit Committee’s principal › to review the Audit Committee’s in which the Company operates. In duties include: terms of reference and monitor its accordance with the Codes, Ms. execution; and Garahy, in particular, is considered by Reporting and External Audit › to consider compliance with legal the Board to have recent, significant › to monitor and keep under review and other regulatory requirements, and relevant financial experience. the scope and effectiveness of the accounting standards and the Group’s financial reporting; Euronext Dublin Listing Rules. Meetings of the Audit Committee › to monitor the integrity of the financial statements of the Group, How the Audit Committee The Audit Committee meets at least including its annual and semi-annual Discharged its Responsibilities four (4) times per year and otherwise financial reports and any other in 2020 as required. The Audit Committee formal announcement relating to its met seven times during the period financial performance; The Audit Committee’s agenda is set from 1 January 2020 to 31 December › to review and report to the based on the Group’s financial calendar 2020 and the external auditor was Board on summary financial and the Audit Committee’s work plan, in attendance at six (6) meetings. statements and any financial which allows the Audit Committee to The Audit Committee members’ information contained in certain fulfil its role in an efficient manner. In attendance at each meeting is set other documents, such as the year under review, the principal out on page 63. The CEO, CFO and announcements of a price- activities of the Audit Committee were certain representatives of the Manager sensitive nature; as follows: attend the Audit Committee meetings, › reviewed the appropriateness › to keep under review the adequacy as required. The external valuer of Group accounting principles, and effectiveness of the Group’s attends the Audit Committee meetings practices and policies, and monitored internal financial controls and risk when the year-end and interim changes to and compliance with management and internal control valuations of the Group’s properties accounting standards on an ongoing systems; are being considered. The Company’s basis; tax advisors also meet with the Audit › to oversee the relations with the › reviewed the Group’s interim Committee at least bi-annually to external auditor and to consider report and this Report, including address any tax developments and and make recommendations on the the financial statements contained as otherwise required. appointment, reappointment and therein, and considered the key areas removal of the external auditor; of judgement before recommending Terms of Reference and › to ensure the independence and them to the Board for approval; Principal Duties objectivity of the external auditor › reviewed the Group’s preliminary annually; The terms of reference established announcement of financial results; › to ensure that the provision of for the Audit Committee were › reviewed and approved the annual non-audit services by the external initially approved and adopted by audit plan presented by the external auditor does not impair the the Board on 31 March 2014 and are auditor and approved the audit fees; external auditor’s independence or regularly reviewed and updated for objectivity; and › reviewed and discussed the reports best practice and compliance with received from the external auditor › to review with the external auditor the Codes. The Board approved following the audit process; and adopted revised terms of the findings of their work, including › reviewed and considered the Group’s reference for the Audit Committee any major issues that arose during key risks, internal control policies and on 29 October 2020 based on the course of the audit and have procedures and risk management the model terms of reference for subsequently been resolved. systems, with particular reference to audit committees published by the the operations of the Manager; ICSA in January 2020, which are Valuations designed to comply with the UK › to monitor and review the valuation › reviewed and considered the Code. The roles and responsibilities process; approach adopted by the independent valuers, including delegated to the Audit Committee › to review the valuation reports, assumptions, procedures and under the terms of reference can be assumptions and methodology; and

72 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 73 ”), tax 2020 Annual Report Annual 2020 for valuation, any provisions recorded recorded provisions any valuation, for investment the of valuation against the of valuation and properties, appropriate. were properties investment the discussed Committee Audit The management with process valuation from confirmed and valuer, each and satisfied are they that them of each the of accuracy and quality the with them. to provided information property the reviews also auditor external The work test performs reports, two valuers’ the by provided information the on with meets valuers, both to Company audit their of part as twothe valuers the to communicates and procedures, or comments any Committee Audit have. may they observations CAPREIT with Transactions the of nature close the to Due (or CAPREIT between relationship CAPREIT’s I-RES, and affiliates) its 31 December at in I-RES shareholding services of provision the and 2020, Management, Fund IRES by provided I- RES, to CAPREIT, of a subsidiary the and Committee Audit the of risk the discussed auditor external party transactions related undisclosed for affiliates its or CAPREIT with financial consolidated 2020 the Committee Audit The statements. incurred fees of level the discussed services management of in respect Management Fund IRES from received these discussed and affiliates its and Audit The management. relevant with the considered also Committee financial the to notes in the disclosures Committee Audit The statements. of these result as a satisfied was disclosure appropriate that discussions in report annual in the made been has matters. these of each to relation Matters Other Audit the by considered matters Other disclosure the included Committee (“Alternative measures non-IFRS of Performance Measures obligations regulatory and compliance, disclosures. accounting and Going Concern reviewed has Committee Audit The presentation a with is satisfied and Board’s the support in of CFO the from set as Going Concern on Statement 46. page on out Viability Statement a reviewed has Committee Audit The is satisfied and Manager the from report adequately this assessment that disclosed risks principal the addresses Group’s results and those matters matters those and results Group’s of level a higher involve which estimation or judgement complexity, significant most The management. by Audit the by considered matters Report this to in relation Committee contained statements financial the and follows: as were year the for therein Valuations Property Investment property investment had Group The €1,380.4 million of value a fair with set as 2020, 31 December at as financial Group the 5 to in note out the of As portfolio the statements. significantly, grown has asset Group’s two valuers, appointed has Group the ("CBRE") Company Unlimited CBRE (Ireland) Services Advisory Savills and Committee Audit The ("Savills"). Ltd property investment the considered been had which process valuation in order management by out carried balances the that itself satisfy to These appropriately. stated were of understanding the involved reviews procedures, analytical management’s CBRE with discussions management’s independent Group’s the Savills, and market the of assessment and valuers, prior property each on utilised inputs obtained. valuations the recording to the assessed Committee Audit The of independence and performance with is satisfied and twothe valuers both that and performance their has CFO The independent. are valuers that Committee Audit to the confirmed valuers the that is satisfied CFO the in accordance work their conducted Chartered of Institution Royal the with Standards. Valuation Surveyors’ Committee Audit the In addition, two the independent with met year-end discussed and valuers methodology valuation valuations, used. The assumptions significant and the discussed also Committee Audit valuers, both with dynamics market impact on the focusing specifically the on impact its and Covid-19 of As valuations. year-end and interim their of part as rely valuers both evidence comparable on assumptions transactions market recent from support their and benchmark to properties, Group’s the of valuations the assessed Committee Audit the of appropriateness and relevance with in conjunction transactions, these the of a review Following management. by provided analysis valuation detailed discussions detailed and management independent the and management with was Committee Audit the valuers, used inputs significant the that satisfied

reviewed the dividends to be to dividends the reviewed company unaudited the and paid to them recommended and financials Board. the reviewed the related party schedules party schedules related the reviewed statement financial appropriate for disclosures; long- for model viability the assessed sustainability; term value to loan current the reviewed from resulting on impact and analysis investment of value in fair changes and properties; monitored the levels for 2020 non 2020 for levels the monitored fees total the to in relation fees audit auditors; external the to paid reviewed and recommended to the to recommended and reviewed for reference of terms revised Board from effect with committee Audit the 2020; October 29 reviewed and recommended recommended and reviewed the to required, as amendments, non- policy, dividend Company’s treasury policy, services audit code of policy, valuation policy, policy compliance directors’ ethics, arrangements (and statement ensure to in place structures and and authority signing compliance), whistleblower policy, delegation and policy, anti-corruption policy, to relation procedures and policies regime; abuse market the reviewed the Manager’s and the and Manager’s the reviewed detection fraud auditor’s external procedures; reviewed the annual internal audit audit internal annual the reviewed Manager’s the by forth put plan function; audit internal year the throughout reports received management risk Manager’s the from in regards functions audit internal and the around performed work to management risk of system Group’s controls; internal and methodologies applied in valuing applied in valuing methodologies portfolio; property Group’s the an for necessity the considered an on function audit internal ongoing basis; ongoing

With respect to this Report and the and this Report to respect With therein, included statements financial whether assessed Committee Audit the been had policies accounting suitable management whether and adopted judgements. appropriate made had particular paid Committee Audit The considered it which matters to attention the on impact a material could have Financial Reporting and Significant Significant and Reporting Financial Judgements Financial › › › › › › › › › › › in the Risk Report on pages 48 to 56 › the compliance of the financial External Audit and that a three-year time horizon for statements with all applicable One of the key roles of the Audit the viability model is appropriate to financial reporting standards and any Committee is to monitor the the Company’s business. Furthermore, other required regulations; and performance, objectivity and the Audit Committee has reviewed the › the language used in the independence of the external assessment of the Group’s viability by annual report ensuring it was auditor. Open, direct and honest management, as stated on page 46. understandable to a wide variety of communication between the Audit shareholders. Committee, the external auditor and The review included: the senior management team of › Key assumptions used; the Manager is essential in ensuring Arising from the Audit Committee’s work both an effective audit and auditor › Assessment of prospects; and in this regard, the Audit Committee and independence. › Assessment of viability. the Board concluded that this Report and financial statements included In late October 2020, the Audit therein, taken as a whole, are fair, REIT Status Committee met with the external balanced and understandable, and that The Audit Committee reviewed a report auditor to agree the FY 2020 audit they provide the necessary information from the Manager setting out the plan. To ensure a quality audit, the for shareholders to assess the Company’s compliance with the REIT external auditor needs to be aware of Company’s position and performance, requirements as at 31 December 2020. the business risks; therefore, the Audit business model and strategy. The Board The Audit Committee has confirmed Committee discussed and agreed upon statement to this effect is on page 104. to the Board that the Company is in the key business, financial statements compliance with the REIT rules. and audit risks, and the materiality Risk Management and Internal being used for the audit, to ensure that Controls Fair, Balanced and Understandable the audit was appropriately focused. The UK Code requires that the Board In advance of the commencement of The Board has delegated responsibility should present a fair, balanced and the annual audit, the Audit Committee to the Audit Committee to monitor the understandable assessment of the reviewed the external auditor’s letter Group’s risk management and internal Company’s position and prospects, and of engagement, together with a control systems. In order to discharge specifically that they consider that the presentation from the external auditor this responsibility for the period from 1 annual report and financial statements confirming their independence within January 2020 to 31 December 2020, included therein, taken as a whole, are the meaning of the regulations and the Audit Committee: fair, balanced and understandable, and professional standards. provide the information necessary for i. conducted an annual review of the shareholders to assess the Company’s In February 2021, in advance of the effectiveness of the Group’s risk position and performance, business finalisation of the Group’s financial management and internal control model and strategy. statements for the year ended 31 systems and reported to the Board December 2020, the Audit Committee on its findings; At the request of the Board, the received a report from the external ii. received presentations from the Audit Committee considered auditor on their key audit findings, Manager’s risk management function whether this Report and financial including the key areas of risk and and internal audit function; statements included therein met these significant judgements, and discussed iii. reviewed the Group’s principal risks requirements. the issues with them in order for the and uncertainties, including any Audit Committee to form a judgement emerging risks, quarterly; The Audit Committee considered the on the financial statements. process put in place by management iv. reviewed quarterly reports from the Manager relating to investment for the preparation of the annual report In order to assist the Audit Committee management, fund risk management, and financial statements included in evaluating the external audit process regulatory compliance, operational therein, and in particular the timetable, and to ensure continuous improvement, risk management, capital and co-ordination and review activities. following the completion of the financial management and The Audit Committee discussed these audit, the Audit Committee members distribution; arrangements with management. Key discussed with the management team v. received quarterly updates on any considerations of the Audit Committee of the Manager the effectiveness of the internal control compliance issues or when reflecting on these requirements external auditor and the external audit material legal matters; and included: process in general. vi. reviewed quarterly reports relating to the internal controls of the Manager › the information and reporting the At least annually, the Audit Committee and CAPREIT LP. Audit Committee had received meets with the external auditor during the course of the financial without the presence of management In addition, the Board, as a whole, year; to discuss any matters the external receives quarterly reporting on key › the balance of information included auditor may wish to raise. The Audit risks, including any principal and in the annual report against the Audit Committee continues to be satisfied emerging risks, from the Manager’s risk Committee’s understanding of the with the performance of the external management function. Additionally, they operations and performance of the auditor, who remains effective, also review quarterly reports from the Group; objective and independent. Manager relating to operational updates and key performance indicators.

74 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 75

2020 Annual Report Annual 2020 monitoring and reviewing the the reviewing and monitoring process. valuation reviewing and making making and reviewing the to in relation recommendations interim and final preliminary statutory, results; financial the of adequacy the reviewing and function audit internal Group’s an for necessity the considering function; audit internal financial on impact the reviewing andregulatory to due results changes; legislative financial on impact the reviewing Covid-19 the to due results pandemic; and independence the ensuring auditor; external the of objectivity and

not to establish an internal audit audit internal an establish to not Group. the for function has Committee Audit the In 2021, the supplement to Ireland EY engaged audit internal Manager’s the of efforts assurance with particularly function, provide to and Ireland within initiatives support advisory and experience local CEO. the and Committee Audit the to as this views Committee Audit The the with arrangement a co-sourcing function audit internal Manager’s internal own Group’s the than rather function. audit continue will Committee Audit The and annually this position review to recommendations appropriate make Board. the to Committee Audit the of Chair The meeting each at Board the to reports in activities Committee’s Audit the on management risk Group’s the to regard systems. control internal and Audit the of Priorities Key 2021 for Committee financial 2021 the to ahead Looking remain will Committee Audit the year, assurance and audit the on focused and business, the within processes and financial of oversight its maintain The requirements. regulatory evolving year financial 2021 the for plan action include: will › › › › › › Group’s whistleblower policy, which which policy, whistleblower Group’s applies policy The reviewed. was contractors and employees all to of employees all and Group the of The others. among Manager, the the on information provides policy employee if any follow to process a concern raise to appropriate it feels relevant of a respect in confidentially for includes, which wrongdoing a with non-compliance example, safety and health obligation, legal environment, the to damage threats, or assets of theft, misappropriation towards behaviour unacceptable concerns public. All the or colleagues of Chair the by considered are raised a nominated or Committee Audit the party. third that is satisfied Committee Audit The confidential is effective, process the of protection the ensures and other or harassment from employees of a result as treatment detrimental of incidences No a concern. raising in 2020. uncovered were concern Internal Audit the Code, UK the with In accordance the considered has Committee Audit function audit internal an for need complexity scale, Group’s the given including operations, of range and in structure management external its the on Based operations. to relation Audit the considerations, foregoing the to recommended has Committee is it believe not does it that Board audit internal an establish to necessary Committee Audit the Rather, function. internal Manager’s the assessed has be to it believes and function audit and experience quality, sufficient of business, its for appropriate expertise audit internal Manager’s the that and independence sufficient has function and resources the to access and and Manager the of information the assist to be able to Group the in Board the and Committee Audit with responsibilities their discharging effectiveness the assessing to regards and management risk Group’s the of Additionally, systems. control internal access direct has Committee Audit the function audit internal Manager’s the to Committee Audit quarterly through sessions, in-camera including meetings, Audit the Furthermore, required. as internal annual the assesses Committee Manager’s the by forth put plan audit receives and function audit internal performed work the of reports periodic with concurs Board The plan. the under recommendation Committee’s Audit the

Whistleblower policy Whistleblower the to is committed Company The probity, openness, of standards highest the as well as accountability, and in standards ethical possible highest this, achieve To practices. its of all of use encourages Company the mechanisms external and internal or malpractice any reporting for the through omissions or acts illegal Details of the amounts paid to the to paid amounts the of Details for year the during auditor external are services non-audit and audit Group the to 26 in note out set financial statements. The independence and objectivity of of objectivity and independence The Audit the by addressed was auditors the level the with in conjunction Committee in the services non-audit for fees of the completes KPMG period. reporting and statements financial the of audit completes PricewaterhouseCoopers ensuring workings, related tax the independent. remain parties both that external the with discussion Following Committee Audit the auditors, non-audit for fees the that determined audit the than lower were services 31 December ended year the for fees and independence the that and 2020 have auditor external the of objectivity compromised. been not Independence and Services Non-Audit non-audit on a policy has Company The services non-audit of level The services. is auditor external the by provided basis a quarterly on least at reviewed external the with in conjunction and, independence on impact the auditor, is assessed. objectivity and Statutory Auditor process a tender of On completion the to regard having and in 2017, Audit Statutory the of requirements (Statutory 2016 15 June of Directive Board the 2016), 312 of SI Instrument KPMG of appointment the approved the for effect with auditor statutory as 31 December ended year financial approved was This appointment 2018. annual 2019 the at shareholders the by the remains KPMG meeting. general year financial the for auditor statutory audit The 2020. 31 December ended is Sean KPMG within in charge partner keep will Committee Audit The O’Keefe. under auditor external the of tenure the and practice best of in light review Committee Audit The legislation. recent re-tendering for plans no has currently auditor. statutory the of Introductory Statement from the valuation and contracted to acquire an Remuneration Committee Chair attractive portfolio of 146 apartments REPORT which was closed in January 2021. Dear Shareholder, OF THE Due to the execution of an effective On behalf of the Remuneration funding strategy by the CEO, the REMUNERATION Committee, I am pleased to present Company had a robust balance sheet the Report of the Remuneration and strong liquidity to withstand COMMITTEE Committee for the year ended 31 unforeseen challenges coming into December 2020. The report will be put 2020. In March 2020, the CEO further to an (advisory) shareholder vote at enhanced the strength of the balance the 2021 annual general meeting. sheet with the successful private placement of €200 million equivalent We have drafted this report with the senior notes at market leading terms UK Code and the EU Shareholders’ and lengthening maturities which Rights Directive in mind. We hope you will further support the funding and 2020 has been a find this format a clear explanation of growth strategy of the Company. our approach to remuneration and year of exceptional how we applied this during 2020. The CEO has continued a strong activity for the focus on ESG during 2020 with a 2020 has been an extraordinary year particular emphasis encouraged Company. for the Company with the Covid-19 on social initiatives due to the challenges to many aspects of our impacts of Covid-19. The Company business model, the financial and progressed its inaugural GRESB welfare results achieved were notable assessment and measurement in all the circumstances. The health against EPRA ESG indicators as well and welfare risks to which the Group’s as an ongoing programme of stakeholders – staff, tenants, the stakeholder engagement. Manager, advisors and consultants, contractors and suppliers, visitors to CEO remuneration in 2020 our homes and offices were potentially During the year the Remuneration exposed – was prioritised by the CEO Committee implemented the from the outset of the pandemic. Remuneration Policy approved at She established and lead a crisis the 2020 annual general meeting, management team through a process including the annual bonus scheme which has robustly withstood the and making the first award of exceptional resilience of Covid-19 and performance shares under the LTIP. resulted in minimal direct impact from the virus. As a result of the Covid-19 impact on trading and expansion, threshold Against this challenging market performance was not reached in backdrop, the Group continued the EPRA Earnings, EPRA EPS and to generate strong growth in both Dividend metrics. However, the NAV revenue and NRI during the year, with threshold was comfortably exceeded, Revenue from Investment properties almost reaching target level. The up 20.4% on 2019, growth in EPRA Remuneration Committee judged earnings of 2.9% and an increase the CEO’s performance under the in Net Asset Value of 3.9%. The Qualitative measures to be excellent Company has continued to increase and fully met. dividends with an interim dividend paid in September 2020 and a final The Remuneration Committee dividend in respect of 2021 proposed believes that the CEO’s performance in February 2021. As of 31 December in 2020 was exceptional, in all 2020, our adjusted EPRA EPS adjusted aspects and that the Company for non- recurring costs is 7.0 cents benefited significantly from her crisis which is up on 2019, while our IFRS management experience in previous Basic NAV per share grew by 3.2% employment, and her 24/7/365 to 160.3 cents. time commitment during this year. Moreover, her resilience has served Despite the challenges posed by the Group and all its stakeholders Covid-19 and the various restrictions exceptionally well imposed due to public health, the during 2020. Company continued to deliver on its growth strategy with 173 additional The CEO bonus outcome for 2020 units delivered during 2020, efficient was therefore 24.5% of maximum recycling of assets through a disposal opportunity or €147,017. of 151 units in excess of cost and

76 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 77 2020 Annual Report Annual 2020 Meetings of the Remuneration Remuneration the of Meetings Committee Committee Remuneration The and twice year per least at meets required. otherwise as met Committee Remuneration The period the during (8) times eight 31 December to 2020 1 January from Committee Remuneration The 2020. meeting each at attendance members’ 63. page on out is set and Reference of Terms Duties Principal the for reference of terms The were Committee Remuneration by adopted and approved initially are and 2014 31 March on Board the for updated and reviewed regularly with compliance and practice best and approved Board The Codes. the reference of terms revised adopted on Committee Remuneration the for model the on based 2020 October 29 remuneration for reference of terms ICSA in the by published committees designed are which 2020, January The Code. UK the with comply to delegated responsibilities and roles Committee Remuneration the to be can reference of terms the under https:// at electronically accessed investorrelations.iresreit.ie/company- and-strategy/corporate-governance. reviews Committee Remuneration The annual an on reference of terms its for proposes if necessary, and basis amendments adoption Board formal Committee’s Remuneration the to Remuneration The reference. of terms own its evaluates Committee of terms its to relative performance annual 2020 the Following reference. the that concluded was it review, satisfied was Committee Remuneration performance. its with Accordingly, the Remuneration Remuneration the Accordingly, compliance in is constituted Committee of Articles the and Codes the with composition the regarding Association Committee. Remuneration the of Remuneration the of No member of interest, conflicts any has Committee financial personal any have do they nor shareholders as than other interest relevant). (where Remuneration the of members All initial an for appointed are Committee may which years, three up to of term Board. the by be extended Aidan for appointment of terms The expired Moylan Declan and O’Hogan of term The 2020. 30 March on expired Garahy Joan for appointment the Accordingly, 2020. 17 April on appointment the that agreed Board Moylan Declan and O’Hogan Aidan of additional an for be extended shall years three approximately of term and 2020, 31 March on commencing AGM 2023 the of end the at expiring meet to continuing each to (subject the of membership for criteria the Board The Committee). Remuneration appointment the that agreed further for be extended shall Garahy Joan of approximately of term additional an 18 April on commencing years three the of end the at expiring and 2020 continuing her to (subject AGM 2023 of membership for criteria the meet to Committee). Remuneration the Tom for appointment of term The 2021. 31 May on expires Kavanagh agreed has Board the Accordingly, Kavanagh Tom of appointment the that additional an for be extended shall years three approximately of term and 2021 1 June on commencing AGM 2024 the of end the at expiring meet to him continuing to (subject the of membership for criteria the Committee). Remuneration of biographies in the As highlighted Remuneration the of member each 60, 58 to pages on Committee Remuneration the of members the of a range bring Committee skills and experience different Committee Remuneration the to large and medium small, to relating public companies, and organisations of area in the experience including which remuneration, executive senior the enables is satisfied Board the fulfil to Committee Remuneration role. its The Remuneration Committee is Committee Remuneration The members All O’Hogan. Aidan by chaired were Committee Remuneration the of directors non-executive independent and Board the by appointed when be independent. to continue Aidan O’Hogan (Chair), (Chair), O’Hogan Aidan Members: and Kavanagh Tom Garahy, Joan Moylan. Declan Aidan O’Hogan Aidan Committee Remuneration the of Chair We were grateful that 99.2% of 99.2% of that grateful were We of in favour voted shareholders the at Policy Remuneration our meeting. general annual 2020 to continue will and welcome We feedback shareholder any consider the and Policy Remuneration the on that believe We Report. Remuneration has Committee Remuneration the Policy Remuneration the implemented appropriately that in a way in 2020 achieved performance the reflected that I hope and year the during of in favour vote will shareholders the at Report Remuneration the meeting. general annual forthcoming The Remuneration Committee Committee Remuneration The challenging continuing the considered Covid the to due environment likely the including 19 pandemic public health various of impacts the on regulations Government and Company the of business and strategy the of impact likely the as well as environment economic deteriorating continues that uncertainty macro and this alongside of As a result prevail. to the criteria, previous the of a review approved Committee Remuneration performance the of recalibration some of in respect weightings and metrics better to remuneration, variable the necessary performance the reflect the of achievement the ensure to continued the and plan business 2021 strategy. Company's the of delivery Looking ahead Committee Remuneration the In 2021 our operate to continue will approved the with in line arrangements activities key and Policy Remuneration Committee Remuneration the of performance defining include will long-term and short our for targets the monitoring and schemes incentive these. of achievement The Remuneration Committee’s including bonuses, incentive comparator real estate investment principal duties include: payments and share options or trusts, which includes real estate a) delegated responsibility for other share awards. The choice investment trusts in jurisdictions inside determining the policy for of financial, non-financial and and outside of Ireland (including directors’ remuneration and setting strategic measures is important, countries where executives are remuneration for the Company’s as is the exercise of independent employed and paid by the real estate chair and executive directors and judgement and discretion when investment trust), to ensure that the senior management, including the determining remuneration awards, compensation mix is competitive with company secretary, in accordance taking account of company and comparator real estate investment with the Principles and Provisions individual performance, and wider trusts and appropriate in light of the of the UK Code; circumstances; Company’s business strategy. b) to establish remuneration h) to have full authority to appoint schemes that promote long- remuneration consultants and The following section sets out the term shareholding by executive to commission or purchase any Company’s Remuneration Policy directors that support alignment reports, surveys or information for Executive and Non-Executive with long-term shareholder which the Remuneration Directors, which was approved interests, having regard to the Committee deems necessary at by 99.2% of shareholders at the recommendations of the UK Code; the expense of the Company. 2020 annual general meeting. The c) to design remuneration policies However, the Committee should Committee’s intention is that the and practices to support strategy avoid designing pay structures Remuneration Policy will apply for a and promote long-term sustainable based solely on benchmarking to period of four years in line with the success, with executive the market or on the advice of EU Shareholders’ Rights Directive remuneration aligned to Company remuneration consultants; legislation. In the table below minor purpose and values, clearly linked i) to review the design of all share adjustments to wording have been to the successful delivery of the incentive plans for approval by made for clarity (for example, page Company’s long-term strategy, and the Board and, where required, references). For the definitive version that enable the use of discretion to shareholders. For any such plans, of the Remuneration Policy as override formulaic outcomes and determine each year whether approved by shareholders, please to recover and/or withhold sums awards will be made, and if so, the see the 2019 annual report. or share awards under appropriate overall amount of such awards, specified circumstances; the individual awards for executive In developing the Remuneration Policy, d) when determining executive directors and senior managers, the Remuneration Committee has director remuneration policy and and the performance targets to been mindful of the factors set out practices, consider the UK Code be used; in the UK Code Provision 40: requirements for clarity, simplicity, j) to review workforce remuneration risk mitigation, predictability, and related policies; and › Clarity and Simplicity: The proportionality and alignment to k) to work and liaise as necessary Remuneration Committee has culture; with other board committees, aimed to incorporate simplicity and e) in determining remuneration ensuring the interaction between transparency into the design and policy, take into account all other committees and with the Board is delivery of our Remuneration Policy. factors which the Remuneration reviewed regularly. The remuneration structure is simple Committee deems necessary to understand for both participants including relevant legal and No director may be involved in any and shareholders and is aligned regulatory requirements, the decisions in respect of his or her own to the strategic priorities of the provisions and recommendations remuneration. business. of the UK Code and associated › Risk: The Remuneration Policy guidance. The objective of Remuneration Policy includes a number of points to such policy shall be to attract, mitigate potential risk: retain and motivate executive The Company’s policy is to ensure - Defined limits on the maximum management of the quality that executive compensation includes opportunity levels under required to run the Company a mix of basic salary and short-term incentive plans successfully without paying more and long- term incentive awards, than is necessary, having regard to aligned to the Company’s strategy - Provisions to allow malus and views of shareholders and other and key performance indicators. The clawback to be applied where stakeholders; mix of executive compensation should appropriate f) to review the ongoing be designed to reflect the relative - Performance targets calibrated appropriateness and relevance of impact of the executive’s role on the at appropriately stretching but the remuneration policy; Company’s performance and should sustainable levels g) within the terms of the agreed consider how the compensation mix - Bonus deferral, LTIP holding remuneration policy and in aligns with long-term shareholder periods, in-employment and consultation with the chair and/ value creation. post-employment shareholding or chief executive, as appropriate, requirements ensuring alignment determine the total individual In determining the target mix of of interests between Executive remuneration package of each compensation, the Remuneration Directors and shareholders executive director, the company Committee considers market and encouraging sustainable chair and senior managers compensation data available for performance

78 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 79

2020 Annual Report Annual 2020 out on page 83. page on out Not applicable Not applicable Not Performance metrics applicable Not The Remuneration Remuneration The will Committee the determine performance their measures, and weightings of calibration the year each targets clearly will and in these disclose Remuneration the Report. performance 2020 and measures set are targets

The Company’s strategy of growth growth of strategy Company’s The and Income Rental Net in both favourable and secure with NAV, standards quality alongside leverage, customer and accommodation of the with, aligned is well service, rewards deferred, substantially both through CEO the to available awards share LTIP the and bonus the are benchmarks certain when if and significant the Moreover, achieved. and malus the with combined deferral risk the minimises provisions clawback focus. short-term exceptional any of

› Maximum opportunity Maximum basic of 150% of salary theFor 15% of basic salary basic 15% of Benefits allowance allowance Benefits 2019: 1 January from p.a. €25,000 No maximum level No maximum level No maximum Opportunity achievement of of achievement performance, Target the of 50% opportunity Maximum salary) basic of (75% be expected would be payable. to

The incentive incentive The culture: to Alignment performance the and arrangements aligned strongly are used measures considers Board the that those to success the determining when the of implementation the of and values purpose, Company’s this of 41 see page Please strategy. on information more for Report key and strategy Company’s the indicators. performance

› the CEO with shareholder interests. Dividends will Dividends interests. shareholder with CEO the arise. they as be paid withholding to be subject will payments bonus Any (clawback) repayment of requirement or (malus) certain of achievement the of event in the provisions subject the subsequently were that results financial a portion of or all of a restatement by affected or of statements; financial Consolidated Company’s the intentional negligence, in gross engagement partially or caused that fraud or misconduct finally as restatement, the for need the caused a court by appeal) of right any (beyond determined payment bonus the and jurisdiction, competent of financial the had lower been have would received reported. properly been results discretion the has Committee Remuneration The in circumstances outcomes formulaic override to do to be appropriate would it judges it where the for basis the circumstances, in such so and, in be disclosed will discretion such any of exercise Report. Annual the be payable may bonus the portion of cash The pension employer an as in part) or (in whole and individual the between if agreed contribution Committee. Remuneration Fixed contributions into an approved Company Company approved an into contributions Fixed or scheme pension executive contribution defined is proposed. supplement cash equivalent an performance stretching on based bonus Annual at Committee Remuneration the by set conditions year. each of start the restricted as be paid will paid bonus any of 20% sustainable promote to shares Company of alignment additional provide and performance The Remuneration Committee will consider the consider will Committee Remuneration The policy the during time to time from level salary changes significant any to regard having period, business, the and role the scope of and size in the for data market in comparative changes material development. individual for reward and roles similar car, towards allowance cash taxable An annual as death such benefits risk and cover health cover disability and illness critical in service contributions. Operation A significant A significant We aim for our our aim for We Proportionality: reward Executive’s an of part with performance to is linked between sight of line a clear the and performance business value. shareholder of delivery Predictability: disclosure to be clear to allow allow to be clear to disclosure the understand to shareholders may which values potential of range remuneration the under be earned arrangements. Pension provide To post- competitive benefits retirement Bonus Annual support delivery the To Company’s the of strategy business and and KPIs reward contribution for annually non- and financial to performance financial Basic Salary fixed a provide To compensation of level individual’s the reflecting experience and skills Benefits benefits provide To competitive are which practice market with Element

› › Element Operation Opportunity Performance metrics Long-Term On her appointment as CEO, a share option award Awards of face The vesting of Incentives was granted to Margaret Sweeney and she was value up to 135% these shares will To align the entitled to be awarded options to acquire 3% of of salary be determined by interests of the the number of shares issued by the Company from performance against CEO with those of time to time pursuant to any equity raise (private or earnings per share shareholders and public) of the Company. (“EPS”) and relative reward the delivery total shareholder From 2020, this share option arrangement for the of long-term return (“TSR”) CEO was replaced with annual awards of shares, strategic conditions set by subject to stretching three-year performance performance the Remuneration conditions. objectives and Committee at the the creation of Following the three-year performance period, there time of each grant. shareholder value is a further two-year holding period to further The performance promote sustainable performance and shareholder targets for each alignment. award will be clearly disclosed in the Dividend equivalents (as a cash amount or additional relevant year’s shares) will be paid at the end of the vesting period. Remuneration Report. All LTIP awards will be subject to malus and clawback provisions. The Remuneration Committee has the discretion to override formulaic outcomes in circumstances where it judges it would be appropriate to do so and in such circumstances, the basis for the exercise of any such discretion will be disclosed in the Annual Report. In the event of an equity restructuring, the Remuneration Committee may make an equitable adjustment to the terms of share and share option awards by adjusting the number and kind of shares which have been granted. Outstanding LTIP awards would normally vest and become exercisable on a change of control, subject to plan rules, and taking account of the degree to which performance conditions have been satisfied. The Remuneration Committee may exercise its discretion to vary the level of vesting having regard to the circumstances and reasons for the events giving rise to the change of control or determine that it would be appropriate for the LTIP awards to be exchanged for equivalent awards in the purchaser’s shares where such an award would be substantially equivalent, in value and in terms and conditions, to the award in the Company. The LTIP limit cannot exceed 10% of the Company’s issued ordinary share capital (adjusted for share issuance and cancellation) during the 10-year period prior to that date.

80 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 81 2020 Annual Report Annual 2020 Not applicable Not Performance metrics applicable Not or shares), vesting period and any any and period vesting shares), or to applicable conditions performance forfeited. being remuneration the is made, appointment internal If an awarded arrangements remuneration Executive to promotion to prior in run to continue will level Director conditions and schedule the with line grant. of time at determined Fees Director Non-Executive non-executive the of remuneration The Board the by is determined directors be may No director a whole. as of in respect decisions in any involved remuneration. own her his or non- for remuneration of Levels time the reflect directors executive the of responsibilities and commitment non-executive to paid fees The role. a level at set therefore are directors with individuals attract aims to which ability and experience necessary the to contribution a significant make to compensate to and Company the role. their for appropriately them Not applicable Not Opportunity applicable Not Policy for Recruitment of of Recruitment for Policy Directors Executive New Committee Remuneration The remuneration the determine will newly any of in respect arrangements that Directors Executive appointed in line future, in the be appointed may in the limits the to subject and with above, out set as Policy Remuneration criteria, performance of use including of application and periods holding periods. withholding or recovery taking be determined will levels Salary the of experience the account into the of scope and size the individual, comparative and business, the and role roles. similar for data market provided be may benefits Relocation if necessary. it appointment external an If for incentive buy out to is necessary be would which arrangements previous the leaving on forfeited taking be done this will employer, cash (e.g. form the account into Only in accordance with the terms of the the of terms the with in accordance Only Union European the and/or Policy Remuneration which 2020, Regulations Rights) (Shareholders’ in exceptional derogation temporary for provides the serve so is to doing where circumstances, the of sustainability and interests term long- viability. its assure to or a whole as Company From 2020, the CEO was required to build and and build to required was CEO the 2020, From Company in the interest a shareholding maintain salary. basic her of 200% least at to equivalent this up to build period five-year be a will There policy. the of introduction the from holding “shareholding requirement, the of purposes the For subject not is if vesting shares includes interest” but Vested conditions. performance further any to shares bonus deferred options, share unexercised period holding two-year the during shares LTIP and performance the of achievement the following discount a 50% with be included will condition of number the reflect to appropriate applied where sufficient assuming be owned would which shares due. tax pay sold to were shares will requirement shareholding A post-employment Company in the interest A shareholding apply: also the (or salary basic of 200% least at to equivalent be will if lower) exit on interest shareholding actual after two years of period a for be held to required employment. leaving Operation Derogation Derogation from Remuneration Policy Shareholding Requirement align further To the of interests the those with CEO shareholders of encourage and sustainable performance Element Ms. Sweeney’s notice period period notice Sweeney’s Ms. salary to limited are entitlements or less, months 12 over benefits and mitigation. to subject Margaret Sweeney has a service a service has Sweeney Margaret terminable Company the with contract at notice written prior months’ six upon or Sweeney Margaret of discretion the the at notice written prior 12 months’ Margaret Company. the of discretion full her be paid to is entitled Sweeney welfare social any of (net remuneration of inability periods any during benefits) not accident, or illness to due work to in weeks six in aggregate exceeding and period; 12-month consecutive any remuneration half weeks’ six thereafter benefits). welfare social any of (net Service contracts Service The Remuneration Committee Committee Remuneration The are arrangements these that considers of supportive and with aligned closely strategy. long-term Company’s the Levels of fees may be reviewed from The European Union (Shareholders’ of not doing so would be significantly time to time during the policy period, Rights) Regulations 2020 allow for the detrimental. Where time allowed, having regard to any significant potential for a temporary derogation shareholders would be consulted changes in the size and scope of the from the Remuneration Policy where prior to applying such a change, or, at role and the business, and material doing so is necessary in exceptional minimum where this was not possible, changes in comparative market data circumstances, to serve the long- the full details of the derogation would for similar roles. term interests and sustainability of be communicated as soon as practical the traded PLC as a whole or to (e.g., by market announcement/on the Potential derogation from the assure its viability. By definition, it Company’s website) and disclosed Remuneration Policy is not possible to fully list all such in detail in the next Remuneration exceptional circumstances, but the Report. Under the potential derogation, The Remuneration Committee intends Remuneration Committee would only the Remuneration Committee would that remuneration arrangements use such ability to apply a derogation have the ability to vary the elements will operate in accordance with after careful consideration and of remuneration described in the the above Remuneration Policy where the Remuneration Committee above table, including levels and for a four-year period or until an considers the circumstances were truly performance conditions applicable amended Remuneration Policy is exceptional and the consequences to incentive arrangements. put to shareholders for approval. for the Company and shareholders

Total Remuneration of Directors The table below sets forth the total remuneration received by each director in respect of 2019 and 2020 (Note 1).

Fixed Remuneration Variable Remuneration

Name Year Basic Fees Benefits Annual Deferred Long-Term Extraordinary Pension Total Proportion Salary (€’000) (€’000)(2) Bonus Bonus Incentives Items (€’000) Remuneration of fixed (€’000) (€’000) (€’000) (€’000)(3) (€’000)(4) (€’000) and variable Remuneration (5) (6) Margaret 2020 400 — 25 118 29 — — 60 632 77% / 23% Sweeney 2019 400 — 25 442 110 — — 60 1,037 47% / 53% Phillip 2020 — 50 — — — — — — 50 100% / 0% Burns 2019 — 50 — — — — — — 50 100% / 0% Joan 2020 — 75 — — — — — — 75 100% / 0% Garahy 2019 — 75 — — — — — — 75 100% / 0% Tom 2020 — 50 — — — — — — 50 100% / 0% Kavanagh 2019 — 50 — — — — — — 50 100% / 0% Mark 2020 — — — — — — — — — n/a Kenney 2019 — — — — — — — — — n/a Declan 2020 — 140 — — — — — — 140 100% / 0% Moylan 2019 — 134 — — — — — — 134 100% / 0% Aidan 2020 — 75 — — — — — — 75 100% / 0% O’Hogan 2019 — 75 — — — — — — 75 100% / 0% 2020 400 390 25 118 29 — — 60 1,022 n/a

Total 2019 400 384 25 442 110 — — 60 1,421 n/a

(1) The table includes all emoluments paid to or receivable by directors in respect of qualifying services during the review period. (2) Non-executive directors do not receive any benefits. (3) For more information on options and Restricted Shares granted under the LTIP to the directors, please refer to the section below titled “Long-term Incentives”. (4) No compensation for loss of office, payments for breach of contract or other termination payments were paid to any current or former director in the period under review. (5) These proportions have been calculated based on the figures in this table. Note that, as share options awarded in 2019 were market priced, their intrinsic value at the date of grant (and therefore the value included in this table) was zero. Full details of the awards made in 2020 and in previous years are included in the tables below under “Long-term Incentives”. (6) Note that Restricted Shares awarded to the CEO will be included in this table when performance conditions have been met. For further details on Restricted Shares granted to the CEO in 2020, please refer to page 83 of this Report. (7) Remuneration in respect of 2020 was in line with the Remuneration Policy approved by shareholders at the 2020 annual general meeting.

82 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 83

€0 €0 €0 (% of (% of Actual salary) payout €27,017 2020 Annual Report Annual 2020 payout €60,000 €60,000 €60,000 Maximum €300,000

€0.0597 achieved €0.0700 €841.70m €36.36m Performance paid is deferred into Company shares shares Company into is deferred paid performance sustainable promote to the of alignment additional provide and interests. shareholder with CEO for bonus annual 80% of 2020, For financial by determined was CEO the was 20% and measures performance The objectives. strategic on based performance and targets weightings, in the summarised are each against below: tables

Stretch Stretch payout) €0.0721 €0.0824 (100% of (100% of Maximum €893.21m €42.94m performance

Target payout) €0.0785 €0.0687 (50% of of (50% €40.90m €850.68m Maximum performance basic salary during 2020. during salary basic

Pension in a defined participates CEO The and arrangement pension contribution to equivalent contributions received 15% of Annual bonus maximum bonus annual CEO’s The was 2020 for level opportunity the with in line salary basic of 150% Remuneration approved shareholder- is arrangement deferral A bonus Policy. bonus any of 20% that such in place (25% of of (25% payout) €38.85m €0.0746 €0.0653 Maximum Threshold Threshold €808.14m performance (% of (% of 10% 10% 10% 50% bonus) Maximum Weighting Weighting ) ² ( ) ² (

Between Threshold and Target performance and between Target and Stretch performance payments were determined on a straight-line basis. a straight-line on determined were payments performance Stretch and Target between and performance Target and Threshold Between and recurring non- certain of effects the earnings EPRA from excluding by is calculated which earnings EPRA normalised on be based EPS will items. exceptional EPRA Basic EPS Basic EPRA Share per Dividend (cents) EPRA earnings EPRA Measure NAV

Residential Units Residential 201 Photo: Road Merrion Elmpark, Dublin 4 2020 quantitative financial measures (Note 1) (Note measures financial quantitative 2020 (2) (1) Benefits taxable annual an receives CEO The towards €25,000 of allowance cash benefits risk and cover health car, illness critical in service death as such contributions. cover disability and Basic salary is CEO the of salary basic The reviewed last was This level €400,000. and 2019 1 January from effect with 2020. during adjusted not was 2020 qualitative measures

Measure Weighting Commentary on performance achieved Rating(1) (% of Maximum bonus) 1. Maintaining a 3% The CEO had extensive interaction with existing and prospective investors Green proactive investor in 2020. relations plan with existing and In 2020, the CEO attended approximately 167 separate meetings and prospective investors conference calls. In addition, the company facilitated property tours with existing and prospective shareholders, investment banks and analysts in early 2020. The CEO undertook thorough roadshows following the FY19 and H1 20 results, meeting in person or virtually a range of investors in Ireland, the UK, Europe, North America and Canada. In addition, the CEO and the Company participated in various conferences and took ad-hoc meetings, calls and site visits. During 2020, the Company appointed an external advisor to complete its first Independent Investor Perception Study to gain unbiased, independent insights into investors sentiment towards I-RES and the sector it operates in which strongly endorsed the companies’ strategy and the CEO.

2. Managing and 3% The CEO led a private placement of notes of circa €200 million equivalent Green preserving strong at market leading pricing and maturity in March 2020 during an exceptionally relationships with challenging economic environment. existing bankers and note holders, The CEO has maintained good relationships with the Group’s lenders and including, if required, note holders during challenging economic times ensuring a robust debt execution of structure for the Company. additional debt 3. Advance growth 2% The Company entered the first quarter of the year with a significant portfolio Green in assets in line of prospective acquisitions and a contract signed to commence construction with approved of 61 residential units at Bakers Yard. Board strategy in conjunction with the As the Covid-19 pandemic emerged non contracted transaction activity was Manager paused pending assessment of the impact of the Pandemic on pricing and tenant demand. Reflecting changed markets the CEO led the Company to profitably complete the disposition of 151 non-core residential units across 10 properties in Dublin in October 2020 and then exchange contracts to acquire 146 residential units at Phoenix Park Racecourse, Castleknock, Dublin 15 for €60 million (including VAT but excluding other transaction costs) in December 2020. Having regard to dramatically changed global and local conditions, the successful direction of disposition and expansion of the portfolio into a quality core asset aligned with Board growth strategy in modified conditions.

4. Resolution of 4% The CEO managed a board subcommittee through an extremely robust Green Investment and challenging Investment Management Agreement review with advisors, Management including benchmarking, detailed consideration of proposals and analyses, Agreement issues as well as a significant number of meetings during the year, culminating ultimately in the Investment Management Agreement rolling over on its existing terms in November 2020. 5. Advancing the 4% The CEO established an ESG steering committee, overseeing detailed Green ESG strategy and ESG reporting with the Company submitting its inaugural GRESB submission benchmarking against in 2020. Through active engagement with the Manager and CAPREIT LP the relevant standards in CEO ensured that ESG by the Company was given the priority and focus to conjunction with the meet the business and investor demands from a European perspective. Manager 6. Successfully 4% The Covid-19 pandemic represented a significant potential risk to Green overseeing the Risk the Company in 2020. The Group navigated this challenging period Management Strategy successfully, in no small part, due to the implementation of a crisis and execution to management team led by the CEO and through regular reporting ensure that there is from the CEO to the Board on the potential impact of Covid-19 on no material avoidable the Company. The CEO’s crisis management skills from previous and within our control employment roles proved of significant value to the Board and risk events facilitated the continued successful operation of the Company during this extraordinary Covid-19 period.

(1) The Remuneration Committee assessed performance against each of the qualitative measures on a ‘traffic light’ basis: Green – Fully Achieved, Orange – Partially Achieved, Red – Not Achieved

84 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 85

2020 Annual Report Annual 2020 TSR portion portion TSR weighting) (50% constituents to relative TSR FTSE EPRA/NAREIT the of Index Developed Europe Below Median Below Median Upper Quartile (or above) (or Quartile Upper Between Median and and Median Between Quartile Upper Long-term incentives Long-term the with in line 2020, March On 27 Remuneration the Policy Remuneration subject CEO, the awarded Committee a conditional conditions, certain to shares ordinary 437,601 of award share in salary) basic 135% of to (equivalent “2023 (the Company the of capital the Restricted ”) as Shares Restricted LTIP. the of terms the under Shares Restricted 2023 the of vesting The achievement the to is subject Shares set conditions performance the of 2023 The below. table in the out on be held to are Shares Restricted two- a further for CEO the for trust date vesting the from period year in 2023. (1) ”). Of this, €117,614 ”). Of this, €117,614 Below 3% p.a. Below EPS portion portion EPS weighting) (50% EPS: in growth Percentage base to compared 2022 2019 of year 3% p.a. 6% p.a. Between 3% and 6% p.a. and 3% Between appropriate benchmarks in context in context benchmarks appropriate and REIT structure Company's the of the for only market Irish the on focus this the on Based future. foreseeable determined Committee Remuneration per 6% growth 3% to of a range that stretching appropriately was annum would targets the of achievement and value significant of in creation result shareholders. for The total bonus payable to the CEO CEO the to payable bonus total The ended year financial the of in respect basic of 36.75% therefore was 2020 150% opportunity: (maximum salary this, on with In line salary). basic of Remuneration the 2021, 18 February a CEO the awarded Committee €147,017 of bonus performance-related financial Company’s the of in respect 2020 31 December on ended year “2020(the Bonus 2020 the 80% of (representing in cash. CEO the to paid was Bonus) Bonus, 2020 the of remainder The as settled was €29,403, representing the to entitlement, a restricted ordinary in 19,340 interest beneficial Company the of capital in the shares ”). Shares Bonus Restricted “2020 (the 0% Vesting level 25% 100% Pro-rata between between Pro-rata 100% and 25% EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and and non-recurring certain of effects the earnings EPRA from excluding by is calculated which earnings EPRA normalised on be based EPS will items. exceptional Below Threshold Below Performance level Threshold Stretch (or above) (or Stretch Between Threshold Threshold Between Stretch and In calibrating the above EPS above the In calibrating Remuneration the range, performance the in detail considered Committee approved Company the for strategy business detailed Board, the by as metrics performance and plan forecasts analyst external as well period. performance the covering Committee Remuneration The discussed and considered also (1) The Remuneration Committee Committee Remuneration The and achievement considered the against CEO the of performance for set objectives qualitative specific notwithstanding 2020 for CEO the being wholly 2020 of 10 months to due environment an as different by envisaged was what 19 to Covid the and Committee Remuneration the were objectives 2020 the when Board Committee Remuneration The set. had CEO the how noted particularly this through business the navigated delivery of continuity ensure to crisis focused and careful strategy, the of effective and risks of management are These management. stakeholder success continued in the reflected Company. the of sustainability and analysis this thorough on Based Remuneration the consideration and the that determined Committee 2020 for objectives qualitative achieved. fully were Shares options awarded in years prior to 2020

Director Grant Exercise No. of Options Options Options Options No. of Vesting Latest Date Price Options Granted Vested Exercised Cancelled Options Date(s) Date for (€) 01-Jan-20 During During During / Forfeited 31-Dec-20 Exercise the the the During Period Period Period the Period

Margaret 10-Jul-19 1.682 1,294,038 — 431,346 — — 1,294,038 One third in 9-Jul-26 Sweeney each year starting 10-Jul-2020 Margaret 18-Jun-19 1.710 1,302,461 — 434,154 — — 1,302,461 One third in 17-Jun-26 Sweeney each year starting 18-Jun-2020 Margaret 16-Nov-17 1.489 2,000,000 — 666,667 — — 2,000,000 One third in 15-Nov-24 Sweeney each year starting 16-Nov-18 Mark 16-Apr-14 1.040 1,000,000 — — 1,000,000(3) — — One third in 15-Apr-21 Kenney(1)(2) each year starting 16-Apr-2015 Mark 26-Mar-15 1.005 500,000 — — — — 500,000 One third in 25-Mar-22 Kenney(2) each year starting 26-Mar-2016

(1) Options were first granted at I-RES’ initial offering on 16 April 2014. (2) At the time of his appointment as a Non-Executive Director, Mark Kenney held 1,500,000 options of I-RES previously awarded to him in his capacity as an employee of CAPREIT. (3) On 20 November 2020 Mark Kenney assigned 1,000,000 options to subscribe for shares in the Company, granted to him in April 2014 under the LTIP, to CAPREIT through its qualifying investor alternative investment fund, Irish Residential Properties Fund (the "QIAIF"). The Remuneration Committee granted consent for this assignment. Following assignment of these options by Mr. Kenney, the QIAIF immediately exercised the options and effected the payment of the Exercise Price (of €1.04 per option) to the Company, whereupon the QIAIF was allotted 1,000,000 ordinary shares of nominal value €0.10 each in the capital of the Company. In consideration for the assignment of these options to the QIAIF, the QIAIF agreed to pay Mark Kenney the amount of €0.4770 per option, representing the difference between the Exercise Price and the volume weighted average price of the underlying Ordinary Shares for the five business day period to close of business on 19 November 2020, being the business day immediately prior to the date of assignment.

Restricted Shares awarded during 2020

Director Grant No. of Restricted Restricted Restricted No. of Performance Vesting Date Restricted Shares Shares Vested Shares Restricted Period Date(s) Shares Granted during the Cancelled/ Shares 01-Jan-20 during the Period forfeited 31-Dec-20 Period during the Period

Margaret 27-Mar-20 — 437,601 — — 437,601 1-Jan-20 to 27-Mar-23 Sweeney 31-Dec-22

Non-Executive Director Fees Note that, as I-RES currently has only The Company reviewed the level of two employees below Main Board fees for non-executive directors most level, being the Executive Assistant recently in 2019. No changes were and a Director of Investor Relations made to Non-Executive Director and Funding, and as I-RES is externally fees in 2020. managed, items of disclosure required by the European Union (Shareholders’ Comparative information on Rights) Regulations 2020 and the the change of remuneration UK Code relating to comparing and company performance Director and workforce remuneration The table below compares the arrangements are not applicable. year-on-year change in total remuneration of each of the directors over the past five years with company performance over the same period.

86 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 87 ) ⁷ ( 1% 3688 (6)% 6.5 3% 34.030 — 140 — 50 0% 75 5% 2020 632 75 (39)% — 0% 50 0% — — (4) 2020 Annual Report Annual 2020 37% 3666 6% 6.9 19% 33.070 — 134 — 50 0% 75 34% 2019 1,037 75 42% 0% 72% — 50 0% — (1) (6) (3) 9% 2679 8% 6.5 12% 474% — 27.780 — 100 — 0% 92% 14% 39% 50 75 2018 730 75 — 29 n/a (2) (5) (1) 3% 2450 22% 6 21% 76% 28% — — 8% 12% — 24.870 — 88 50 39 2017 127 54 56 n/a n/a 47% 2378 48% 4.9 69% — — — — — — — 20.552 — 50 39 n/a — 2016 50 50 n/a n/a % change from previous year previous from % change Total % change from previous year previous from % change Total (cents) Total % change from previous year previous from % change % change from previous year previous from % change % change from previous year previous from % change year previous from % change % change from previous year previous from % change year previous from % change % change from previous year previous from % change year previous from % change Total (€ millions) Total % change from previous year previous from % change (€) Remuneration Total Total Remuneration (€) Remuneration Total (€) Remuneration Total Total Remuneration (€) Remuneration Total Total Remuneration (€) Remuneration Total Total Remuneration (€) Remuneration Total (€) Remuneration Total Total Remuneration (€) Remuneration Total Non-Executive Chairman Non-Executive Non-Executive Director Non-Executive Director Non-Executive Chief Executive Officer Officer Executive Chief Director Executive and Non-Executive Director Non-Executive Role Director Non-Executive Director Non-Executive Non-Executive Director Non-Executive Margaret Sweeney served as a non-executive director in 2016 and 2017 and received fees in respect of this role. She was the Chair of Audit Audit of Chair the was She this role. of in respect fees received and 2017 and in 2016 director a non-executive as served Sweeney Margaret time full and Officer Executive Chief appointed was Sweeney Ms. 2017, On 1 November 2017. 1 November until 2016 March 23 from Committee bonus. and contributions pension salary, include to above in 2018 in remuneration change substantial the for this accounts and director executive a for Board the of being part Burns Mr. to due was in 2017 28% of increase The 2016. March 23 on Board the to appointed was Burns Phillip year. full succeeding 2017, 1 November on Committee Audit the of Chair as appointed was and 2017 18 April on Board the to appointed was Garahy Joan her for €25,000 2017, 1 November from effect with and, is €50,000 role non-executive her for fee annual Garahy’s Ms. Sweeney. Margaret new her and year a full for Board the of being part Joan to due was 92% in 2018 of increase The Committee. Audit the of Chair as position Committee. Audit the of Chair as position for Board the of being part Kavanagh Mr. to due was in 2019 72% of increase The 2018. 1 June on Board the to appointed was Kavanagh Tom year. a full €100,000 to €50,000 from increased was fee annual Moylan's Mr. As a result, 2017. 31 March on Chairman as appointed was Moylan Declan Chairman. as role new Declan’s to due was in 2017 76% of increase The 2017. 31 March from effect with O’Hogan’s annual Mr. Moylan. Declan succeeding 2017, 31 March on Committee Remuneration the of Chair as appointed was O’Hogan Aidan the of Chair as his role for €25,000 was 2017, 1 November from effect with and, fee €50,000 was director for a non-executive as his role Committee. Remuneration the of Chair as role new Aidan’s to due was 39% in 2018 of increase The Committee. Remuneration in resulted which 2019 21 February effective annum per €140,000 to increased was Chairman the as his role for fee annual Moylan's Declan 2020. to 2019 from a 5% increase Total number of residential units residential of number Total EPRA EPS EPRA Declan Moylan Declan Phillip Burns Phillip Joan Garahy Executive Directors’ remuneration Directors’ Executive Margaret Sweeney Aidan O’Hogan Aidan Name remuneration Directors’ Non-Executive Margaret Sweeney Kavanagh Tom Company performance Earnings EPRA Mark Kenney (1) (2) (3) (4) (5) (6) (7) Interests of Directors and the Implementation of Secretary in the share capital Remuneration Policy in 2021 The interests of directors and the Secretary in the share capital of the Following the adjustment to the Company set out in page 96 of the basic salary of the CEO in 2019, Report of the Directors is incorporated the Remuneration Committee does by reference in this Report of the not anticipate making a further Remuneration Committee. adjustment in 2021.

As of 9 March 2021, the CEO The CEO’s opportunity under the maintained a ‘shareholding interest’ annual bonus for 2021 will be 150% of approximately 665% of basic of basic salary, with 20% of any salary based on a market price of bonus payment deferred into shares €1.566 being the closing price of the in line with the shareholder approved Company’s shares on 9 March 2021. Remuneration Policy set out above. The table below sets out the measures and weightings that will apply for 2021. The full details of targets and performance against each will be set out on a retrospective basis on next year’s Remuneration Report.

Measure Weighting (% of Maximum bonus) EPRA earnings (note 1) 30% Net Rental Income 20% NAV 20% Qualitative strategic objectives 30%

(1) EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and exceptional items.

The Remuneration Committee on maximising Net Rental Income considered the continuing challenging alongside EPRA earnings and NAV. environment due to the Covid 19 pandemic and the likely impacts of For the qualitative measures, the various public health and Government Remuneration Committee has reduced regulations on the strategy and the number of measures but placed business of the Company. As a result enhanced weighting on ESG and risk the Remuneration Committee has management outcomes alongside recalibrated the performance measure investor relations / funding and on targets and weightings for the annual delivery of the Company's strategy. bonus for 2021 to better reflect those necessary to the achievement of the On 5 March 2021, the Remuneration 2021 business plan and continued Committee awarded the CEO, subject delivery of the Company's strategy. to certain conditions, a conditional share award of 335,820 ordinary shares Reflecting the variable economic equivalent to 135% of basic salary in outlook for 2021 arising from Covid-19, the capital of the Company (the “2024 the Remuneration Committee Restricted Shares”) as Restricted allocated an increased proportion Shares under the terms of the LTIP. of the annual bonus for 2021 to the The vesting of the 2024 Restricted qualitative measures increasing it Shares is subject to the achievement from 20% to 30%. Additionally the of the performance conditions set out Remuneration Committee, recognising in the table below. The 2024 Restricted the importance for 2021 of optimising Shares are to be held in trust for the the existing portfolio, adjusted the CEO for a further two-year period from performance measures to add focus the vesting date in 2024.

88 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 89 99,062 2020 Annual Report Annual 2020 Votes Withheld* Votes 0.78% To set suitable targets for the the for targets suitable set To long- the for and scheme bonus 2021. for scheme incentive term comparator monitor To reward their and performance a high level ensure to schemes of level Board at awareness of our of performance relative the Policy. Remuneration our of alignment ensure To current with Policy Remuneration recommendations. governance performance company assess To CEO determine and achieved are that outcomes incentive in this context appropriate broader with aligned also and experience. stakeholder TSR portion (50% weighting) (50% portion TSR constituents to relative TSR FTSE EPRA/NAREIT the of Index Developed Europe Below Median Below Median Upper Quartile (or above) (or Quartile Upper Between Median and and Median Between Quartile Upper External Services has Committee Remuneration The consultants, remuneration engaged have which Watson, Towers Willis Group the with relationship other no provide to director, individual any or executive to in relation advice remuneration the and remuneration for fees Watson’s Towers Willis report. €36,549. were 2020 during advice Remuneration the of Priorities Key 2021 for Committee 1. 2. 3. 4. Votes Against Votes 2,768,100 (1) 99.22% EPS portion (50% weighting) (50% portion EPS EPS: in growth Percentage base to compared 2023 year 2020 of Below 2% p.a. Below 2% p.a. 3% p.a. Between 2% and 2% and Between 3% p.a. Votes For The Remuneration Committee Committee Remuneration The EPS performance the that determined award, LTIP 2021 the under metrics metrics, 2020 the than lower although significantly the reflect appropriately uncertain and challenging more a as Ireland for outlook economic Covid-19. of result appointments external Executives’ future any (and director executive The be might that director(s) executive on take to permitted are appointed) another with appointments external prior the with company listed publicly Board The Board. the of approval to benefits are there that recognises executive the and Company the both director executive the for director, board a non-executive as serve to The companies. other of member to is permitted director executive in received payments any retain appointments. such of respect Margaret 2014, February On 27 a non- as appointed was Sweeney Hotel Dalata of director executive an received she which plc, for Group €75,437. of in 2020 fee annual / office of loss for Payment payments exit year in the made were No payments office. loss of to in relation 353,535,440 Vesting level 0% 25% 100% Pro-rata between between Pro-rata 100% and 25% EPS will be based on normalised EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and and non-recurring certain of effects the earnings EPRA from excluding by is calculated which earnings EPRA normalised on be based EPS will items. exceptional *A vote withheld is not a vote in law and is not counted in the proportion of votes for or against a resolution. against or for votes of proportion in the counted is not and in law a vote is not withheld *A vote The table below shows the voting outcome at the 2020 annual general meeting in relation to the Remuneration Policy. Remuneration the to in relation meeting general annual 2020 the at outcome voting the shows below table The 2020 Annual General Meeting Vote on Remuneration Policy Remuneration on Vote Meeting General Annual 2020 Due to the Covid 19 pandemic, various various 19 pandemic, Covid the to Due measures, public health and regulations be to continue may and been have Government Irish the by introduced, impacts have to anticipated are which Company the of performance the for strategy Company's the on in 2021, In period. performance the over and pandemic the of a result as addition, in Ireland, environment economic the all out carries Company the in which with deteriorated, has business, its economic in forecasted reduction in increase significant growth, for need the as well as unemployment holding for costs incur to Company the and wider the to due liquidity additional is which uncertainty macro continuing coming the over continue to expected reforecast and uncertainty This years. as plan business Company's the of expectations investor changing as well the in setting considered been have and period performance the for targets Remuneration the by considered are to be challenging to Committee in this environment. achieve (1) Performance level Advisory vote on 2020 2020 on vote Advisory Policy Remuneration Below Threshold Below Threshold Stretch (or above) (or Stretch Between Threshold Threshold Between Stretch and Introductory Statement from Looking ahead the Nomination Committee Chair With two directors, including myself, REPORT having served on the Board for seven Dear Shareholder, years, the Nomination Committee OF THE will continue to focus on Board On behalf of the Nomination succession planning. In terms of Committee, I am pleased to present director development, we will continue NOMINATION the Report of the Nomination to focus on enhancing the Board’s Committee for the year ended ESG competency. In 2020, Mr. Tom COMMITTEE 31 December 2020. Kavanagh attended a course from the Cambridge Institute for Sustainability The Board is comprised of directors Leadership and all the directors who have been involved with the received presentations on ESG from Company since its inception and have the Company’s external ESG consultant. invaluable insight into the history and We will continue to focus on enhancing growth of the Company and more the Board’s ESG competency. recently appointed directors who offer The Nomination fresh perspectives and enhance Board Committee remains diversity. The Nomination Committee remains satisfied with the structure, size, Declan Moylan satisfied with the composition and balance (including Chair of the Nomination Committee structure, size, the skills, knowledge, experience, composition and independence and diversity) of the Members: Declan Moylan (Chair), Board and its committees. Phillip Burns, Joan Garahy and balance of the Aidan O’Hogan. Board and its A report issued in June 2019 by the Balance for Better Business Review The Nomination Committee is chaired committees. Group, which is an independent by Declan Moylan, who is also the business-led review group established Chairman. The Company considers by the Government of Ireland to the Chairman of the Company to improve gender balance at the senior be independent and accordingly a leadership level in Ireland, encouraged majority of members of the Nomination Irish companies that form part of the Committee are independent. ISEQ 20 Companies to target 25% Therefore, the Nomination Committee female representation on boards by is constituted in compliance with the 2020. We are pleased to report that Codes and the Articles of Association currently, 28.6% of the directors on regarding the composition of the the Board are female, which includes Nomination Committee. the Company’s CEO and the Chair of the Audit Committee. These are All members are appointed for an significant roles and demonstrate initial term of up to three (3) years, the Board’s commitment to ensuring which may be extended by the Board. appropriate gender diversity on the The terms of appointment for Declan Board. The Company also amended Moylan and Aidan O’Hogan expired its Board Diversity and Inclusion Policy on 30 March 2020. The term of in 2020 to set targets for female appointment of Joan Garahy expired representation on the Board consistent on 31 October 2020. Accordingly, the with those targets recommended Board agreed that the appointment by the Balance for Better Business of Declan Moylan and Aidan O’Hogan Review Group. should be extended for an additional term of approximately three years This year the Board also conducted commencing on 31 March 2020 and an external evaluation of the Board, expiring at the end of the 2023 AGM its main committees, the Chairman (subject to each continuing to meet and individual directors led by the criteria for membership of the Independent Audit. Nomination Committee). The Board further agreed that the appointment of Joan Garahy shall be extended for an additional term of approximately two and half years commencing on 1 November 2020 and expiring at the end of the 2023 AGM aligning with the expiry of her Board and other committee appointments (subject to her continuing to meet the criteria for membership of the Nomination Committee).

90 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 91 2020 Annual Report Annual 2020 reviewed the findings of the of the findings the reviewed to respect with evaluation board its and Board the of composition committees; main amended the Company’s Board Board Company’s the amended to Policy Inclusion and Diversity board female for targets include representation; of commitments time the reviewed Independent Senior Chairman, the non-executive and Director directors; other of scale the considered the of Chair the appointments non-executive other and Board without on take may directors effectiveness; their compromising succession ongoing reviewed planning; matrix skills updated an adopted the with in line members Board for aid future to strategy Company’s talent and planning succession that ensure as well as management, and skills of balance appropriate an exists; expertise developed a work plan for 2020; for plan a work developed the to recommended and reviewed reference of terms revised Board with Committee Nomination the for 2020; October 29 from effect to recommended and considered appointment the that Board the Aidan Moylan, Declan of each of a as Garahy Joan and O’Hogan as (and Company the of director Committee Audit the of members as Committee Remuneration and an for be extended applicable) approximately of term additional of end the at expiring years three general annual 2023 Company’s the meeting;

On appointment to the Board, new new Board, the to On appointment Company’s the in participate directors process. induction also Committee Nomination The Board the to recommendations makes of re-appointment the concerning the at director non-executive any term specified their of conclusion by re-election the and in office are who directors of shareholders re-election. annual of subject the 2020 during activities Key undertook Committee Nomination The the during activities key following the 2020 financialyear: › › › › › › › › ›

the development of a diverse a diverse of development the taking succession, for pipeline and challenges the account into Company, the facing opportunities needed expertise and skills the and future. in the Board the on The Nomination Committee leads the the leads Committee Nomination The appointments considering for process There committees. its and Board the to transparent and rigorous is a formal, new of appointment for procedure Board. the to directors identifies Committee Nomination The of approval the for nominates and board fill to candidates Board, the arise. they when and as vacancies by is made appointment any Before Committee Nomination the Board, the skills, of balance the evaluates diversity and experience knowledge, this of light in the and, Board the on of a description prepares evaluation, for required capabilities and role the time the and appointment a particular expected. commitment the candidates, suitable In identifying open uses Committee Nomination external of services the or advertising as search, the facilitate to advisers from candidates considers necessary; and backgrounds; of a wide range and merit on candidates considers due having criteria, objective against of diversity benefits the to regard that care taking and Board the on available time enough have appointees position. the to devote to by interviewed are candidates Suitable Nomination of the members specified the of results the and Committee the by reviewed are interviews the and Committee Nomination Nomination the by selected candidate(s) the to recommended are Committee approval. for Board a director, of appointment the to Prior appointments, directorships, other all interests and commitments significant be to required are candidates the of Board. the to disclosed the Board, the to On appointment that ensures Committee Nomination a receive directors non-executive setting appointment of letter formal them of is expected what clearly out commitment, time of in terms involvement and service committee meetings. board outside to regularly review the structure, structure, the review regularly to Board the of composition and size the to recommendations make and changes any to regard with Board of balance the evaluate to and and experience knowledge, skills, Board; the on diversity identifying for be responsible to approval the for nominating, and fill to candidates Board, the of when and as vacancies Board and arise; they for in place are plans ensure to orderly and to appointments senior and Board the to succession oversee and positions management (b) (c) (a) The Nomination Committee’s principal principal Committee’s Nomination The include: duties The Nomination Committee reviews reviews Committee Nomination The annual an on reference of terms its for proposes if necessary, and, basis to amendments adoption Board formal of terms Committee’s Nomination the Committee Nomination The reference. relative performance own its evaluates the Following reference. of terms its to concluded was it review, annual 2020 was Committee Nomination the that effectively. operating The terms of reference for the the for reference of terms The initially were Committee Nomination Board the by adopted and approved regularly are and 2014 31 March on best for updated and reviewed the with compliance and practice and approved Board The Codes. reference of terms revised adopted 29 on Committee Nomination the for model the on based 2020 October nomination for reference of terms ICSA in the by published committees designed are which 2020, January The Code. UK the with comply to delegated responsibilities and roles under Committee Nomination the to be can reference of terms the https:// at electronically accessed investorrelations.iresreit.ie/company- and-strategy/corporate-governance. Terms of Reference and and Reference of Terms Duties Principal The Nomination Committee meets at at meets Committee Nomination The otherwise as and twice year per least Committee Nomination The required. from period the during times five met 2020. 31 December to 2020 1 January members’ Committee Nomination The 63. page on out is set attendance Meetings of the Nomination Nomination the of Meetings Committee Meeting › assessed the balance of skills, Audit Committee (as relevant), which in turn confirmed, that all serving experience, independence, diversity appointments expired on 30 March directors be put forward for and knowledge of each director and 2020 in the case of Mr. Moylan and re-election at the 2021 annual across the Board and subsequently Mr. O’Hogan and expired on 17 April general meeting. recommended that each of them 2020 in the case of Ms. Garahy, for an be elected or re-elected at the additional term of approximately three Diversity Company’s AGM; and years. None of Mr. Moylan, Mr. O’Hogan › discussed and reviewed any new or Ms. Garahy participated in the The Board and the Nomination corporate governance requirements discussion or vote with respect to his Committee recognise the importance and any new or forthcoming or her re-appointment to Board and/ of, and are committed to supporting, amendments to relevant laws or or committee positions with respect to diversity and inclusion in the regulations that will, or are likely to, him or herself. boardroom where directors believe impact the roles and duties of the that their views are heard, their Nomination Committee. Mr. Kavanagh will complete his first concerns are addressed and they three-year contract at the end of serve in an environment where no Company’s 2021 annual general bias, discrimination or harassment is Succession planning meeting. Accordingly, in February 2021, tolerated on any matter. The Board and the Nomination Committee considered the Nomination Committee understand The Nomination Committee assesses and recommended to the Board the that a diverse Board will offer different the aggregate skills and experience renewal of Mr. Kavanagh’s appointment perspectives in order to provide of the directors in light of the current to the Board for an additional effective oversight of the Company’s and future needs of the Board and its term of approximately three years business and guide the Company committees, both on a routine basis expiring at the end of the Company’s towards its strategic aims. Diversity and in particular when considering 2024 annual general meeting. In also improves the quality of decision- renewal of contracts and potential addition, the Nomination Committee making by the Board by reducing the new appointments. considered and recommended to the risk of group-think and supports the Board the renewal of Mr. Kavanagh’s development of a diverse pipeline of Each non-executive director, appointments to the Audit Committee candidates to serve on the Board. including the Chairman of the and Remuneration Committee, which Board, is expected to serve until the appointments are due to expire on The Company’s Board Diversity end of the annual general meeting 31 May 2021, for an additional term and Inclusion Policy requires the following the third anniversary of his of approximately three years. Mr. Board to consider a broad range of or her appointment unless his or her Kavanagh did not participate in the characteristics when considering appointment is otherwise terminated discussion or vote with respect to diversity including, but not limited to: earlier in accordance with the terms his re-appointment to the Board and of his or her letter of appointment committee positions. › age, gender, social and ethnic or he or she is invited by the Board background; and agrees to serve for an additional The number of directors is currently period. In its work in the area of Board › educational and professional considered by the Nomination renewal, the Nomination Committee background, possession of Committee to be sufficiently small to looks at a number of issues including: technical skills in the Company’s allow efficient management of the › skills, knowledge and expertise in field of operations, including “soft” Company while being large enough areas relevant to the operation of and cognitive skills necessary to be to ensure an appropriate mix of skills the Board; an effective director; and experience. › diversity; and › personal strengths such as strength of character, experience, knowledge › the need for an appropriately Board and Committee evaluation and understanding; and sized Board. The Nomination Committee reviewed › expertise in relevant environmental, social and governance The Board has had a stable year those elements of the board evaluation (“ESG”) matters. with no directors leaving or joining that related to the composition of the . Mr. Moylan and Mr. O’Hogan Board and its committees, succession completed their second three-year planning and the time commitment The Nomination Committee in the term contracts and Ms. Garahy required from non-executive directors. context of its Board evaluation completed her first three-year term These were rated positively, and the processes, regularly reviews the contract at the end of the Company’s Nomination Committee continues structure, size and composition 2020 annual general meeting. The to monitor the skills and experience of the Board, taking diversity and Nomination Committee considered requirements throughout the year. the considerations noted above and recommended to the Board the in particular into account, in order renewal of their appointments to The Nomination Committee believes to maintain an appropriate range the Board for an additional term of that each non-executive director and balance of skills, experience approximately three years. In addition, brings a distinct range of skills and and background on the Board. The the Nomination Committee considered experience that complements those Nomination Committee also considers and recommended to the Board the brought by the other non-executive diversity in the context of Board renewal of their appointments to directors. The Nomination Committee appointments and succession planning. the Remuneration Committee and recommended to the Board, which Each of these processes will take

92 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 93 2020 Annual Report Annual 2020 implement actions from the 2020 2020 the from actions implement 92); (see page Evaluation Board what assess to continue to be made should enhancements composition; committee and Board in work our undertake to continue for planning succession to relation Board; the overall Board’s the review strategy; to contribution and commitment time the review non-executive each of effectiveness and contribution; director’s availability skills, the consider Board each of performance and member.

Key Priorities of the Nomination Nomination the of Priorities Key 2021 for Committee for plan Committee’s Nomination The includes: year financial 2021 the › › › › › › 25% 27% 30% 33% By end of 2020 of By end By end of 2021 of By end 2022 of By end 2023 of By end The Nomination Committee will Committee Nomination The additional whether annually consider as such objectives measurable timeframes and targets quantitative appropriate are diversity achieving for such recommend fit, will if thought and, for Board the to objectives measurable to is committed Board The adoption. skills of balance appropriate an having gender including perspectives, and Board. the on balance All Board appointments, with the with appointments, Board All nominee Manager’s the of exception Manager, the by is nominated who selection a transparent on based are criteria, objective using process diversity of consideration including necessary gender), (including and skillsets characteristics, experience, ensure to necessary attributes other Company’s the of oversight effective Company guide the to and business objectives. strategic its towards gender board meets Company The in Ireland practice best diversity Board female 27% over having by Currently, 2021. by representation Board the on directors the of 28.6% the includes which female, are of Chair the and CEO Company’s roles Both Committee. Audit the commitment Board’s the demonstrate gender appropriate ensuring to Board. the on diversity Board the of composition the Given of stage development the and the and Board the Company, the set only have Committee Nomination to in relation objectives measurable Board. the on representation female quotas, gender to respect With the by set targets the with consistent Review Business Better for Balance following the set has Board the Group, on representation female for targets Board: the 7 7 7 4 4 6 3 3 3 3 with that Skill that with Number of Directors Directors of Number Management Management Experience Financial Acumen Capital Markets Estate Real General Experience Development Experience Environmental Management Legal Tax Human Resources Government Relations appointments outside-of-Board Where in 2020 arise did not (which made are in Board change no was there given having and year) the during members Company the that fact the to regard Board the employees, three only has in fully challenges the recognises and Diversity Board its implementing a relatively across Policy Inclusion to in order individuals pool of small each within diversity true achieve above. listed characteristics the of consultants, recruitment using Where seeks, Committee Nomination the work seek, to to continue will and a made have who consultants with diversity. promote to commitment Skill account of and address the Board’s Board’s the address and of account consider and time that at diversity on diversity of enhancement for needs Board the In implementing Board. the during Policy Inclusion and Diversity Committee Nomination the 2020, the in evaluating diversity considered and Board the of composition optimum its of effectiveness the in evaluating is that matrix skills the on Based Board. of part as director each by completed have directors the evaluation, Board the skills. diverse The directors of the Company facing the Company, the Chairman’s present their report and the audited Statement on pages 12 to 14, the REPORT financial statements for the financial Chief Executive Officer’s Statement period from 1 January 2020 to on pages 15 to 19, the Manager’s OF THE 31 December 2020. Statement on page 20, the Business Review on pages 21 to 40 and the Risk Principal Activity Report on pages 44 to 56 are deemed DIRECTORS to be the management report as The Company is an Irish real estate required by the Transparency (Directive company, focused on the private 2004/109/EC) Regulations 2007 (the residential rental property market on “Transparency Regulations”). the Island of Ireland. The Company owns interests primarily in residential Revenue for the financial period rental accommodations and amounted to €74.7 million (€62.10 ancillary and/or strategically located million for the 2019 year). The profit for commercial properties located in and the year attributable to shareholders near major urban centres in Ireland, amounted to €58.3 million (€86.28 The Company is in particular Dublin. The Company million for the 2019 year). Basic an Irish real estate purchased its first real estate assets on Earnings per Share and Diluted Earnings company, focused 10 September 2013 and is now one of per Share amounted to 11.2 cents and the largest private residential landlords 11.1 cents, respectively (18.0 cents and on the private in Ireland. The Company’s net assets 17.9 cents for the 2019 year). EPRA residential rental and operating results are derived from Earnings per Share were 6.5 cents (6.9 real estate located in Ireland. cents for the 2019 year), and EPRA property market on NAV per share was 160.3 cents (155.3 the Island of Ireland. Review of Activities, Business cents as at 31 December 2019). Further Performance Measures, and Events details of the results for the year are set since the Year End out in the consolidated statement of profit or loss and other comprehensive The Chairman’s Statement on pages income on page 112. 12 to 14, the Chief Executive Officer’s Statement on pages 15 to 19, the REIT Status Manager’s Statement on page 20, and the Business Review on pages The Company elected for REIT status 21 to 40 contain a review of the on 31 March 2014 under section 705 E development and performance of the of the Taxes Consolidation Act, 1997. business during the year, the state of As a result, the Company does not pay affairs of the business at 31 December Irish corporation tax on the profits and 2020, recent events and likely future gains from qualifying rental business developments. Information in respect in Ireland from that date, provided it of events since the year end as meets certain conditions. required by the Companies Act, 2014 is included in these sections and in note As an Irish REIT, the Company 28 of the Group financial statements is required to distribute to its on page 154. shareholders (by way of dividend), on or before the filing date for its tax The Corporate Governance Statement return for the accounting period in on pages 61 to 70, the Report of question, at least 85% of the Property the Audit Committee on pages 71 to Income of the Property Rental 75, the Report of the Remuneration Business arising in each accounting Committee on pages 76 to 89, the period (provided it has sufficient Report of the Nomination Committee distributable reserves). Failure to meet on pages 90 to 93 and the Business this requirement will result in an Irish Review on pages 21 to 40 are deemed REIT incurring a tax charge calculated to be included in this Report of the by reference to the extent of the Directors for the purposes of the shortfall in the dividends paid. Companies Act, 2014. The directors confirm that the Group This Report, the documents referred to complied with all the above REIT therein, which include a description of requirements for the period from the principal risks and uncertainties 1 January 2020 to 31 December 2020.

94 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 95 2020 Annual Report Annual 2020 in certificated form where the where form in certificated not have documents following share original the produced: been of form usual the and certificate the by executed duly transfer, stock stamped and shares the of holder and duty; stamp requisite the with in such only form in uncertificated be permitted may as circumstances Act, Companies the by required or Securities) 1990 (Uncertificated 1996. Regulations, in certain circumstances where where circumstances in certain to notice given have directors the Articles the under a shareholder such requiring Association of Company the notify to shareholder in shares in any interest her his or of interests the (and/or Company the a beneficial having persons all of Company in the shares in any interest and/ shareholder such by held into entered arrangement any or such any or shareholder such by any of a transfer regarding person to in relation acting or share such and Company) the of meeting any a for is in default shareholder such such in supplying period prescribed Company; the to information any of is in favour transfer if the the by determined as person, transfer or a sale whom to directors, indirect direct, whose or shares, of shares of ownership beneficial or a specific cause might or would be imposed on to burden regulatory US the under as such Company, the 1934; of Act Exchange Securities to or by a minor or a person with a with a person or a minor by or to by the defined (as disorder mental 2001); Act, Health Mental

› › › › ›

31 December 2020 and as at 9 at as and 2020 31 December no held Company the 2021, March subsidiary no and in treasury, shares held Company the of undertaking Company. in the shares the imposed by restrictions for Save in order persons relevant on Company the under obligations its with comply to (596/2014), Regulation Abuse Market dealing share its under example for the on restrictions no are there code, and Company in the shares of transfer of approval obtain to requirements no of holders other of or Company, the a transfer for Company, in the securities the that save Company, in the shares of any register to decline may directors a share: of transfer Share Capital Share the of capital share authorised The ordinary is 1,000,000,000 Company which of €0.10 each, of shares at issue in were shares 525,078,946 shares these of All 2020. 31 December carry all They class. same the of are for equally rank and rights voting equal Company in the No shares dividends. the by redeemed or acquired were period financial the during Company made or 2020 31 December ended no are There lien. or charge to subject with rights special holding securities Company. the of control to regard and authorised the of Particulars Company the of capital share issued set are 2020 31 December at as financial Group the 13 of in note out 134. page on statements ended period financial the During

Residential Units Residential 101 101 Photo: Beechwood Court Co Dublin Stillorgan, Accordingly, in 2020, the Board paid Board the in 2020, Accordingly, €30.2 million approximately of dividends and period accounting 2019 the for in respect million €14.3 approximately 2020 1 January from period the of On 19 February 2020. 30 June to an announced directors the 2021, €16.9 million of dividend additional 3.22 cents) of share per (dividends 31 December ended year the for 2021 April 20 on be paid to 2020, 26 of as record on shareholders to made was dividend This 2021. March Distribution Income a Property up of REIT Irish in the defined (“PID”), as the of migration the to Due Legislation. from shares uncertificated Company’s operated system settlement CREST the Limited Ireland and UK Euroclear by operated system settlement the to SA/NV, Bank is which Euroclear by 2021, 15 March on occur to expected in that, determined has Board the disruption potential any avoid to order be a dividend should occur may that migration the during paid and declared year the for dividend the process, be paid will 2020 31 December ended 2021 March than rather 2021 in April Under the Irish REIT Regime, subject to to subject REIT Regime, Irish the Under reserves, distributable sufficient having distribute to is required Company the the of 85% least at shareholders to Rental Property its of Income Property period. accounting each for Business to intention Board’s is the it year Each payable dividends semi-annual propose September. and in March case. be the normally would as Dividends Interests of Directors and executive director of I-RES with effect Secretary in Share Capital from 1 January 2019. At the time of his appointment, Mark Kenney held The current directors, with the 1,500,000 options of I-RES previously exception of Mark Kenney, and the awarded to him in his capacity as an Company Secretary had no interests employee of CAPREIT. in the share capital at their date of appointment. As announced by the The movement in directors’ and Company in December 2018, Mark Company Secretary’s shares during Kenney was appointed as a non- the year is set out below:

Name Ordinary Ordinary % of Outstanding Outstanding Outstanding Ordinary Shares Shares Company Option Option Restricted Shares as at as at at Awards at Awards at Shares pursuant as at 1 January 31 December 31 December 1 January 31 December to the LTIP at 9 March 2020 2020 2020 2020 2020 31 December 2020 2021 Phillip Burns — — —% — — — — Joan Garahy 34,850 34,850 0.01% — — — 34,850 Tom Kavanagh 81,129 81,129 0.02% — — — 81,129 Mark Kenney — — —% 1,500,000 500,000 — — Declan Moylan 150,000 150,000 0.03% — — — 150,000 Aidan O’Hogan 186,774 186,774 0.04% — — — 186,774 Margaret Sweeney 154,680 247,073 0.05% 4,596,499 4,596,499 437,601 266,413 Elise Lenser — — —% 250,000 250,000 — —

Totals 607,433 699,826 0.13% 6,346,499 5,346,499 437,601 719,166

CEO 2019 Bonus award Assignment of Options under the of the Company (the “Assignment An element of the 2019 bonus awarded LTIP to CAPREIT and Exercise of Shares”). In consideration for the to the CEO, representing €110,358, those Options by CAPREIT assignment of their respective Options was settled as a restricted entitlement, On 20 November 2020 certain to the QIAIF, the QIAIF agreed to pay subject to certain conditions, to the employees of CAPREIT and CAPREIT each of the Participants the amount of beneficial interest in 92,393 ordinary LP (the “Participants”), including Mark €0.4770 per Option, representing the shares in the capital of the Company Kenney, assigned an aggregate of difference between the Exercise Price (the “2019 Restricted Bonus Shares”). 3,400,000 options to subscribe for and the volume weighted average price The 2019 Restricted Bonus Shares are shares in the Company (the “Options”), of the underlying Ordinary Shares for reflected in the table above for the previously granted to them under the the five business day period to close of CEO under “Ordinary Shares as at LTIP, to CAPREIT through its qualifying business on 19 November 2020, being 31 December 2020”. investor alternative investment fund, the business day immediately prior to Irish Residential Properties Fund (the the date of assignment. As CAPREIT CEO 2020 LTIP award “QIAIF”). The Options were initially is a related party of the Company On 27 March 2020, the Remuneration granted by the Company to the under the Euronext Dublin Listing Committee awarded the CEO, subject Participants on 16 April 2014. The Rules, the allotment of the Assignment to certain conditions, a conditional Options had an exercise price of Shares to CAPREIT (through the QIAIF) share award of 437,601 ordinary €1.04 each (the “Exercise Price”) and constituted a smaller Related Party shares in the capital of the Company were due to expire on 15 April 2021. Transaction under LR 11.1.15 of the as Restricted Shares under the The assignments of the Options were Listing Rules. terms of the LTIP. In order for the made following a request by each CEO to receive the 2023 Restricted Participant, pursuant to the Rules CEO 2020 Bonus award Shares, she must meet the applicable of the LTIP, for the consent of the An element of the 2020 bonus awarded performance conditions (as disclosed Company’s Remuneration Committee to the CEO, representing €29,403, on page 85 of the Report of the to such assignment which, after due was settled as a restricted entitlement, Remuneration Committee). The 2023 consideration, was granted by the subject to certain conditions, to the Restricted Shares are to be held on Remuneration Committee. beneficial interest trust for the CEO for a further two- in 19,340 ordinary shares in the capital year period from the vesting date in Immediately following the assignment of the Company (the “2020 Restricted 2023. The 2023 Restricted Shares of the Options, the QIAIF exercised the Bonus Shares”). are reflected in the table above for the Options and effected the payment of CEO under “Outstanding Restricted the Exercise Price to the Company (in The 2020 Restricted Bonus Shares Shares pursuant to the LTIP at 31 total €3,536,000) and, accordingly, the are reflected in the table above for December 2020”. QIAIF was allotted 3,400,000 ordinary the CEO under “Ordinary Shares as shares of €0.10 each in the capital at 9 March 2021”.

96 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 97 2020 Annual Report Annual 2020 shall have been absent for more more for absent been have shall months (6) consecutive six than directors the of permission without held directors the of meetings from her his or and period that during not shall (if any) director alternate in meeting such any attended have is restricted or disqualified from from disqualified or is restricted company any of a director as acting of Part 14 of provisions the under 2014; Act, Companies the any makes or bankrupt becomes with composition or arrangement generally; creditors her his or his of a majority of opinion in the incapable becomes co-directors, of disorder mental of reason by a as duties her his or discharging director; a for holding a director being (not office in his executive an term fixed the a director) as capacity her or to notice by office resigns director Company; the or office executive any holds or Company the with employment or office that and subsidiary, any any for is terminated employment co-directors her his or and reason be as a director office that resolve vacated; indictable an of is convicted directors the unless offence, determine; otherwise

No person other than a director a director than other No person may meeting a general at retiring any at a director be appointed she or he (i) unless meeting general or directors the by is recommended more nor (7) seven than less (ii) not before days thirtythan (30) clear meeting, the for appointed date the a shareholder by executed notice has meeting at the vote to qualified the of Company the to given been for person that propose to intention particulars the stating appointment she or if he be required, would which in be included to so appointed, were directors of register Company’s the that by executed notice with together be to willingness her his or of person appointed. at retire obliged to is director Each if and, meeting general annual each offer may in office, continue to wishing the at re-election for herself himself or meeting. general annual be shall of a director office The the of in any ipso facto, vacated if the circumstances, following director: › › › › › › ›

make market purchases of the the of purchases market make up to shares ordinary Company’s in shares ordinary issued the 15% of those reissue to and Company the shares; and set and shares repurchased reissue range. price a reissue issue new shares up to a nominal a nominal up to shares new issue €26,083,947.30, of amount the of (50%) half representing Company’s the of value nominal April 14 at as capital share issued 2020; pre-emption statutory disapply issues with in connection rights a nominal for shares ordinary of cash value the 10% of up to to equivalent share issued the of value nominal the with in line which, (5% of capital of Statement Group’s emption Pre- solely be exercised is to Principles, acquisition an with in connection or investment); capital specified

The directors’ powers to allot, issue, issue, allot, to powers directors’ The ordinary reissue and repurchase terms the on dependent are shares in time to time from resolutions the of At directors. the so empowering force general annual 2020 Company’s the the given were directors the meeting, to: power shall be eligible for reappointment at at reappointment for be eligible shall meeting. that The authorities described above are are above described authorities The of conclusion the at expire to due of meeting general annual 2021 the the from 15 months or Company the resolution. the of passing be to resolutions the of Details general annual next the at considered be sent will Company the of meeting 2021 the of in advance shareholders to meeting. general annual appointment the concerning Rules the of directors of removal and Company a resolution on appointed are Directors a general at shareholders the of general annual the usually meeting, an as or vacancy a fill to either meeting, have directors The director. additional to or vacancy casual a fill to power the (within director additional an appoint fixed directors of number maximum the meeting), in a general Company the by holds so appointed director any and of the conclusion the until only office following meeting general annual next the when appointment, her his or but retire, shall concerned director › › › › › The directors are responsible for the the for responsible are directors The the of business the of management the all exercise may and Company to subject Company the of power regulation and legislation applicable Constitution. Company’s the and Powers of the Board the of Powers Options and Restricted Shares are are Shares Restricted and Options share- I-RES’ to pursuant issuable namely, plan, compensation based include participants Eligible LTIP. the of directors executive or employees trustees certain and Company the its and CAPREIT of employees and LTIP on the details Further affiliates. Group the 12 of in note included are statements. financial Employee Share Schemes Share Employee The Company is not aware of any any of aware is not Company The its between arrangements other result may which shareholders of transfer the on in restrictions rights. voting or securities The directors and the Company Company the and directors The interests beneficial no have Secretary or subsidiary Group’s the of in any undertakings. associated In accordance with the disclosure disclosure the with In accordance Euronext by prescribed requirements the 6.1.82(1), Rule Dublin Listing include above disclosed interests and legal indirect and direct both Other shares. in interests beneficial no were there above, noted as than shareholdings in directors’ movements or awards option outstanding or LTIP the to pursuant Shares Restricted the and 2020 December 31 between this Report. of date CEO 2021 LTIP award LTIP 2021 CEO Remuneration the 2021, On 5 March subject CEO, the awarded Committee a conditional conditions, certain to ordinary 335,820 of award share Company the of capital the in shares the under Shares Restricted as the for In order LTIP. the of terms Restricted 2024 the receive to CEO applicable the meet must she Shares, disclosed (as conditions performance the of Report the 89 of page on 2024 The Committee). Remuneration on be held to are Shares Restricted two- a further for CEO the for trust in date vesting the from period year are Shares Restricted 2024 The 2024. in reflected interests the to in addition CEO. the for above table the

— — — 20212021 as at as at 81,129 186,774 34,850 Shares Shares 266,413 719,166 150,000 9 March 9 March Ordinary Ordinary

— — — — — — — 2020 437,601 437,601 Restricted Outstanding Outstanding to the LTIP at at LTIP the to Shares pursuant pursuant Shares 31 December 2020 December 31

— — — — — 20202020 Option Option 250,000 500,000 4,596,499 Awards at at Awards 5,346,499 Outstanding Outstanding 31 December December 31

— — — — — 2020 2020 Option Option 250,000 4,596,499 1,500,000 11 January January Awards at at Awards 6,346,499 Outstanding Outstanding

at —% —% —% % of % of 20202020 0.01% 0.13% 0.02% 0.04% 0.05% 0.03% Company Company 31 December December 31

— — — as at as at 81,129 20202020 186,774 34,850 Shares Shares 247,073 150,000 699,826 Ordinary Ordinary 31 December December 31

— — — as at as at 81,129 20202020 186,774 34,850 Shares Shares 154,680 150,000 607,433 Ordinary Ordinary 1 January 11 January January NameName Phillip Burns Phillip Joan Garahy Tom Kavanagh Tom Mark Kenney Declan Moylan Declan O’Hogan Aidan Margaret Sweeney Margaret Elise Lenser Totals his or her place during such period, The CEO, Margaret Sweeney, is an Non-Executive Directors and the directors pass a resolution executive director. Declan Moylan (the Agreements for Service that by reason of such absence he Chairman), Phillip Burns, Joan Garahy, or she has vacated office; or Tom Kavanagh, Mark Kenney and Aidan Other than Margaret Sweeney, › is removed from office by notice in O’Hogan (Senior Independent Director) the directors do not have service writing (whether in electronic form are non-executive directors. A short contracts but do have letters of or otherwise) by all his or her co- biographical note on each director appointment which reflect their directors. appears on pages 58 to 60. responsibilities and commitments. Margaret Sweeney entered into an In accordance with Provision 18 of employment agreement with the Notwithstanding anything in the the UK Code and the Company’s Company effective 1 November 2017 Company’s Constitution or in any Constitution, all directors of the (as amended on 18 February 2020 and agreement between the Company Company are subject to election by 27 March 2020). Each director has and a director, the Company may, by shareholders at the first annual general the same general legal responsibilities ordinary resolution of which extended meeting after their appointment, to the Company as any other notice has been given in accordance and to annual re-election thereafter. director and the Board as a whole is with the Companies Act, 2014, remove In accordance with this, each of collectively responsible for the overall any director before the expiry of his or Phillip Burns, Joan Garahy, Tom success of the Company. her period of office. Kavanagh, Mark Kenney, Declan Moylan, Aidan O’Hogan and Margaret Sweeney The details of the non-executive Directors will retire and, being eligible, will offer directors’ current terms and dates himself/herself for re-election at of current service contracts are set As at the date of this Report, there are the Company’s 2021 annual out below: seven (7) directors on the Board. general meeting.

Name Date of Appointment Date of Most Recent Year Term Expires Notice to Board Letter of Appointment (on conclusion of the AGM) Period Declan Moylan 31 March 2014 19 February 2020 On conclusion of 2023 AGM 3 months Phillip Burns 23 March 2016 21 March 2019 On conclusion of 2022 AGM 3 months Mark Kenney 1 January 2019 11 December 2018 as On conclusion of 2022 AGM 3 months amended 21 March 2019 Joan Garahy 18 April 2017 19 February 2020 On conclusion of 2023 AGM 3 months Tom Kavanagh 1 June 2018 3 March 2021 On conclusion of 2024 AGM 3 months Aidan O’Hogan 31 March 2014 19 February 2020 On conclusion of 2023 AGM 3 months

Photos: Tallaght Cross West, Dublin 24 460 Residential Units

98 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 99 2020 Annual Report Annual 2020 is material to, or a duty which conflicts conflicts which a duty or to, is material of, interests the with conflict may or be not may Directors Company. the to in relation quorum the in counted not are they which on resolutions vote. to entitled Investment the to Pursuant Manager the Agreement, Management the require and nominate to is entitled a as person one appoint to Company Kenney Mark director. non-executive Executive Chief President, is the CAPREIT of a trustee and Officer non- nominee Manager’s is the and is the CAPREIT director. executive and LP CAPREIT of company parent and owned is wholly Manager the Articles The LP. CAPREIT by controlled director any prohibit Association of and Manager the of is a nominee who or trustees officers are who directors affiliate CAPREIT any or CAPREIT of of in deliberations participating from appointment the to relating Board the of Company the by engagement and in relation or Management Fund IRES engagement and appointment the to CAPREIT any of Company the by Burns, Phillip and Kenney Mark affiliate. be permitted not will accordingly Board the at matter any on vote to appointment the to relating level Fund IRES of engagement and LP. CAPREIT or Management the of a committee 2019 In November a conduct to appointed was Board Investment the of review scheduled the and Agreement Management an with along Agreement Services options strategic the of evaluation these to in relation I-RES to available committee This Board agreements. Kenney Mark either include not does respective their given Burns Phillip or set (as CAPREIT to relationships Governance Corporate the in out remit the 2020 In August Statement). by extended was this committee of matter other any include to Board the relationship Company’s the concerning Manager the and/or CAPREIT with authorised was this committee and such any make to Board the by Company the of behalf on decisions it as remit such with in connection appropriate. deems ) under a secondment arrangement. arrangement. a secondment under of CFO as role her Notwithstanding an is not Taneja Ms. Company, the pursuant Company the of employee remains and arrangement this to is and of, employee an times all at The LP. CAPREIT by, remunerated arrangement secondment CFO of number in a be terminated may the on including circumstances, amendment material or of, termination the and/or Agreement Services the to, Agreement, Management Investment or Company the by notice written on Ms. of appointment the of event in the within position alternative an to Taneja LP. CAPREIT Directors - Interest of Conflicts Act, Companies the of 231 Section is in who director each requires 2014 indirectly, or directly either way, any proposed or in a contract interested declare to Company the with contract interest her his or of nature the The directors. the of a meeting at such all of a register keeps Company be inspected may which declarations, or auditor secretary, director, any by offices the at Company the of member One, Riverside FitzGerald, McCann of Dublin 2, Quay, Rogerson’s Sir John X576. D02 the exceptions, certain to Subject generally Association of Articles board at voting from directors prohibit committees of meetings or meetings resolution any on Board the of they in which a matter concerning which interest indirect or a direct have certain portfolio, risk management, management, risk portfolio, certain other and management property pursuant Manager the to functions Management Investment the to Agreement. the to services its In providing Investment the under Company Manager the Agreement, Management and expertise the to access has also LP, CAPREIT by provided resources agreement services the to pursuant and LP CAPREIT Company, the among amended (as Management Fund IRES (the time) to time from restated or covers ), which Agreement” “Services asset and property of performance the LP. CAPREIT by services management arrangements, these to Pursuant (at available made has LP CAPREIT Ms. of services the cost) own its as Company the to Taneja Priyanka (“CFO” Officer Financial Chief its The Company is managed by the the by is managed Company The through and Company the of CEO the under Manager external the The Board. the of supervision services the engaged has Company is (which Management Fund IRES of investment alternative an as authorised of Bank Central the by manager fund AIFM Regulations) the under Ireland alternative Company’s the as act to the under manager fund investment delegated has and AIFM Regulations Key ManagementKey Personnel There are no agreements between between agreements no are There or directors its and Company the compensation for providing employees employment, or office loss of for resignation, through whether otherwise, or redundancy purported of a takeover of a result as occurs that terms the under except Company, the LTIP. the of Copies of the terms and conditions conditions and terms the of Copies are, director each for appointment of Covid-19 applicable any to subject suitable case in which restrictions be made, will arrangements alternative person any by inspection for available FitzGerald, of McCann offices the at Rogerson’s Sir John One, Riverside Ireland X576 Dublin 2, D02 Quay, at and hours business normal during meeting general annual Company’s the and meeting the to prior 15 minutes for meeting. the during With effect from 1 November 2017, 2017, November 1 from effect With on served has Sweeney Margaret an as Company the of Board the Ms. of terms The director. executive employment of contract Sweeney’s 81 79 to pages on summarised are of this Report. The letter of appointment for each each for appointment of letter The that provides director non-executive that terminate may Company the immediate with appointment director’s circumstances, in certain effect commits director a where including her his or of breach a material of letter their under obligations the at otherwise or appointment the or director the of discretion prior months’ three on Company is No compensation notice. written event in the director any to payable In addition termination. such any of responsibilities, legal general their to responsibility have directors the strategy, Company’s the for risk and financial performance, control, and personnel. Conflicts of Interest – The Corporate Governance Statement Investment Management on pages 61 to 70 sets out the Agreement and Services Company’s application of the principles Agreement and compliance with the provisions of the UK Code and the Irish Annex Each of the Investment Management and the Company’s system of risk Agreement and the Services management and internal control. Agreement include non-compete provisions in favour of the Company, Principal Risks and Uncertainties subject to certain exceptions. A description of the principal risks and Corporate Governance uncertainties facing the Group is set out on pages 48 to 56. The Company has complied, from 1 January 2020 to 31 December 2020, Substantial Shareholdings with the provisions set out in the UK Code and in the Irish Annex, which The Company has been notified of the applied to the Company for the following interests of 3% or more of financial period ended 31 December the voting rights over the share capital 2020, except as disclosed on page 70 of the Company as at 31 December under Compliance with Relevant Codes. 2020 and 9 March 2021:

Holder 31 December 2020 9 March 2021 Number of Shares % Number of Shares % CAPREIT Limited Partnership 98,910,000 18.80 98,910,000 18.80 Setanta Asset Management Limited 41,797,932 8.01 47,265,808 9.00 Aviva plc & its Subsidiaries 29,632,848 5.68 29,632,848 5.68 FMR LLC 27,902,182 5.34 31,642,883 6.02 APG Asset Management N.V. 26,138,135 5.01 26,138,135 5.01 Irish Life Investment Managers Limited 20,838,363 4.99 20,838,363 4.99 Vision Capital Corporation n/a n/a 21,710,942 4.13 Timbercreek Asset Management Inc. 20,585,091 3.95 13,041,488 2.48 BlackRock, Inc. 15,799,200 3.03 15,799,200 3.03 Sumitomo Mitsui Trust Holdings, Inc 15,574,076 2.99 15,574,076 2.99 Lansdowne Partners International Limited 15,180,317 2.91 15,180,317 2.91 GLG Partners LP 13,207,986 3.17 13,207,986 3.17

Except as disclosed above, the Company was notified. As the total Company has not been notified number of shares outstanding as at as at 9 March 2021 of any other 31 December 2020 and 9 March 2021 interest of 3% or more of the voting was 525,078,946 and 525,078,946, rights in its share capital nor is it respectively, the actual percentage aware of any person who directly ownership may differ from above. or indirectly, jointly or severally, exercises or could exercise control Information required to be over the Company. The table above disclosed by LR 6.1.77, summarises the various notifications Euronext Dublin Listing Rules that the Company has received for shareholders with 3% or more of For the purposes of LR 6.1.77, the the voting rights. The percentage information required to be disclosed ownership is based on the number by LR 6.1.77 can be found in the of shares outstanding at the time the following locations:

100 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 101 2020 Annual Report Annual 2020 A compliance policy statement statement policy A compliance the out up setting drawn been has is in the (that policy Company’s appropriate directors the of opinion to regard with Company) the to with Company the by compliance Obligations; Relevant its and arrangements Appropriate directors’ in the that, structures ensure to designed are opinion, the with compliance material Obligations, Relevant Company’s and in place; put been have conducted been has A review of the year financial the during that structures and arrangements secure to in place put been have its with compliance Company’s the Obligations. Relevant

Directors’ Compliance Statement Compliance Directors’ with in accordance directors, The Companies the of 225(2) Section they that acknowledge 2014, Act, the securing for responsible are Obligations” “Relevant Company’s of 225 Section of meaning the within (described 2014 Act, Companies the ). Obligations” “Relevant as below that: confirm directors The › › › Location 5 Note Statements, Financial applicable Not Directors the of Report the of Report Committee Remuneration applicable Not applicable Not applicable Not applicable Not applicable Not 21 Note Statements, Financial applicable Not applicable Not applicable Not applicable Not

office located at South Dock House, House, Dock at South located office Dublin 2, Ireland. Quay, Hanover Audit Information Relevant have they that believe directors The make to necessary steps all taken audit relevant any of aware themselves that established have and information are auditors statutory Company’s the as Insofar information. that of aware audit relevant is no there aware, are they Company’s the which of information unaware. are auditors statutory Subsequent Events Subsequent since events of in respect Information 28 in note is contained end year the on statements financial Group the to 154. page Contributions Political contributions political no were There be disclosed to required are which the or 1997 Act, Electoral the under 2014. Act, Companies Irish Records Accounting for responsible are directors The as records, accounting ensuring of 285 to 281 Sections by required by kept are 2014, Act, Companies the believe directors The Company. the this with complied have they that responsibility delegating by requirement accounting the that ensuring for the to maintained are records Investment the to pursuant Manager The Agreement. Management Company the of records accounting registered its at maintained are

31 December 2020 December 31 Interest capitalised Interest information financial unaudited of Publication prospectus or in a circular party transactions related Small schemes incentive long-term of Details a director by emoluments of Waiver a director by emoluments future of Waiver cash for equity of issues Non-pre-emptive undertakings subsidiary major to (7) in relation Item subsidiary listed a by a placing in participation Parent significance of Contracts shareholder a controlling by services of Provision dividends of waivers Shareholder dividends future of waivers Shareholder shareholders controlling with Agreement The financial risks include market risk, risk, market include risks financial The capital and risk credit risk, liquidity risk financial The risk. management policies and objectives management 17 in note out set are Group the of statements financial Group the of 141. 136 to on pages Financial Risk Management Risk Financial Financial instruments are set out out set are instruments Financial financial Group the 17 of in note 141. 136 to pages on statements Financial Instruments Financial Details of the Company’s principal principal Company’s the of Details 31 December at as subsidiaries Residential IRES include which 2020, on (acquired Limited Properties the with in connection 2015 31 March Portfolio Rockbrook the of acquisition Portfolio), Rockbrook the holds and management owners’ certain and Company the in which companies rights, voting the of a majority holds Group the 21 of in note out set are to 147 pages on statements financial principal Company’s the of All 150. in Ireland. incorporated are subsidiaries Principal Subsidiaries and and Subsidiaries Principal Joint Ventures referenced above is hereby is hereby above referenced into reference by incorporated Directors. the of this Report All of the information cross- information the of All Section (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) Regulation 21 of SI 255/2006 Audit Committee whereas a qualified majority of European Communities more than 75% of the votes cast (Takeover Bids (Directive The Board has established an Audit by members voting on the relevant (2004/25/EC)) Regulations 2006 Committee in compliance with resolution is required in order to the Codes to assist with certain pass a special resolution. Matters Each of the Company and its responsibilities relating to internal requiring a special resolution include, subsidiary, IRES Residential controls, risk management and for example: altering the objects of Properties Limited has certain reporting. Refer to the Report of the Company; altering the Articles financial indebtedness arising under the Audit Committee on page 71 of Association of the Company; and a private placement of loan notes for the procedures established by approving a change of the Company’s and, in the case of the Company, the Audit Committee to discharge name. banking facilities, which may require these responsibilities. repayment and (in respect of the Constitution banking facilities) cancellation of the General Meetings commitments thereunder in the event The Company's Constitution sets that a change of control occurs with The Company holds a general meeting out the objects and powers of respect to the Company (or, in the each year as its annual general the Company. Revised Articles of case of IRES Residential Properties meeting in addition to any other Association within the Constitution Limited's financial indebtedness, meeting in that year. Not more than were adopted by the Company at IRES Residential Properties Limited), 15 months shall elapse between the an extraordinary general meeting which may have the effect of also date of one annual general meeting held on 29 January 2021 in order to terminating (in whole or part) hedges and that of the next. The directors facilitate new arrangements required transacted under the International are responsible for the convening as a result of the migration of the Swaps and Derivative Association, Inc. of general meetings. Information is Company's uncertificated shares from (“ISDA”) documentation entered into distributed to shareholders at least the CREST settlement system operated by IRES Residential Properties Limited. 20 working days prior to the annual by Euroclear UK and Ireland Limited In addition, the LTIP contains change general meeting. to the settlement system operated by of control provisions which allow for Euroclear Bank SA/NV (expected to the acceleration of the exercisability of No business other than the occur on 15 March 2021) and to take share options or awards in the event appointment of a chairman shall be account of changes introduced by the that a change of control occurs with transacted at any general meeting Migration of Participating Securities respect to the Company. unless a quorum of members is Act 2019. The Articles of Association present at the time when the meeting detail the rights attaching to shares in There are no other significant proceeds to business. Except as the Company, the method by which agreements to which the Company provided in relation to an adjourned the such shares can be purchased or is a party that take effect, alter or meeting, two (2) persons entitled re-issued, the provisions which apply terminate upon a change of control of to vote upon the business to be to the holding and voting at general the Company following a bid. transacted, each being a member meetings and the rules relating to or proxy for a member or a duly directors, including their appointment, For the purposes of Regulation 21 of authorised representative of a retirement, re-election, duties and the European Communities (Takeover corporate member, shall be a quorum. powers. The Articles of Association Bids (Directive 2004/25/EC)) may be amended by special resolution Regulations 2006, the information on Votes may be given either personally of the Company's shareholders, being directors on pages 58 to 60 and the or by proxy or a duly authorised a resolution proposed on not less than disclosures on Directors’ Remuneration representative of a corporate member. 21 days' notice as a special resolution on page 82 of this Report cover the Subject to rights or restrictions for the and passed by more than 75% majority information required and are deemed time being attached to any class or of those voting on the resolution. to be incorporated in the Report of classes of shares, on a show of hands, the Directors. every member present in person The Directors’ Report was approved and every proxy or duly authorised by the Board of Directors on 10 March Auditor representative of a corporate body 2021 and is signed on their behalf by: shall have one vote. No individual shall KPMG, Chartered Accountants, were have more than one vote, and on a Directors appointed statutory auditor on 17 July poll, every member present in person 10 March 2021 2018 and have been re-appointed or by proxy or a duly authorised annually since that date, and pursuant representative of a corporate body to section 383(2) will continue in shall have one vote for every share office. A resolution authorising the carrying voting rights of which the directors to set their remuneration will individual is the holder. Declan Moylan be proposed at the Company’s 2021 Chairman annual general meeting. Resolutions are categorised as either ordinary or special resolutions. A bare majority of more than 50% of the votes cast by members voting on the relevant resolution is required for Margaret Sweeney the passing of an ordinary resolution, Executive Director

102 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 103 2020 Annual Report Annual 2020 The directors are responsible for for responsible are directors The records accounting adequate keeping reasonable with disclose which assets, the time any at accuracy profit and position financial liabilities, which and Company the loss of or the that ensure to them enable the with comply statements financial 2014. Act Companies the of provision responsible also are directors The to steps reasonable all taking for its by kept are records such ensure to them enable which subsidiaries of statements financial the that ensure provisions the with comply Group the including 2014 Act Companies the of They Regulation. IAS the 4 of Article internal such for responsible are is determine they as controls preparation the enable to necessary free are that statements financial of whether misstatement, material from general have and error, or fraud to due the safeguarding for responsibility hence and Group, the of assets the for steps reasonable taking for fraud of detection and prevention directors The irregularities. other and a preparing for responsible also are with complies that report directors’ Companies the of requirements the 2014. Act and law applicable with In accordance the Rules, Dublin Listing Euronext the prepare to required also are directors reports and Directors the of a Report and remuneration directors’ to relating directors The governance. corporate Transparency the by required also are Regulations 2004/109/EC) (Directive Regulations”) “Transparency (the 2007 report a management include to business the of review a fair containing risks principal the of a description and Group. the facing uncertainties and pages on Directors, the of Report The Statement Chairman’s the 102, 94 to Executive Chief the 14, 12 to pages on to 15 pages on Statement Officer’s page on Statement Manager’s 19, the 21 pages on Review Business the 20, pages on Report Risk the 40 and to be the to deemed 56 are 44 to the by required as report management Transparency Regulations. make judgements and estimates estimates and judgements make prudent; and reasonable are that applicable whether state been have Standards Accounting material any to subject followed, explained and disclosed departures statements; financial in the Company’s and Group the assess a going as continue to ability applicable, as disclosing, concern, going concern; to related matters and of basis going concern the use intend either they unless accounting Company or Group the liquidate to no have or operations, cease to or do so. to but alternative realistic select suitable accounting policies policies accounting suitable select consistently; them apply then and

The Directors are responsible for for responsible are Directors The financial the and Report the preparing with accordance in statements regulations. and laws applicable directors the requires law Company statements financial prepare to that Under year. financial each for to required are directors the law Company’s and Group’s the prepare accordance in statements financial Reporting Financial International with European the by adopted as Standards law applicable and (“IFRS”) Union regulation. IAS the 4 of Article including prepare to elected have directors The in statements financial Company the Reduced 101 FRS with accordance applied in as Framework Disclosure of provisions the with accordance 2014. Act Companies must directors the law, company Under Company and Group the approve not are they unless statements financial and a true give they that satisfied and liabilities assets, the of view fair and Group of the position financial profit Group’s the of and Company year. that for loss or statements, financial the In preparing to: required are directors the › › › › › The Directors are are Directors The for responsible Report the preparing financial the and statements in with accordance and laws applicable regulations. RESPONSIBILITIES OF DIRECTORS’ DIRECTORS’ OF STATEMENT STATEMENT The directors confirm that they have As required by the Transparency As required by the UK Corporate complied with the above requirements Regulations: Governance Code: in preparing the financial statements. › the financial statements, prepared in › the Report and financial statements The directors have contracted with accordance with IFRS as adopted contained therein, taken as a the Manager to ensure that those by the EU, give a true and fair view whole, are fair, balanced and requirements are met. The books and of the assets, liabilities and financial understandable and provide accounting records of the Group and position of the Group and the the information necessary the Company are maintained at the Company as at 31 December 2020 for shareholders to assess Company’s registered office located and of the results of the Group, the Company’s position and at South Dock House, Hanover Quay, taken as a whole, for the period 1 performance, business model Dublin 2, Ireland. The directors have January 2020 to 31 December 2020; and strategy. delegated investment management › the management report, comprising and administration functions, including the Report of the Directors, the risk management, to the Manager Chairman’s Statement, the Chief Signed on behalf of the Board without abrogating their overall Executive Officer’s Statement, the 10 March 2021 responsibility. The directors have in Manager’s Statement, the Business place mechanisms for monitoring the Review and the Risk Report, include exercise of such delegated functions, a fair review of the development which are always subject to the and performance of the business supervision and direction of the Board. and the position of the Company These delegations of functions and the and the Group taken as a whole as Declan Moylan appointment of regulated third party at 31 December 2020, together with Chairman entities are set out in the Corporate a description of the principal risks Governance Statement on pages and uncertainties that the Company 61 to 70. and the Group faces; and › use the going concern basis of Each of the directors, whose names accounting unless they either intend and functions are listed on pages 58 to liquidate the Group or Company to 60, confirms that, to the best of or to cease operations, or have no Margaret Sweeney each director’s knowledge and belief: realistic alternative but to do so. Executive Director

104 I-RES Financial STRATEGIC REPORT Statements

In this Section:

Independent Auditor’s Report to the Members of Irish Residential Properties Reit Plc 106 Consolidated Statement of Financial Position 111 Consolidated Statement of Profit or Loss and Other Comprehensive Income 112 Consolidated Statement of Changes in Equity 113 Consolidated Statement of Cash Flows 114 Notes to Consolidated Financial Statements 115 GOVERNANCE Company Statement of Financial Position 155 Company Statement of Profit or Loss and Other Comprehensive Income 156 Company Statement of Changes in Equity 157 Company Statement of Cash Flows 158 Notes to Company Financial Statements 159 Supplementary Information 170 FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION Phoenix Park Racecourse, CastleKnock 146 Units

2020 Annual Report 105 INDEPENDENT AUDITOR’S REPORT to the Members of Irish Residential Properties Reit Plc

Report on the audit of the financial statements Conclusions relating to going concern

Opinion In auditing the financial statements, we have concluded that the director’s use of the going concern basis of We have audited the financial statements of Irish accounting in the preparation of the financial statements is Residential Properties REIT plc (`the Company’) and appropriate. Our evaluation of the directors’ assessment of its consolidated undertakings (“the Group”) for the the Group’s and Company’s ability to continue to adopt the year ended 31 December 2020 set out on pages 111 going concern basis of accounting included: to 168, which comprise the Consolidated Statement of Financial Position, the Company Statement of Financial » Using our knowledge of the Group, its industry, and the Position, the Consolidated Statement of Profit or Loss general economic environment to identify the inherent and Other Comprehensive Income, the Company risks to its business model and analysing how those Statement of Profit or Loss and Other Comprehensive risks might affect the Group’s and Company’s financial Income, the Consolidated Statement of Changes in resources or ability to continue operations over the Equity, the Company Statement of Changes in Equity, the going concern period. The risks that we considered Consolidated Statement of Cash Flows, and the Company were most likely to adversely affect the Group’s and Statement of Cash Flows and related notes, including the Company’s available financial resources over this summary of significant accounting policies set out in notes period were: 2 and 3 and note I of the Company financial statements. » the impact of a significant decrease in occupancy The financial reporting framework that has been applied levels and decline in rental collection during the in the preparation of the Group financial statements is going concern period; and Irish Law and International Financial Reporting Standards » the potential impact of a prolonged pandemic on the (IFRS) as adopted by the European Union and, as regards Group and Company’s liquidity. the Company financial statements, Irish Law and FRS 101 » Considering whether these risks could plausibly affect Reduced Disclosure Framework issued in the United the availability of financial resources in the going Kingdom by the Financial Reporting Council. concern period by comparing severe, but plausible, downside scenarios that could arise from these risks In our opinion: individually and collectively against the level of available financial resources indicated by the Group’s and » the financial statements give a true and fair view of the Company’s financial forecasts. assets, liabilities and financial position of the Group and Company as at 31 December 2020 and of the Group’s Based on the work we have performed, we have not profit for the year then ended; identified any material uncertainties relating to events » the Group financial statements have been properly or conditions that, individually or collectively, may cast prepared in accordance with IFRS as adopted by the significant doubt on the Group or the Company’s ability to European Union; continue as a going concern for a period of at least twelve » the Company financial statements have been properly months from the date when the financial statements are prepared in accordance with FRS 101 Reduced authorised for issue. Disclosure Framework issued by the UK’s Financial Reporting Council; and In relation to the Group and the Company’s reporting on » the Group and Company financial statements have been how they have applied the UK Corporate Governance properly prepared in accordance with the requirements Code, we have nothing material to add or draw attention of the Companies Act 2014 and, as regards the Group to in relation to the directors’ statement in the financial financial statements, Article 4 of the IAS Regulation. statements about whether the directors considered it appropriate to adopt the going concern basis Basis for opinion of accounting.

We conducted our audit in accordance with International Key audit matters: our assessment of risks Standards on Auditing (Ireland) (ISAs (Ireland)) and of material misstatement applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities Key audit matters are those matters that, in our professional section of our report. We believe that the audit evidence judgment, were of most significance in the audit of the we have obtained is a sufficient and appropriate basis for financial statements and include the most significant our opinion. Our audit opinion is consistent with our report assessed risks of material misstatement (whether or not to the audit committee. due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the We were appointed as auditor by the directors on 17 July allocation of resources in the audit; and directing the 2018. The period of total uninterrupted engagement is the efforts of the engagement team. These matters were 3 years ended 31 December 2020. We have fulfilled our addressed in the context of our audit of the financial ethical responsibilities under, and we remained independent statements as a whole, and in forming our opinion of the Group in accordance with, ethical requirements thereon, and we do not provide a separate opinion on applicable in Ireland, including the Ethical Standard issued these matters. by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to public interest entities. No non-audit services prohibited by that standard were provided.

106 I-RES INDEPENDENT AUDITOR’S REPORT (continued) to the Members of Irish Residential Properties Reit Plc

In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows (unchanged from prior years):

Valuation of Investment Property: Consolidated €1,380 million (2019 - €1,359 million), Company

€1,247m (2019 - €1,225 million) STRATEGIC REPORT

Refer to page 73 (Audit and Risk Committee Report), pages 115-116 (accounting policy) and pages 125 to 128 (financial disclosures)

The key audit matter How the matter was addressed in our audit

The Groups’ investment property portfolio (including In this area our audit procedures included, among others, properties under development and development land) the following: comprises a portfolio of mainly residential property assets » We evaluated the design and implementation of key located in Dublin. The investment property portfolio controls over the investment property valuation process. is valued at €1,380 million at 31 December 2020 and » We performed testing over the accuracy and represents 97% of the Group’s total assets and 90% of the completeness of lease information provided by the Company’s total assets. Group to the external valuers for income generating properties. The valuation of the Group’s investment property portfolio » We inspected the valuation reports and confirmed that is inherently subjective, as it requires, amongst other the valuation approach was in accordance with RICS factors, consideration of the specific characteristics of standards and suitable for the purposes of the Group’s GOVERNANCE each property, the location and nature of each property, financial statements. consideration of prevailing property market conditions and » We assessed the external valuers’ qualifications and in respect of income generating properties, estimation of expertise and read their terms of engagement with the future rentals beyond the current lease terms. Group to determine whether there were any matters that might have affected their objectivity or may have In respect of properties under development, further factors imposed scope limitations upon their work. We found no include estimated costs to completion and timing of evidence to suggest that the objectivity of the valuers in practical completion of each development. their performance of the valuations was compromised. » We met with the external valuers to understand the The Directors engage external valuers to value the Group’s valuation of the portfolio. These discussions included investment property portfolio in accordance with the gaining an understanding of the external valuers Royal Institution of Chartered Surveyors (‘RICS’) Valuation process; the critical assumptions employed in estimating – Professional Standards. The valuation experts used by future rental incomes and future capital expenditure the Group have considerable experience of the markets requirements for income generating properties; and the in which the Group operates. In determining the valuation judgements in the selection of appropriate capitalisation FINANCIAL STATEMENTS of the Group’s investment properties, the valuers take rates for a sample of selected properties. into account the above considerations and rely on the » We considered the capitalisation rate assumptions accuracy of the underlying lease and related information used by the valuers in performing their valuations and provided to the valuers by the Group. compared them to relevant market evidence, such as benchmarking against specific property sales, and We regard this area as a key audit matter due to the performing an internal comparison across the Group’s significance of the estimates and judgements involved in property portfolio. the valuation of the Group’s investment property portfolio. » We agreed the value of all investment properties included in the financial statements to the valuation reports prepared by the external valuers. » We assessed the adequacy of the disclosures in relation to the valuation of investment properties and found them to be appropriate.

On the basis of the work performed, we found the assumptions used in the valuations to be appropriate. SUPPLEMENTARY INFORMATION

2020 Annual Report 107 INDEPENDENT AUDITOR’S REPORT (continued) to the Members of Irish Residential Properties Reit Plc

Transactions with related parties

Refer to page 73 (Audit and Risk Committee Report), and pages 145 to 150 (financial disclosures)

The key audit matter How the matter was addressed in our audit

A number of related party relationships exist between » We obtained an understanding of the process, the Group and CAPREIT LP and its affiliates. The asset procedures and controls governing the identification management fee and related disclosures are considered and management of related party transactions with significant transactions and disclosures in the financial CAPREIT LP and its affiliates. statements. » We read the Board Minutes to consider the completeness of related party transactions and relevant Due to the significance of related party transactions agreements with related parties. and the risk of non-disclosure, this warranted specific » We recalculated the fees charged from IRES Fund audit focus. Management Limited, a wholly owned subsidiary of CAPREIT LP, to the Investment Management Agreement. » We considered the disclosures included in the financial statements for consistency with agreements and other related party transactions during the year.

On the basis of the work performed, we found the disclosures in the financial statements to be appropriate.

Our application of materiality and an overview of Other information the scope of our audit The directors are responsible for the preparation of the other The materiality for the Group financial statements as a information presented in the Annual Report together with whole was set at €8.4 million (2019: €7.9 million). This the financial statements. The other information comprises all has been calculated with reference to a benchmark of the information included in the Chairman’s Statement, Chief net assets which we consider to be one of the principal Executive Officer’s Statement, Manager’s Statement, Business considerations for members of the Group in assessing the Review, Market Update, Key 2020 ESG Deliverables, Business financial performance of the Group. Materiality represents Objectives and Strategy, Investment Policy, Risk Report, approximately 1% of this benchmark, consistent with the Corporate Governance Statement, Report of the Audit prior year. In addition, we applied a materiality of €1.7 million Committee, Report of the Remuneration Committee, Report (2019: €1.5 million) for testing profit or loss items excluding of the Nomination Committee, and Report of the Directors. the net movement in fair value of investment properties. In our judgement, the application of this specific materiality The financial statements and our auditor’s report thereon is appropriate due to key performance indicators of the do not comprise part of the other information. Our opinion Group driven by profit or loss items. We applied materiality on the financial statements does not cover the other to assist us determine what risks were significant risks and information and, accordingly, we do not express an audit the procedures to be performed. opinion or, except as explicitly stated below, any form of assurance conclusion thereon. We reported to the Audit Committee all corrected and uncorrected misstatements we identified through our audit Our responsibility is to read the other information and, with a value in excess of €0.4 million. in doing so, consider whether, based on our financial statements audit work, the information therein is materially Materiality for the company financial statements as a misstated or inconsistent with the financial statements or whole was set at €8.1 million (2019: €7.7 million). This was our audit knowledge. Based solely on that work we have not determined with reference to a benchmark of net assets. identified material misstatements in the other information. We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding Based solely on our work on the other information €0.4 million. undertaken during the course of the audit, we report that, in those parts of the directors’ report specified for The Group team performed the audit of the Group as if our consideration: it was a single aggregated set of financial information. The audit was performed using the materiality levels set » we have not identified material misstatements in the out above. directors’ report; » in our opinion, the information given in the directors’ report is consistent with the financial statements; and » in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.

108 I-RES INDEPENDENT AUDITOR’S REPORT (continued) to the Members of Irish Residential Properties Reit Plc

Disclosures of principal risks and longer-term viability » based on our knowledge and understanding of the Company and its environment obtained in the course Based on the knowledge we acquired during our financial of our audit, we have not identified any material statements audit, we have nothing material to add or draw misstatements in that information; and attention to in relation to: » the Corporate Governance Statement contains the STRATEGIC REPORT information required by the European Union (Disclosure » the Principal Risks disclosures describing these risks and of Non-Financial and Diversity Information by certain explaining how they are being managed and mitigated; large undertakings and groups) Regulations 2017. » the directors’ confirmation within the viability statement pages 46 and 47 that they have carried out a robust We also report that, based on work undertaken for our assessment of the principal risks facing the Group, audit, the information required by the Act is contained in including those that would threaten its business model, the Corporate Governance Statement. future performance, solvency and liquidity; and » the directors’ explanation in the viability statement of how Our opinions on other matters prescribed by the they have assessed the prospects of the Group, over Companies Act 2014 are unmodified what period they have done so and why they considered that period to be appropriate, and their statement as to We have obtained all the information and explanations whether they have a reasonable expectation that the which we consider necessary for the purpose of our audit. Group will be able to continue in operation and meet its liabilities as they fall due over the period of their In our opinion, the accounting records of the Company assessment, including any related disclosures drawing were sufficient to permit the financial statements to be attention to any necessary qualifications or assumptions. readily and properly audited and the financial statements are in agreement with the accounting records. GOVERNANCE Other corporate governance disclosures We have nothing to report on other matters on which We are required to address the following items and report we are required to report by exception to you in the following circumstances: The Companies Act 2014 requires us to report to you if, in » Fair, balanced and understandable: if we have identified our opinion: material inconsistencies between the knowledge we acquired during our financial statements audit and the » the disclosures of directors’ remuneration and directors’ statement that they consider that the Annual transactions required by Sections 305 to 312 of the Act Report and financial statements taken as a whole is fair, are not made; balanced and understandable and provides the information » the Company has not provided the information required necessary for shareholders to assess the Group’s position by Section 1110N in relation to its remuneration report for and performance, business model and strategy; the financial year 31 December 2019; » Report of the Audit Committee: if the section of » the Company has not provided the information required the Annual Report describing the work of the Audit by section 5(2) to (7) of the European Union (Disclosure FINANCIAL STATEMENTS Committee does not appropriately address matters of Non-Financial and Diversity Information by certain communicated by us to the Audit Committee; large undertakings and groups) Regulations 2017 for » Statement of compliance with UK Corporate the year ended 31 December 2019 as required by Governance Code: if the directors’ statement does not the European Union (Disclosure of Non-Financial and properly disclose a departure from provisions of the UK Diversity Information by certain large undertakings and Corporate Governance Code specified by the Listing groups) (amendment) Regulations 2018. Rules of Euronext Dublin for our review. » if the directors’ statement relating to Going Concern We have nothing to report in this regard. required under the Listing Rules of Euronext Dublin set out on pages 103 and 104 is materially inconsistent with The Listing Rules of Euronext Dublin require us to review: our audit knowledge. » the Directors’ Statement, set out on pages 103 to 104 in We have nothing to report in these respects. relation to going concern and longer-term viability; » the part of the Corporate Governance Statement on In addition as required by the Companies Act 2014, we pages 61 to 70 relating to the Company’s compliance SUPPLEMENTARY INFORMATION report, in relation to information given in the Corporate with the provisions of the UK Corporate Governance Governance Statement on pages 61 to 70, that: Code and the Irish Corporate Governance Annex specified for our review; and » based on the work undertaken for our audit, in our » certain elements of disclosures in the report opinion, the description of the main features of internal to shareholders by the Board of Directors’ control and risk management systems in relation to the remuneration committee. financial reporting process and information relating to voting rights and other matters required by the European We have nothing to report in this regard. Communities (Takeover Bids (Directive 2004/EC)) Regulations 2006 and specified for our consideration, is consistent with the financial statements and has been prepared in accordance with the Act;

2020 Annual Report 109 INDEPENDENT AUDITOR’S REPORT (continued) to the Members of Irish Residential Properties Reit Plc

Respective responsibilities and restrictions on use The purpose of our audit work and to whom we owe our responsibilities Directors’ responsibilities Our report is made solely to the Company’s members, as As explained more fully in their statement set out on a body, in accordance with Section 391 of the Companies pages 103 to 104, the directors are responsible for: the Act 2014. Our audit work has been undertaken so that we preparation of the financial statements including being might state to the Company’s members those matters we satisfied that they give a true and fair view; such internal are required to state to them in an auditor’s report and for control as they determine is necessary to enable the no other purpose. To the fullest extent permitted by law, preparation of financial statements that are free from we do not accept or assume responsibility to anyone other material misstatement, whether due to fraud or error; than the Company and the Company’s members, as a body, assessing the Group and Company’s ability to continue as for our audit work, for our report, or for the opinions we a going concern, disclosing, as applicable, matters related have formed. to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Sean O’Keefe Group or the Company or to cease operations, or have no 10 March 2021 realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and for and on behalf of KPMG to issue our opinion in an auditor’s report. Reasonable Chartered Accountants, Statutory Audit Firm assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with 1 Stokes Place ISAs (Ireland) will always detect a material misstatement St. Stephen’s Green when it exists. Misstatements can arise from fraud, other Dublin 2 irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation and not just those directly affecting the financial statements.

A fuller description of our responsibilities is provided on IAASA’s website at http://www.iaasa.ie/Publications/ Auditing-standards/International-Standards-on-Auditing-for- use-in-Ire/Description-of-the-auditor-s-responsibilities-for .

110 I-RES CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2020

Note 31 December 31 December 2020 2019 €’000 €’000 Assets STRATEGIC REPORT Non-Current Assets Investment properties 5 1,380,354 1,359,201 Property, plant and equipment 7 9,722 10,088 1,390,076 1,369,289 Current Assets Other current assets 8 15,502 11,786 Derivative financial instruments 16 770 — Cash and cash equivalents 11,193 6,979 27,465 18,765 Total Assets 1,417,541 1,388,054

Liabilities Non-Current Liabilities Bank indebtedness 10 350,049 549,851 Private placement note 11 189,002 — GOVERNANCE Lease liability 20 9,486 9,872 Derivative financial instruments 16 8,075 788 556,612 560,511 Current Liabilities Accounts payable and accrued liabilities 9 11,588 10,216 Derivative financial instruments 16 84 — Security deposits 7,562 7,158 19,234 17,374 Total Liabilities 575,846 577,885

Shareholders’ Equity Share capital 13 52,507 52,167

Share premium 13 500,440 497,244 FINANCIAL STATEMENTS Share-based payment reserve 1,169 1,147 Cashflow hedge reserve 16 (77) — Retained earnings 287,656 259,611 Total Shareholders’ Equity 841,695 810,169 Total Shareholders’ Equity and Liabilities 1,417,541 1,388,054 IFRS Basic NAV per share 25 160.3 155.3

The accompanying notes form an integral part of these consolidated financial statements.

Declan Moylan Margaret Sweeney Chairman Executive Director SUPPLEMENTARY INFORMATION

2020 Annual Report 111 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2020

Note 31 December 31 December 2020 2019 €’000 €’000 Operating Revenue Revenue from investment properties 14 74,744 62,097 Operating Expenses Property taxes (754) (669) Property operating costs (14,215) (10,891) (14,969) (11,560) Net Rental Income (“NRI”) 59,775 50,537 General and administrative expenses (7,396) (4,288) Asset management fee 21 (4,444) (4,024) Share-based compensation expense 12 (322) (236) Net movement in fair value of investment properties 5 19,092 56,234 Gain on disposal of investment property 5 4,432 — Gain on derivative financial instruments 16 709 131 Depreciation of property, plant and equipment 7 (526) (32) Lease interest 6 (241) (4) Financing costs 15 (12,816) (12,036) Profit for the Year 58,263 86,282

Other comprehensive income Items that are or may be reclassified subsequently to profit or loss: Cash flow hedges - effective portion of changes in fair value (4,533) — Cash flow hedges - cost of hedging deferred 163 — Cash flow hedges - reclassified to profit or loss 4,293 — Other Comprehensive income for the period (77) — Total Comprehensive Income for the Year Attributable to Shareholders 58,186 86,282

Basic Earnings per Share (cents) 24 11.2 18.0 Diluted Earnings per Share (cents) 24 11.1 17.9

The accompanying notes form an integral part of these consolidated financial statements

112 I-RES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2020

Note Share Share Retained Share- Total Capital Premium Earnings based Cashflow payments hedge Reserve Reserve

€’000 €’000 €’000 €’000 €’000 €’000 STRATEGIC REPORT Shareholders’ Equity at 1 January 2020 52,167 497,244 259,611 1,147 — 810,169 Total comprehensive income for the year Profit for the year — — 58,263 — — 58,263 Other comprehensive income for the year — — — — (77) (77) Total comprehensive income for the year — — 58,263 — (77) 58,186

Transactions with owners, recognised directly in equity Long-term incentive plan 12 — — — 322 — 322 Share issuance 13 340 3,196 300 (300) — 3,536 Dividends paid 19 — — (30,518) — — (30,518) Transactions with owners, recognised directly in equity 340 3,196 (30,218) 22 — (26,660)

Shareholders’ Equity at 31 December 2020 52,507 500,440 287,656 1,169 (77) 841,695 GOVERNANCE

Note Share Share Retained Share- Total Capital Premium Earnings based Cashflow payments hedge Reserve Reserve €’000 €’000 €’000 €’000 €’000 €’000 Shareholders’ Equity at 1 January 2019 43,414 370,855 203,467 988 — 618,724 Total comprehensive income for the year Profit for the year — — 86,282 — — 86,282 Total comprehensive income for the year — — 86,282 — — 86,282

Transactions with owners, recognised directly in equity FINANCIAL STATEMENTS Long-term incentive plan 12 — — — 236 — 236 Share issuance 13 8,753 126,389 (3,052) (77) — 132,013 Dividends paid 19 — — (27,086) — (27,086) Transactions with owners, recognised directly in equity 8,753 126,389 (30,138) 159 — 105,163

Shareholders’ Equity at 31 December 2019 52,167 497,244 259,611 1,147 — 810,169

The accompanying notes form an integral part of these consolidated financial statements SUPPLEMENTARY INFORMATION

2020 Annual Report 113 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2020

31 December 31 December 2020 2019 Note €’000 €’000 Cash Flows from Operating Activities: Operating Activities Profit for the Year 58,263 86,282 Adjustments for non-cash items: Fair value adjustment - investment properties 5 (19,092) (56,234) Gain on disposal of investment property (4,432) — Depreciation of property, plant and equipment 7 526 32 Amortisation of other financing costs 20 1,409 2,486 Share-based compensation expense 12 322 236 Gain on derivative financial instruments 16 (709) (131) Allowance for expected credit loss 991 — Straight-line rent adjustment 44 21 Interest accrual relating to derivatives 5 6 37,327 32,698 Net income items relating to financing and investing activities 11,648 9,239 Changes in operating assets and liabilities 20 (416) 1,958 Net Cash Generated from Operating Activities 48,559 43,895

Cash Flows from Investing Activities Net proceeds from disposal of investment property 47,895 — Deposits on acquisitions (5,444) (2,284) Acquisition of investment properties (17,470) (344,684) Development of investment properties (15,799) (24,768) Investment property enhancement expenditure (10,336) (7,633) Direct leasing cost (150) (47) Purchase of property, plant and equipment 7 (160) — Net Cash Used in Investing Activities (1,464) (379,416)

Cash Flows from Financing Activities Financing fees 20 (2,595) (5,990) Interest paid 20 (10,771) (9,677) Credit Facility drawdown 20 17,000 637,451 Credit Facility repayment 20 (218,000) (391,590) Proceeds from private placement debt 20 196,342 — Cash settlement on exchange of swap 2,511 — Lease payment 6 (386) (247) Proceeds on issuance of shares 20 3,536 135,142 Share issuance costs — (3,129) Dividends paid to shareholders 19 (30,518) (27,086) Net Cash (Used in)/Generated from Financing Activities (42,881) 334,874

Changes in Cash and Cash Equivalents during the Year 4,214 (647) Cash and Cash Equivalents, Beginning of the Year 6,979 7,626 Cash and Cash Equivalents, End of the Year 11,193 6,979

The accompanying notes form an integral part of these consolidated financial statements.

114 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. General Information The Group has not early adopted any forthcoming International Accounting Standards Board (“IASB”) Irish Residential Properties REIT plc (“I-RES” or the standards. Note 2(r) sets out details of such “Company”) was incorporated in Ireland on 2 July 2013 upcoming standards. as Shoreglade Limited (formerly known as CAPREIT STRATEGIC REPORT Ireland Limited, Irish Residential Apartments REIT Limited Going concern and Irish Residential Properties REIT Limited). On 16 April The Group meets its day-to-day working capital 2014, I-RES obtained admission of its ordinary shares to requirements through its cash and deposit balances. the primary listing segment of the Official List of Euronext The Group’s plans indicate that it should have adequate Dublin (formerly the Irish Stock Exchange) and to trading resources to continue operating for the foreseeable future. on the main market for listed securities of Euronext Dublin. Post the Covid-19 pandemic declaration on 16 March Its registered office is South Dock House, Hanover Quay, 2020, the Group’s occupancy rate remained strong at Dublin 2, Ireland. The ordinary shares of I-RES are traded approximately 98%. The Group also has a strong statement on the main market for listed securities of Euronext Dublin of financial position with sufficient liquidity and flexibility in under the symbol “IRES”. place to manage through this period of uncertainty. The Group can draw an additional €144 million from its RCF (as I-RES was previously a wholly-owned subsidiary of CAPREIT defined below in Note 10) while maintaining a maximum Limited Partnership (“CAPREIT LP”) until the initial 50% Loan to value ratio as at 31 December 2020, and public offering of the Company on 16 April 2014. As at 31 is maintaining a minimum cash balance of €10 million for December 2020, CAPREIT LP’s interest in I-RES was 18.8% liquidity purposes. As at 31 December 2020, the current (31 December 2019: 18.3%). undrawn RCF amount is €246 million. The Group continues to generate a positive cashflow from operations and a IRES Residential Properties Limited of South Dock profit for the year ended 31 December 2020. Accordingly, GOVERNANCE House, Hanover Quay, Dublin 2, Ireland is a wholly-owned the directors consider it appropriate that the Group adopts consolidated subsidiary of I-RES, acquired on 31 March the going concern basis of accounting in the preparation 2015, and owns directly the beneficial interest of its of the consolidated financial statements. properties. I-RES and IRES Residential Properties Limited together are referred to as the “Group” in this financial b) Basis of Consolidation information. The Group owns interests in residential rental accommodations, as well as commercial and development These consolidated financial statements incorporate sites, the majority of which are located in and near major the financial statements of I-RES and its subsidiary, urban centres in Dublin, Ireland. Specifically, IRES Residential IRES Residential Properties Limited. I-RES controls IRES Properties Limited owns an interest in the “Rockbrook Residential Properties Limited by virtue of its 100% Portfolio”, which consists of 81 apartments at Rockbrook shareholding in that company. All intragroup assets and Grande Central and 189 apartments at Rockbrook South liabilities, equity, income, expenses and cash flows relating Central, mixed-use commercial space of approximately to transactions between members of the Group are 4,665 sq. m., a development site of approximately 1.13 eliminated in full on consolidation. hectares and associated basement car parking. FINANCIAL STATEMENTS Subsidiaries 2. Significant Accounting Policies Subsidiaries are entities controlled by I-RES. I-RES controls an entity when it is exposed to, or has rights to, variable a) Basis of Preparation returns from its involvement with the entity and has the ability to affect these returns through its power over the This financial information has been derived from the entity. The financial information of subsidiaries (except information to be used to prepare the Group’s consolidated owner management companies) is included in the financial statements for the year ended 31 December consolidated financial statements from the date on which 2020 in accordance with International Financial Reporting control commences until the date on which control ceases. Standards (“IFRS”) as adopted by the European Union I-RES does not consolidate owner management companies (“EU”), IFRS Interpretations Committee (“IFRIC”) in which it holds majority voting rights. For further details, interpretations and those parts of the Companies Act please refer to note 21. 2014 applicable to companies reporting under IFRS. The financial information for the years ended 31 December c) Investment Properties and Investment Properties 2020 and 31 December 2019 has been prepared under the Under Development SUPPLEMENTARY INFORMATION historical cost convention, as modified by the revaluation of investment properties, derivative financial instruments at Investment Properties fair value and share options at grant date through the profit The Group considers its income properties to be or loss in the consolidated statement of profit or loss and investment properties under IAS 40, Investment Property other comprehensive income. (“IAS 40”), and has chosen the fair value model to account for its investment properties in the consolidated financial The consolidated financial statements of the Group have statements. Under IFRS 13, Fair Value Measurement (“IFRS been presented in euros, which is the Company’s functional 13”), this IFRS defines fair value as the price that would currency. be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the The consolidated financial statements of the Group measurement date. cover the 12-month period from 1 January 2020 to 31 December 2020.

2020 Annual Report 115 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued) all necessary occupancy and related permits have been received, whether or not the space is leased. Borrowing c) Investment Properties and Investment Properties costs are calculated using the Company’s weighted Under Development (continued) average cost of borrowing.

Investment properties are treated as acquired at the Properties under development are valued at fair value time when the Group assumes the significant risks and by qualified independent valuers at each reporting date returns of ownership, which normally occurs when the with fair value adjustments recognised in profit or loss conveyancing contract has been performed by both in the consolidated statement of profit or loss and other buyer and seller and the contract has been deemed to comprehensive income. In the case of investment property have become unconditional and completed. Investment under development, the valuation approach applied is the properties are deemed to have been acquired when the “residual method”, with a deduction for the costs necessary buyer has assumed control of ownership and the contract to complete the development together with an allowance has been completed. for the remaining risk.

Investment properties comprise investment interests held in Development Land land and buildings (including integral equipment) held for the Development land is also stated at fair value by qualified purpose of producing rental income, capital appreciation or independent valuers at each reporting date with fair value both, but not for sale in the ordinary course of business. adjustments recognised in profit or loss in the consolidated statement of profit or loss and other comprehensive All investment properties are initially recorded at cost, income. In the case of development land, the valuation which includes transaction and other acquisition costs, at approach applied is the comparable sales approach, which their respective acquisition dates, and are subsequently considers recent sales activity for similar land parcels in the stated at fair value at each reporting date, with any gain same or similar markets. Land values are estimated using or loss arising from a change in fair value recognised either a per acre or per buildable square foot basis based through profit or loss in the consolidated statement of on highest and best use. Such values are applied to the profit or loss and other comprehensive income for the Group’s properties after adjusting for factors specific to period. Gains and losses (calculated as the difference the site, including its location, highest and best use, zoning, between the net proceeds from disposal and the carrying servicing and configuration. amount of the item) incurred on the disposal of investment properties are also recognised through profit or loss in Key Estimations of Inherent Uncertainty in Investment the consolidated statement of profit or loss and other Property Valuations comprehensive income. The fair values derived are based on anticipated market values for the properties, being the estimated amount The fair value of investment properties is determined by that would be received from a sale of the assets in an qualified independent valuers at each reporting date, orderly transaction between market participants. The in accordance with the Royal Institution of Chartered valuation of the Group’s investment property portfolio is Surveyors Valuation Standards (RICS) and IFRS 13. inherently subjective as it requires, among other factors, Each independent valuer holds a recognised relevant assumptions to be made regarding the ability of existing professional qualification and has recent experience in residents to meet their rental obligations over the entire the locations and segments of the investment properties life of their leases, the estimation of the expected rental valued. At each reporting date, management undertakes a income in the future, an assessment of a property’s review of its investment property valuations to assess the ability to remain an attractive technical configuration to continuing validity of the underlying assumptions, such as existing and prospective residents in a changing market future income streams and yields used in the independent and a judgement to be reached on the attractiveness of valuation report, as well as property valuation movements a building, its location and the surrounding environment. when compared to the prior year valuation report and While these and other similar matters are market- holds discussions with the independent valuer. standard considerations in determining the fair value of a property in accordance with the RICS methodology, Investment Properties Under Development they are all subjective assessments of future outturns Investment properties under development include those and macroeconomic factors, which are outside of the properties, or components thereof, that will undergo Group’s control or influence and therefore may prove activities that will take a substantial period of time to be inaccurate long-term forecasts. As a result of all to prepare the properties for their intended use as these factors, the ultimate valuation the Group places on income properties. its investment properties is subject to some uncertainty, and may not turn out to be accurate, particularly in The cost of a development property that is an asset times of macroeconomic volatility. The RICS property acquisition comprises the amount of cash, or the fair valuation methodology is considered by the Board to be value of other consideration, paid to acquire the property, the valuation technique most suited to the measurement including transaction costs. Subsequent to the acquisition, of the fair value of property investments. It is also the the cost of a development property includes costs that are primary measurement of fair value that all major and directly attributable to these assets, including development reputable property market participants use when valuing a costs, and borrowing costs. These costs are capitalised property investment. See note 5 for a detailed discussion when the activities necessary to prepare an asset for of the significant assumptions, estimates and valuation development or redevelopment begin and continue until methods used. the date that construction is substantially complete, and

116 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued) f) IFRS 9, Financial Instruments (“IFRS 9”) d) Property Asset Acquisition Financial Assets and Financial Liabilities Under IFRS 9, financial assets and financial liabilities are

At the time of acquisition of a property or a portfolio of initially recognised at fair value and are subsequently STRATEGIC REPORT investment properties, the Group evaluates whether the accounted for based on their classification as described acquisition is a business combination or asset acquisition. below. Their classification depends on the purpose for The Group accounts for business combinations using the which the financial instruments were acquired or issued, acquisition method when the acquired set of activities their characteristics and I-RES’ designation of such and assets meets the definition of a business and control instruments. The standards require that all financial assets is transferred to the Group. In determining whether a and financial liabilities be classified as fair value through particular set of activities and assets is a business, the profit or loss (“FVTPL”), amortised cost or fair value Group assesses whether the set of assets and activities through other comprehensive income (“FVOCI”). acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to Derecognition of financial assets and financial liabilities produce outputs. The Group derecognises a financial asset when:

The Group has an option to apply a ‘concentration » the contractual rights to the cash flows from the test’ that permits a simplified assessment of whether an financial asset expire; or acquired set of activities and assets is not a business. The » it transfers the rights to receive the contractual cash optional concentration test is met if substantially all of the flows in a transaction in which either: fair value of the gross assets acquired is concentrated » substantially all of the risks and rewards of ownership in a single identifiable asset or group of similar of the financial asset are transferred; or GOVERNANCE identifiable assets. » the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not When an acquisition does not represent a business as retain control of the financial asset. defined under IFRS 3, the Group classifies these properties, or portfolio of properties, as an asset acquisition. The Group enters into transactions whereby it transfers Identifiable assets acquired, and liabilities assumed in an assets recognised in its consolidated statement of financial asset acquisition are measured initially at their fair values at position, but retains either all or substantially all of the risks the acquisition date. Acquisition-related transaction costs and rewards of the transferred assets. In these cases, the are capitalised to the property. transferred assets are not derecognised. e) Property, Plant and Equipment The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or Property, plant and equipment are stated at historical cost expire. The Group also derecognises a financial liability less accumulated depreciation, and mainly comprise of when its terms are modified and the cash flows of the head office, head office fixtures and fittings and information modified liability are substantially different, in which case FINANCIAL STATEMENTS technology hardware. These items are depreciated on a a new financial liability based on the modified terms is straight-line basis over their estimated useful lives: The recognised at fair value. right of use building has a useful life of 20 years and the fixtures and fittings have a useful life ranging from three to On derecognition of a financial liability, the difference five years. between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

Offsetting Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the SUPPLEMENTARY INFORMATION asset and settle the liability simultaneously.

2020 Annual Report 117 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued)

Classification of Financial Instruments The following summarises the classification and measurement I-RES has elected to apply to each of its significant categories of financial instruments:

Type Classification Measurement Financial assets Cash and cash equivalents Held to Collect Amortised cost Other receivables Held to Collect Amortised cost Derivative financial instruments FVTPL Fair value through profit or loss

Financial liabilities Bank indebtedness Other financial liabilities Amortised cost Private placement notes Other financial liabilities Amortised cost Accounts payable and accrued liabilities Other financial liabilities Amortised cost Security deposits Other financial liabilities Amortised cost Derivative financial instruments FVTOCI Fair value through other comprehensive income Derivative financial instruments FVTPL Fair value through profit or loss

Cash and Cash Equivalents Derivative financial instruments and hedge accounting Cash and cash equivalents include cash and short-term The Group utilises derivative financial instruments to hedge investments with an original maturity of three months or foreign exchange risk and interest rate risk exposures. less. Interest earned or accrued on these financial assets is Embedded derivatives are separated from the host included in other income. contract and accounted for separately if the host contract is not a financial asset and certain criteria are met. Loans and Other Receivables Such receivables arise when I-RES provides services Derivatives are initially measured at fair value. Subsequent to a third party, such as a resident, and are included in to initial recognition, derivatives are remeasured at fair current assets, except for those with maturities more than value, with changes generally recognised through profit 12 months after the consolidated statement of financial or loss. position date, which are classified as non-current assets. Loans and other receivables are included in other assets The Group designates certain derivatives as hedging on the consolidated statement of financial position and are instruments to hedge the variability in cash flows accounted for at amortised cost. associated with highly probable forecast transactions arising from changes in foreign exchange rates and Other Liabilities interest rates. Such financial liabilities are recorded at amortised cost and include all liabilities other than derivatives. Derivatives At inception of designated hedging relationships, the Group are designated to be accounted for at fair value documents the risk management objective and strategy through profit and loss and at fair value through other for undertaking the hedge. The Group also documents comprehensive income. the economic relationship between the hedged item and the hedging instrument, including whether the changes in FVTPL cash flows of the hedged item and hedging instrument are Financial instruments in this category are recognised expected to offset each other. initially and subsequently at fair value. Gains and losses arising from changes in fair value are presented within Cash flow hedges gain on derivative financial instruments in the consolidated When a derivative is designated as a cash flow hedging statement of income and comprehensive income in the instrument, hedge accounting is used in line with IFRS 9. period in which they arise. Financial assets and liabilities The effective portion of changes in the fair value of the at FVTPL are classified as current, except for the portion derivative is recognised in OCI and accumulated in the expected to be realised or paid more than 12 months after hedging reserve. The effective portion of changes in the fair the consolidated statement of financial position date, which value of the derivative that is recognised in OCI is limited is classified as non-current. Derivatives are categorised as to the cumulative change in fair value of the hedged item, FVTPL unless designated as hedges. determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

118 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued) The Group determines its incremental borrowing rate by obtaining interest rates from various external financing f) IFRS 9, Financial Instruments (“IFRS 9”) (continued) sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

For all hedged forecast transactions, the amount STRATEGIC REPORT accumulated in the hedging reserve is reclassified to Lease payments included in the measurement of the lease financing costs in the same period or periods during which liability comprise the following: the hedged expected future cash flows affect profit or loss. » fixed payments, including in-substance fixed payments; If the hedge no longer meets the criteria for hedge » variable lease payments that depend on an index or a accounting or the hedging instrument is sold, expires, rate, initially measured using the index or rate as at the is terminated or is exercised, then hedge accounting is commencement date; discontinued prospectively. » amounts expected to be payable under a residual value guarantee; and If the hedged future cash flows are no longer expected to » the exercise price under a purchase option that the occur, then the amounts that have been accumulated in Group is reasonably certain to exercise, lease payments the hedging reserve are immediately reclassified to profit in an optional renewal period if the Group is reasonably or loss. certain to exercise an extension option, and penalties for early termination of a lease unless the Group is g) IFRS 16, Leases reasonably certain not to terminate early.

At inception of a contract, the Group assesses whether a The lease liability is measured at amortised cost using the contract is, or contains, a lease. A contract is, or contains, effective interest method. It is remeasured when there is a GOVERNANCE a lease if the contract conveys the right to control the use change in future lease payments arising from a change in of an identified asset for a period of time in exchange for an index or rate, if there is a change in the Group’s estimate consideration. To assess whether a contract conveys the of the amount expected to be payable under a residual right to control the use of an identified asset, the Group value guarantee, if the Group changes its assessment uses the definition of a lease in IFRS 16. of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed As a Lessee lease payment. When the Group acts as a lessee, at commencement or on modification of a contract that contains a lease When the lease liability is remeasured in this way, a component, the Group allocates the consideration in the corresponding adjustment is made to the carrying amount contract to each lease component on the basis of its of the right-of-use asset, or is recorded through profit or relative stand-alone prices. loss if the carrying amount of the right-of-use asset has been reduced to zero. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use The Group presents right-of-use assets that do not meet FINANCIAL STATEMENTS asset is initially measured at cost, which comprises the the definition of investment property in ‘property, plant initial amount of the lease liability adjusted for any lease and equipment’ and lease liabilities in ‘Lease liability’ in the payments made at or before the commencement date, plus statement of financial position. any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore As a Lessor the underlying asset or the site on which it is located, less When the Group acts as a lessor, it determines at lease any lease incentives received. commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group The right-of-use asset is subsequently depreciated using makes an overall assessment of whether the lease transfers the straight-line method from the commencement date to the lessee substantially all of the risks and rewards to the end of the lease term, unless the lease transfers incidental to ownership of the underlying assets. If this is ownership of the underlying asset to the Group by the the case, then the lease is a finance lease; if not, then it is end of the lease term or the cost of the right-of-use asset an operating lease. As part of the assessment, the Group reflects that the Group will exercise a purchase option. In considers certain indicators such as whether the lease if that case the right-of-use asset will be depreciated over for the major part of the economic life of the asset, the SUPPLEMENTARY INFORMATION the useful life of the underlying asset. In addition, the right- present value of lease payments and any option included in of-use asset is periodically reduced by impairment losses, the lease. The Group has determined that all its leases are if any, and adjusted for certain remeasurements of the operating leases. lease liability. When the Group is an intermediate lessor, it accounts for The lease liability is initially measured at the present its interests in the head lease and the sub-lease separately. value of the lease payments that are not paid at the It assesses the lease classification of a sub-lease with commencement date, discounted using the interest reference to the right-of-use asset arising from the head rate implicit in the lease or, if that rate cannot be readily lease, not with reference to the underlying asset. If a head determined, the Group’s incremental borrowing rate. lease is a short-term lease to which the Group applies the Generally, the Group uses its incremental borrowing rate as exemption described above, then it classifies the sub-lease the discount rate. as an operating lease.

2020 Annual Report 119 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued) h) IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) g) IFRS 16, Leases (continued) I-RES retains substantially all of the risks and benefits On modification of a contract that contains a lease of ownership of its investment properties and therefore component and a non-lease component, I-RES accounts for leases with its tenants as operating allocates the consideration in the contract to each of leases. Rent represents lease revenue earned from the the components on the basis of their relative stand- conveyance of the right to use the property, including alone prices. access to common areas, to a lessee for an agreed period of time. The contract also contains a performance Tenant Inducements obligation that requires I-RES to maintain the common Incentives such as cash, rent-free periods and move-in areas to an agreed standard. This right of use and allowances may be provided to lessees who enter into a performance obligation is governed by a single rental lease. The incentives are written off on a straight-line basis contract with the tenant. In accordance with the adoption over the term of the lease as a reduction of rental revenue. of IFRS 16, Leases, I-RES has evaluated the lease and non- lease components of its rental revenue and has determined Early Termination of Leases that common area maintenance services constitute a When the Group receives rent loss payments from single non-lease element, which is accounted for as one a tenant for the early termination of a lease, it is performance obligation under IFRS 15 and is recognised reflected in the accounting period in which the rent loss separately to Rental Income as Revenue under IFRS 15 payment occurred. Revenue from Contracts with Customers.

Expected Credit Loss Rental revenue includes amounts earned from tenants The Group recognises a loss allowance for expected credit under the rental contract which are allocated to the lease losses on trade receivables and other financial assets. and non-lease components based on relative stand-alone The amount of ECL is updated at each reporting date to selling prices. The stand-alone selling prices of the lease reflect changes in credit risk since initial recognition of components are determined using an adjusted market the respective financial instrument. Loss allowances for assessment approach and the stand- alone selling prices trade receivables (including lease receivables) are always of the service components are determined using the input measured at an amount equal to lifetime ECLs. Lifetime method based on the expected costs plus an estimated ECLs are the ECLs that result from all possible default market-based margin for similar services. events over the expected life of a financial instrument. When determining whether the credit risk of a financial Rental income from the operating lease component is asset has increased significantly since initial recognition recognised on a straight-line basis over the lease term and when estimating ECLs, the Group considers in accordance with IFRS 16 Leases. When I-RES provides reasonable and supportable information that is relevant and incentives to its tenants, the cost of such incentives is available without undue cost or effort. This includes both recognised over the lease term, on a straight-line basis, as quantitative and qualitative information and analysis, based a reduction of revenue. on the Group’s historical experience and informed credit assessment, that includes forward-looking information. Revenue from maintenance services represents the service component of the REIT’s rental contracts and is accounted The Group assumes that the credit risk on a financial for in accordance with IFRS 15, Revenue from Contracts asset has increased significantly if it is more than 30 days with Customers (“IFRS 15”). These services consist primarily past due. of the recovery of utility, property and other common area maintenance and amenity costs where I-RES has For individual residential customers, the Group has a policy determined it is acting as a principal. of writing off the gross carrying amount when the financial asset is 30 days past due based on historical experience These services constitute a single non-lease component, of recoveries of similar assets. For individual commercial which is accounted for as one performance obligation customers, the Group has a policy of writing off the gross under IFRS 15 as the individual activities that comprise carrying amount when the financial asset is 60 days these services are not distinct in the context of the past due based on historical experience of recoveries of contract. The individual activities undertaken to meet similar assets. the performance obligation may vary from time to time but cumulatively the activities undertaken to meet the performance obligation are relatively consistent over time. The tenant simultaneously receives and consumes the benefits provided under the performance obligation as I-RES performs and consequently revenue is recognised over time, typically on a monthly basis, as the services are provided.

120 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued) Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, i) Operating Segments using tax rates enacted or substantively enacted at the reporting date.

The Group operates and is managed as one business STRATEGIC REPORT segment, namely property investment, with all investment l) Equity and Share Issue Costs properties located in Ireland. The operating segment is reported in a manner consistent with the internal reporting The equity of I-RES consists of ordinary shares issued. provided to the chief operating decision-maker, which has Shares issued are recorded at the date of issuance. Direct been identified as the I-RES Board. issue costs in respect of the issue of shares are accounted for as a deduction from retained earnings. j) Statement of Cash Flows m) Net Asset Value (“NAV”) Cash and cash equivalents consist of cash on hand and balances with banks. Investing and financing activities The NAV is calculated as the value of the Group’s assets that do not require the use of cash or cash equivalents less the value of its liabilities, measured in accordance with are excluded from the consolidated statement of cash IFRS as adopted in the EU, and in particular will include the flows and are disclosed separately in the notes to the Group’s property assets at their most recent independently consolidated financial statements. Interest expense is assessed market values. classified as financing activities. n) Share-based Payments k) Income Taxes I-RES has determined that the options and restricted GOVERNANCE Current Tax share units issued to senior executives qualify as “equity- Current tax comprises the expected tax payable or settled share-based payment transactions” as per IFRS receivable on the taxable income or loss for the year and 2. In addition, any options issued to the directors have any adjustment to the tax payable or receivable in respect also been based on equity-settled share-based payment of previous years. The amount of current tax payable or transactions. The fair value of the options measured on receivable is the best estimate of the tax amount expected the grant date will be expensed over the graded vesting to be paid or received that reflects uncertainty related to term with a corresponding increase in equity. The fair income taxes, if any. It is measured using tax rates enacted value for all options granted is measured using the Black- or substantively enacted at the reporting date. Current tax Scholes model. also includes any tax arising from dividends. The grant-date fair value of restricted share units issued to Current tax assets and liabilities are offset only if certain senior executives is generally recognised as an expense, criteria are met. with a corresponding increase in equity, over the vesting period of the awards. The fair value for all restricted share I-RES elected for REIT status on 31 March 2014. As a result, units granted is measured using a Monte Carlo simulation. FINANCIAL STATEMENTS from that date I-RES does not pay Irish corporation tax on The amount recognised as an expense is adjusted to the profits and gains from its qualifying rental business in reflect the number of awards for which the related service Ireland, provided it meets certain conditions. and non-market performance conditions are expected to be met, such that the amount ultimately recognised Going forward, corporation tax is still payable in the normal is based on the number of awards that meet the related way in respect of income and gains from any residual service and non-market performance conditions at the business (generally including any property trading business) vesting date. For share-based payment awards with non- not included in the Property Rental Business. I-RES would vesting conditions, the grant-date fair value of the share- also be liable to pay other taxes such as VAT, stamp based payment is measured to reflect such conditions and duty, land tax, local property tax and payroll taxes in the there is no true-up for differences between expected and normal way. actual outcomes.

Deferred Tax o) Property Taxes Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and Property taxes are paid annually and recognised as an SUPPLEMENTARY INFORMATION liabilities for financial reporting purposes and the amounts expense evenly throughout the year. used for taxation purposes. p) Security Deposits The measurement of deferred tax reflects the tax consequences that would follow the manner in which Security deposits are amounts received from tenants at the Group expects, at the end of the reporting period, the beginning of a tenancy. When a tenant is no longer in to recover or settle the carrying amount of its assets possession of the property, the Group will assess whether and liabilities. there were damages to the property above normal wear and tear for which deductions may be made to their deposit. Once the inspections and repairs are calculated, the remaining security deposit is returned to the tenant.

2020 Annual Report 121 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Significant Accounting Policies (continued) IFRS 9 Financial Instruments - This amendment clarifies that for the purpose of performing the ‘’10 per cent test’ q) Pension for derecognition of financial liabilities – in determining those fees paid net of fees received, a borrower includes The Company operates a defined contribution plan for its only fees paid or received between the borrower and employees. A defined contribution plan is a pension plan the lender, including fees paid or received by either the under which a company pays fixed contributions into a borrower or lender on the other’s behalf. separate entity. Once the contributions have been paid, the company has no further obligations. The contributions IFRS 16 Leases - The amendment removes the illustration are recognised as an expense when they are due. The of payments from the lessor relating to leasehold amounts that are not paid are shown as accruals in the improvements. As currently drafted, this example is not consolidated statement of financial position. The assets of clear as to why such payments are not a lease incentive. the plan are held separately from those of the Company in an independently administered fund. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16), IASB effective r) Impact Expected From New or Amended Standards date 1 January 2022. Under the amendments, proceeds from selling items The following standards and amendments are not before the related item of Property Plant and Equipment expected to have a significant impact on reported results is available for use should be recognised in profit or loss, or disclosures of the Group, and, were not effective at together with the costs of producing those items. IAS 2 the financial year end 31 December 2020 and have not Inventories should be applied in identifying and measuring been applied in preparing these consolidated financial these production costs. statements. The Group will apply the new standards from the effective date. The potential impact of these standards Classification of Liabilities as Current or Non-current on the Group is under review: (Amendments to IAS 1), IASB effective date 1 January 2023. Interest Rate Benchmark Reform - Phase 2 (Amendments Under existing IAS 1 requirements, companies classify a to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16), IASB liability as current when they do not have an unconditional effective date 1 January 2021. right to defer settlement of the liability for at least twelve The amendments address issues that might affect months after the end of the reporting period. As part of its financial reporting as a result of the reform of an interest amendments, the Board has removed the requirement for rate benchmark, including the effects of changes to a right to be unconditional and instead, now requires that a contractual cash flows or hedging relationships arising right to defer settlement must have substance and exist at from the replacement of an interest rate benchmark with the end of the reporting period. an alternative benchmark rate. The amendments provide practical relief from certain requirements in IFRS 9, IAS 39, 3. Critical Accounting Estimates, Assumptions and IFRS 7, IFRS 4 and IFRS 16 relating to: Judgements

» changes in the basis for determining contractual cash The preparation of the consolidated financial statements flows of financial assets, financial liabilities and lease in accordance with IFRS requires the use of estimates, liabilities; and assumptions and judgements that in some cases relate to » hedge accounting. matters that are inherently uncertain, and which affect the amounts reported in the consolidated financial statements Onerous Contracts - Cost of Fulfilling a Contract and accompanying notes. Areas of such estimation (Amendments to IAS 37), IASB effective date 1 include, but are not limited to, valuation of investment January 2022. properties, and valuation of financial instruments. Changes The amendments clarify that the ‘costs of fulfilling a to estimates and assumptions may affect the reported contract’ comprise both: the incremental costs – e.g. direct amounts of assets and liabilities and the disclosure labour and materials; and an allocation of other direct of contingent assets and liabilities at the date of the costs – e.g. an allocation of the depreciation charge for consolidated financial statements, as well as the reported an item of property, plant and equipment used in fulfilling amounts of revenue and expenses during the reporting the contract. period. Actual results could differ from those estimates under different assumptions and conditions. Annual Improvements to IFRS Standards 2018-2020, IASB effective date 1 January 2022. The valuation estimate of investment properties is deemed IFRS 1 First-time adoption of International Financial to be more significant. See notes 2(c) and 5 for a detailed Reporting Standards - the amendment simplifies the discussion of valuation methods and the significant application of IFRS 1 for a subsidiary that becomes a first- assumptions and estimates used. time adopter of IFRS Standards later than its parent.

122 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Recent Investment Property Acquisitions, Developments and Disposals

For the year 1 January 2020 to 31 December 2020

Investment Property Acquisitions STRATEGIC REPORT

Property Acquisition Date Apartment Region Total Count Acquisition Costs €’000 Waterside 27 March 2020 55 Malahide 19,330 55 19,330

Completed Development

Property Development Apartment Region Total Costs Total Completion date Count Spent Development in 2020 Cost spent €’000 to date €’000

Tallaght Cross West 7 February 2020 18 West Dublin 259 5,518 GOVERNANCE Piper’s Court (Hansfield Phase II) 31 July 2020 95 West Dublin 556 31,000 Priorsgate 20 December 2020 5 West Dublin 1,816 1,816 118 2,631 38,334

Properties Under Development

Property Development Apartment Region Total Costs Total Contract Date Count(4) Spent Development in 2020 Cost spent €’000 to date €’000 Bakers Yard (1) 10 January 2020 61 City Centre 5,324 5,324

61 5,324 5,324 FINANCIAL STATEMENTS

(1) On 10 January 2020, I-RES started developing 61 residential units at Bakers Yard. The cost to complete is estimated at circa €13.8 million.

Disposals

Name Apartment Count Other Land and Property Region Net proceeds from Disposition €’000 The Laurels 19 1 Commercial Unit, 190 Sq M West Dublin 4,125 Beacon South Quarter(1) 12 South Dublin 4,761 Russell Court 29 North Dublin 7,197 Belville and the Mills 21 West Dublin 7,241 1 Development site, St Edmunds 18 0.16 Ha West Dublin 6,628 SUPPLEMENTARY INFORMATION The Oaks 14 West Dublin 4,328 Spencer House 12 City Centre 5,382 East Arran Street 12 City Centre 4,322 Coopers Court 14 2 Commercial Units, 126 Sq M City Centre 3,911 151 — 47,895

(1) Of the 225 residential units at BSQ, only 12 were disposed in 2020.

2020 Annual Report 123 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Recent Investment Property Acquisitions, Developments and Disposals (continued)

For the year 1 January 2019 to 31 December 2019

Investment Property Acquisitions

Property Acquisition Date Apartment Count Region Total Acquisition Costs €’000 The Coast 2019 52 Dublin, Ireland 14,316 Taylor Hill 2019 78 Dublin, Ireland 22,830 Semple Woods 2019 40 Dublin, Ireland 15,812 City Square 29 April 2019 1 Dublin, Ireland 428 Marathon Portfolio 1 August 2019 815 Ireland 291,298 986 344,684

Properties Under Development

Developments Development Apartment Region Total Costs Spent Total Property Contract Date Count in 2019 Development €’000 Cost spent to date €’000 Hansfield Phase II Development 16 November 2018 95 Dublin, Ireland 19,902 30,444 Coldcut Park 2 July 2019 1 Dublin, Ireland 184 184 Tallaght Cross West 4 April 2019 18 Dublin, Ireland 5,259 5,259 114 25,345 35,887

124 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Investment Properties Investment Property Producing Income For investment property, the income approach/yield Valuation Basis methodology involves applying market-derived yields to current and projected future income streams. These yields

Investment properties are carried at fair value, which is the and future income streams are derived from comparable STRATEGIC REPORT amount at which the individual properties could be sold in property transactions and are considered to be the key an orderly transaction between market participants at the inputs in the valuation. Other factors that are taken into measurement date, considering the highest and best use of account include the tenure of the lease, tenancy details, the asset, with any gain or loss arising from a change in fair and planning, building and environmental factors that might value recognised through profit or loss in the consolidated affect the property. statement of profit or loss and other comprehensive income for the year. Investment Property Under Development In the case of investment property under development, The majority of the fair values of all of the Group’s the approach applied is the “residual method” of valuation, investment properties as at 31 December 2020 are which is the valuation method as described above determined by CBRE Unlimited Company (“CBRE”) and the with a deduction for the costs necessary to complete remaining by Savills, the Company’s external independent the development, together with an allowance for the valuers. The valuers employ qualified valuation professionals remaining risk. who have recent experience in the location and category of the respective property. Valuations are prepared on a During 2020, the Company incurred development costs of bi-annual basis at the interim reporting date and the annual €8.0 million (31 December 2019: €25.3 million) relating to reporting date. the properties under development. At the reporting date, the only property under development is Bakers Yard. GOVERNANCE The information provided to the valuers, and the assumptions and valuation methodologies and models Borrowing costs of €92.0 thousand (€660.1 thousand as at used by the valuers, are reviewed by management. The 31 December 2019) are included in capitalised development valuers meet with the Audit Committee and discusses the expenditures. The weighted average interest rate used to valuation results as at 31 December and 30 June directly. capitalise the borrowing costs was 1.77% (31 December The Board determines the Group’s valuation policies and 2019: 1.86%). procedures for property valuations. The Board decides which independent valuers to appoint for the external Development Land valuation of the Group’s properties. Selection criteria In the case of development land, the approach applied is include market knowledge, reputation, independence and the comparable sales approach, which considers recent whether professional standards are maintained. sales activity for similar land parcels in the same or similar markets. Land values are estimated using either a per acre Retail Properties or per buildable square foot basis based on highest and The outbreak of Covid-19, declared by the World Health best use. Such values are applied to the Group’s properties Organisation as a “Global Pandemic” on the 11 March 2020, after adjusting for factors specific to the site, including its FINANCIAL STATEMENTS has impacted global financial markets. Travel restrictions have location, zoning, servicing and configuration. been implemented by many countries. Market activity is being impacted in many sectors. In some cases, “lockdowns” have Information about Fair Value Measurements using been applied – in varying degrees – to reflect further ‘waves’ Unobservable Inputs (Level 3) of Covid-19. While these may imply a new stage of the crisis, At 31 December 2020, the Group considers that all of they are not unprecedented in the same way as the initial its investment properties fall within Level 3 fair value as impact. As at the valuation date, the valuers have stated that defined by IFRS 13. As outlined in IFRS 13, a Level 3 fair value it can attach less weight to previous market evidence for recognises that the significant inputs and considerations comparison purposes for the retail portion of the Group’s made in determining the fair value of property investments portfolio, to inform opinions of value. The valuations are cannot be derived from publicly available data, as the therefore reported as being subject to ‘material valuation valuation methodology in respect of a property also has to uncertainty’ as set out in VPS 3 and VPGA 10 of the RICS rely on a number of unobservable inputs including technical Valuation – Global Standards. For the avoidance of doubt, the reports, legal data, building costs, rental analysis (including inclusion of the ‘material valuation uncertainty’ declaration rent moratorium), professional opinion on profile, lot size, above does not mean that the Valuation cannot be relied layout and presentation of accommodation. In addition, the SUPPLEMENTARY INFORMATION upon. Rather, the declaration has been included to ensure valuers utilise proprietary databases maintained in respect transparency of the fact that – in the current extraordinary of properties similar to the assets being valued. circumstances – less certainty can be attached to the Valuation than would otherwise be the case. The material uncertainty clause is to serve as a precaution and does not invalidate the Valuation. This uncertainty clause was removed for residential properties as of 31 December 2020 however continues to be apply for retail properties.

2020 Annual Report 125 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Investment Properties (continued) €53.9 million reduction respectively. I-RES believes that this range of change in Stabilised NRI is a reasonable estimate Valuation Basis (continued) in the next twelve months based on expected changes in net rental income. Information about Fair Value Measurements using Unobservable Inputs (Level 3) (continued) The direct operating expenses recognised in the The Irish government implemented a temporary rent consolidated statement of profit or loss and other memorandum as a result of Covid-19 prohibiting increases comprehensive income for the Group is €15.0 million in rents on renewals from April 2020 to September 2020. for the year ended 31 December 2020 (31 December Since September 2020, the Irish government prohibits any 2019: €11.6 million), arising from investment property that increase in rents on renewals on tenants receiving support generated rental income during the period. The direct from the government due to impact from Covid-19. I-RES operating expenses are comprised of the following has not served any renewals with rental changes since April significant categories: property taxes, utilities, repairs 2020, after the declaration of the pandemic in March 2020. and maintenance, wages, insurance, service charges and property management fees. The Group tests the reasonableness of all significant unobservable inputs, including yields and stabilised net The direct operating expenses recognised in the rental income (“Stabilised NRI”) used in the valuation consolidated statement of profit or loss and other and reviews the results with the independent valuers for comprehensive income arising from investment property all independent valuations. The Stabilised NRI represents that did not generate rental income for the year ended 31 cash flows from property revenue less property operating December 2020 and 31 December 2019 was not material. expenses, adjusted for market-based assumptions such as market rents, short term and long term vacancy rates and An investment property is comprised of various bad debts, management fees, repairs and maintenance. components, including undeveloped land and vacant These cashflows are estimates for current and projected residential and commercial units; no direct operating future income streams. costs were specifically allocated to the components noted above. Sensitivity Analysis

Stabilised NRI and “Equivalent Yields” are key inputs in the valuation model used.

Equivalent Yield is the rate of return on a property investment based on current and projected future income streams that such property investment will generate. This is derived by the external valuers and is used to set the term and reversionary yields.

For example, completed properties are valued mainly using a term and reversion model. For the existing rental contract or term, estimated Stabilised NRI is based on the expected rents from residents over the period to the next lease break option or expiry. After this period, the reversion, estimated Stabilised NRI is based on expectations from current market conditions. Thus, a decrease in the estimated Stabilised NRI will decrease the fair value, and an increase in the estimated Stabilised NRI will increase the fair value.

The Equivalent Yields magnify the effect of a change in Stabilised NRI, with a lower yield resulting in a greater effect on the fair value of investment properties than a higher Equivalent Yield.

For investment properties producing income and investment properties under development, an increase of 1% in the Equivalent Yield would have the impact of a €239.2 million reduction in fair value while a decrease of 1% in the Equivalent Yield would result in a fair value increase of €373.4 million. An increase between 1% - 4% in Stabilised NRI would result in a fair value increase from €13.5 million to €53.9 million respectively in fair value, while a decrease between 1% - 4% in Stabilised NRI would have the impact ranging from €13.5 million to

126 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Investment Properties (continued)

Quantitative Information

A summary of the Equivalent Yields and ranges along with the fair value of the total portfolio of the Group as at 31 December STRATEGIC REPORT 2020 is presented below:

As at 31 December 2020

Type of Interest Fair Value WA NRI(1) Rate Type(2) Max. Min. Weighted €’000 €’000 Average Investment properties 1,346,683 2,892 Equivalent Yield 5.62 % 3.75 % 4.66 % Properties under development 8,901 1,004 Equivalent Yield 4.25 % 4.25 % 4.25 % Average Development Cost (per sq. ft.) €361.80 €361.80 €361.80 Market Comparable Development land(3) 24,770 n/a (per sq. ft.) €140.9 €27.5 €134.6 Total investment properties 1,380,354

(1) WA NRI is the NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”). The NRI is calculated by

multiplying the Equivalent Yield for each property by its respective fair value. GOVERNANCE (2) The Equivalent Yield disclosed above is provided by the external valuers. (3) Development land is fair-valued based on the value of the undeveloped site per square foot.

As at 31 December 2019

Type of Interest Fair Value WA NRI(1) Rate Type(2) Max. Min. Weighted €’000 €’000 Average Investment properties 1,293,241 2,751 Equivalent Yield 6.19 % 4.16 % 4.90 % Properties under development 36,000 1,259 Equivalent Yield 5.93 % 4.75 % 4.94 % Average Development Cost (per sq. ft.) €379.0 €319.2 €370.2 Market Comparable Development land(3) 29,960 n/a (per sq. ft.) €158.5 €35.6 €134.1

Total investment properties 1,359,201 FINANCIAL STATEMENTS

(1) WA NRI is the NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”). The NRI is calculated by multiplying the Equivalent Yield for each property by its respective fair value. (2) The Equivalent Yield disclosed above is provided by the external valuers. (3) Development land is fair-valued based on the value of the undeveloped site per square foot. SUPPLEMENTARY INFORMATION

2020 Annual Report 127 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Investment Properties (continued)

Quantitative Information (continued)

The following table summarises the changes in the investment properties portfolio during the periods:

Reconciliation of Carrying Amounts of Investment Properties

For the year ended 31 December 2020

Income Properties Development Total Properties Under Land Development €’000 €’000 €’000 €’000 Balance at the beginning of the year 1,293,241 36,000 29,960 1,359,201 Acquisitions 19,330 — — 19,330 Development expenditures 7,865 7,955 282 16,102 Reclassification(1) 38,631 (35,631) (3,000) — Property capital investments 9,986 — — 9,986 Capitalised leasing costs(2) (44) — — (44) Direct leasing costs(3) 150 — — 150 Disposition(4) (43,463) — — (43,463) Unrealised fair value movements 20,987 577 (2,472) 19,092 Balance at the end of the year 1,346,683 8,901 24,770 1,380,354

For the year ended 31 December 2019

Income Properties Development Total Properties Under Land Development €’000 €’000 €’000 €’000 Balance at the beginning of the year 882,416 10,500 28,400 921,316 Acquisitions 344,684 — — 344,684 Development expenditures — 25,345 3,613 28,958 Reclassification(5) 184 266 (450) — Property capital investments 7,983 — — 7,983 Capitalised leasing costs(2) (21) — — (21) Direct leasing costs(3) 47 — — 47 Unrealised fair value movements 57,948 (111) (1,603) 56,234 Balance at the end of the year 1,293,241 36,000 29,960 1,359,201

(1) Reclassified Bakers Yard from development land to properties under development. Developments at Tallaght Cross West, Piper’s Court and Priorsgate were reclassified from properties under development to income properties upon their completion in 2020. (2) Straight-line rent adjustment. (3) Includes cash outlays for new tenants. (4) 151 residential units were disposed of for net proceeds of €47.9 million resulting in a gain of €4.4 million. (5) Reclassified Tallaght Cross West from development land to properties under development and reclassified Coldcut Park from properties under development to income properties in 2019.

Most of the residential leases are for one year or less.

The carrying value of the Group investment properties of €1,380.4 million for the investment properties at 31 December 2020 (€1,359.2 million at 31 December 2019) was based on an external valuation carried out as at that date. The valuations were prepared in accordance with the RICS Valuation – Global Standards, 2020 (Red Book) and IFRS 13.

128 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Leases

Leases as Lessee (IFRS 16)

On 9 December 2019, the Group entered into an agreement to lease office space at South Dock House. The lease is for a STRATEGIC REPORT period of 20 years, with options for the Group to terminate the lease on the 10th and 15th anniversary of the lease. Lease payments are renegotiated every five years to reflect market rentals.

A portion of the office space is sub-let to a tenant. The sub-lease was extended in 2020 to 2022, and is classified as an operating lease.

The Group has assessed at the lease commencement date whether it is reasonably certain to exercise the lease termination option and has determined that the lease term is 20 years. As well, the Group has used an incremental borrowing rate of 2.48% to determine the lease liability.

Information about leases for which the Group is a lessee is presented below.

Right-of-use Assets

For the year ended 31 December 2020 Land and Buildings (€’000)

Balance at the beginning of the year 10,083 GOVERNANCE Additions to right-of-use assets — Depreciation charge for the year (507) Balance at the end of the year (Note 7) 9,576

For the year ended 31 December 2019 Land and Buildings (€’000) Balance at the beginning of the year — Additions to right-of-use assets 10,114 Depreciation charge for the year (31) Balance at the end of the year (Note 7) 10,083

Amounts Recognised in Profit or Loss For the year ended 31 December 2020, I-RES recognized interest on lease liabilities of circa €241,000. FINANCIAL STATEMENTS (31 December 2019: €4,000)

Amounts Recognised in Statement of Cash Flow For the year ended 31 December 2020, I-RES’s total cash outflow for leases was circa €386,000. (31 December 2019: €247,000)

Refer to note 20 for movements in the lease liability.

Lease as Lessor

The Group leases out its investment property consisting of its owned residential and commercial properties as well as a portion of the leased property. All leases are classified as operating leases from a lessor perspective. See note 14 for an analysis of the Group’s rental income. SUPPLEMENTARY INFORMATION

2020 Annual Report 129 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Property, Plant and Equipment

Land and Furniture and Total Buildings Fixtures (Note 6) €’000 €’000 €’000 At cost As at 1 January 2020 10,114 59 10,173 Additions — 160 160 As at 31 December 2020 10,114 219 10,333 Accumulated amortisation As at 1 January 2020 (31) (54) (85) Additions (507) (19) (526) As at 31 December 2020 (538) (73) (611) As at 31 December 2020 9,576 146 9,722 Land and Furniture and Total Buildings Fixtures €’000 €’000 €’000 At cost As at 1 January 2019 — 59 59 Additions 10,114 — 10,114 As at 31 December 2019 10,114 59 10,173 Accumulated amortisation As at 1 January 2019 — (53) (53) Additions (31) (1) (32) As at 31 December 2019 (31) (54) (85) As at 31 December 2019 10,083 5 10,088

8. Other Assets

As at 31 December 31 December 2020 2019 €’000 €’000 Other Current Assets Prepayments(1) 2,651 2,301 Deposits on acquisitions(2) 10,529 6,945 Other receivables(3) 674 577 Trade receivables 1,648 1,963 Total 15,502 11,786

(1) Includes specific costs relating to preparing planning applications of development lands and costs associated with ongoing transactions. (2) Includes deposits paid for the Phoenix Park acquisition which closed on 28 January 2021. (3) Relates to levies received in respect of services to be incurred.

9. Accounts Payable and Accrued Liabilities

As at 31 December 31 December 2020 2019 €’000 €’000 Accounts Payable and Accrued Liabilities(1) Rent - early payments 3,358 2,662 Trade creditors 645 446 Accruals(2) 7,494 6,914 Value Added Tax 91 194 Total 11,588 10,216

(1) The carrying value of all accounts payable and accrued liabilities approximates their fair value. (2) Includes property related accruals, development accruals, property management fees and asset management fees accruals.

130 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Credit Facility

As at 31 December 31 December 2020 2019 €’000 €’000 STRATEGIC REPORT Bank Indebtedness Loan drawn down 354,020 555,020 Deferred loan costs (3,971) (5,169) Total 350,049 549,851

On 18 April 2019, I-RES entered into a new accordion credit facility of up to €450 million with a syndicate of five banks, which can be extended to €600 million, (subject to certain terms and conditions) (the “New Revolving Credit Facility”) replacing the existing €350 million revolving and accordion credit facility which was due to mature January 2021 (the “Previous Revolving Credit Facility”).

The New Revolving Credit Facility has a five year term, which can be extended to seven years (subject to certain conditions) and is secured by a floating charge over assets of the Company and IRES Residential Properties Limited, its subsidiary, and a fixed charge over the shares held by the Company in IRES Residential Properties Limited on a pari passu basis. It has a reduced margin compared to the Previous Revolving Credit Facility. This facility is being provided by Barclays Bank Ireland PLC, Ulster Bank Ireland DAC, The Governor and Company of the Bank of Ireland, Allied Irish Banks, P.L.C. and HSBC

Bank PLC. GOVERNANCE

On 12 June 2019, the Company exercised its option under the New Revolving Credit Facility to extend its committed facilities from €450 million to €600 million and amended the New Revolving Credit Facility to include a new uncommitted accordion facility of €50 million. The New Revolving Credit Facility (as amended and restated on 12 June 2019) the (“RCF”) matures on 18 April 2024. The interest on the RCF is set at the annual rate of 1.75%, plus the one-month or three-month EURIBOR rate (at the option of I-RES). There are commitment fees charged on the undrawn loan amount of the RCF.

On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to a notional amount of €160 million. The agreements had an effective date of 23 March 2017 and a maturity date of 14 January 2021. On 15 September 2017, I-RES entered into a new interest rate swap agreement totalling a notional amount of €44.8 million. The new agreement has an effective date of 15 September 2017 and a maturity date of 14 January 2021.

The interest rate swap agreements effectively convert the hedged portion of the RCF (€204.8 million) from a variable rate to a fixed rate facility up to 14 January 2021 (see note 16 for further details). FINANCIAL STATEMENTS I-RES has complied with all its debt financial covenants to which it was subject during the year. SUPPLEMENTARY INFORMATION

2020 Annual Report 131 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Private Placement Debt

On 11 March 2020, I-RES successfully closed the issue of €130 million notes and IRES Residential Properties Limited, its subsidiary closed the issue of USD $75 million notes on a private placement basis (collectively, the “Notes”). The Notes have a weighted average fixed interest rate of 1.92% inclusive of a USD Euro swap. Interest is paid semi-annually on 10 March and 10 September.

The Notes have been placed in four tranches:

As at 31 December 2020 Maturity Contractual Derivative Rates €’000 interest rate EUR Series A Senior Secured Notes 10 March 2030 1.83 % n/a 90,000 EUR Series B Senior Secured Notes 10 March 2032 1.98 % n/a 40,000 USD Series A Senior Secured Notes 10 March 2027 3.44 % 1.87 % 40,923(1) USD Series B Senior Secured Notes 10 March 2030 3.63 % 2.25 % 20,462(2) 191,385 Deferred financing costs, net (2,383) Total 189,002

(1) The principal amount of the USD Series A Senior Secured Notes is USD $50 million. (2) The principal amount of the USD Series B Senior Secured Notes is USD $25 million.

The Notes are secured by a floating charge over the assets of the Group and a fixed charge over the shares held by the Company in IRES Residential Properties Limited on a pari passu basis.

12. Share-based Compensation

a) Options

Options are issuable pursuant to I-RES’ share-based compensation plan, namely, the long-term incentive plan (“LTIP”).

On 18 June 2019, 1,302,461 options were granted to the Chief Executive Officer. The Chief Executive Officer received options, calculated as 3% of the new Ordinary Shares issued, at an exercise price of €1.71 per share, in accordance with her employment agreement.

On 10 July 2019, an additional 1,294,038 options were granted to the Chief Executive Officer in connection with the placing of new ordinary shares.

All options have a maximum life of seven years less a day and it is graded vesting. The options will vest over three years from the date of grant on the basis of one third per completed year the recipient of the option completes in respect of the relevant service which has qualified him or her for an option grant. The LTIP limit cannot exceed 10% of I-RES’ issued ordinary share capital (adjusted for share issuance and cancellation) during the 10-year period prior to that date. As at 31 December 2020, the maximum number of additional options, or Restricted Share Units (“RSU”) issuable under the LTIP is 21,444,849 (31 December 2019: 21,542,450).

LTIP

For the year ended WA exercise 31 December 31 December price 2020 2019 Share Options outstanding as at 1 January 1.24 12,496,499 10,875,000 Issued, cancelled or granted during the period: Issued or granted — — 2,596,499 Exercised or settled 1.04 (3,400,000)(2) (975,000) Share Options outstanding as at 31 December(1) 1.32 9,096,499 12,496,499

(1) Of the Share Options outstanding above, 7,365,499 were exercisable at 31 December 2020 (31 December 2019: 9,233,333). (2) See note 21 for more details.

132 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Share-based Compensation (continued) a) Options (continued)

The fair value of options has been determined as at the grant date using the Black-Scholes model. The assumptions utilised STRATEGIC REPORT in the model to arrive at the estimated fair value for the outstanding grants at the respective periods are listed below.

LTIP

Issuance Date 10 July 2019 18 June 2019 16 November 2017 26 March 2015 16 April 2014 Number of shares 1,294,038 1,302,461 2,000,000 11,900,000 17,080,000 Share price on date of grant (€) 1.682 1.710 1.489 1.005 1.040 Award grant price (€) 1.682 1.710 1.489 1.005 1.040 Risk-free rate (%) 2.0 1.9 2.2 0.4 1.2 Distribution yield (%) 3.8 3.6 3.9 5.0 5.0 Expected years 7.0 7.0 7.0 7.0 7.0 Volatility (%) 16.6 16.6 19.6 20.2 20.3 Award option value (€) 0.16 0.17 0.18 0.07 0.08

The volatility of the 18 June 2019 and 10 July 2019 issue is based over the prior seven years. 16 November 2017 issue’s GOVERNANCE volatility is based over the past four years, 26 March 2015 issue’s volatility is based over the prior five years, and 16 April 2014 issue’s volatility is based over the prior four years. The risk-free rate is based on Irish government bonds with a term consistent with the assumed option life. b) Restricted Stock Unit Awards

On 27 March 2020, I-RES granted the Chief Executive Officer 437,601 RSU awards. These awards have a vesting period of three years from 27 March 2020 and a holding period of two years from the vesting date. The share price as at 27 March 2020 was €1.23. The ultimate settlement of the RSU award is dependent on market and other conditions, which mutually exclusive of each other, as illustrated below:

Restricted Shares Conditions Weighting Performance condition type Total Shareholder Return (“TSR”) 50 % Market Earning Per Shares (“EPS”) Return(1) 50 % Non-market FINANCIAL STATEMENTS

Performance level Vesting level EPS portion (50% weighting) TSR portion (50% weighting) Percentage growth in EPS: TSR relative to constituents of 2022 compared to base year the FTSE EPRA/NAREIT Europe of 2019(1) Developed Index Below Threshold 0% Below 3% p.a. Below Median Threshold 25% 3% p.a. Median Stretch (or above) 100% 6% p.a. Upper Quartile (or above) Between Threshold Pro-rata between and Stretch 25% and 100% Between 3% and 6% p.a. Between Median and Upper Quartile

(1) EPS will be based on normalized EPRA earnings which is calculated by excluding from EPRA earnings the effects of certain non-recurring and exceptional items. SUPPLEMENTARY INFORMATION Non-market-based conditions: The fair value of the shares to be issued is determined using the grant date market price. The expected number of shares is calculated based on the expectations of the number of shares which may vest at the vesting date and amortised over the vesting period. At each reporting date, the calculation of the number of shares is revised according to current expectations or performance.

2020 Annual Report 133 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Share-based Compensation (continued)

b) Restricted Stock Unit Awards (continued)

Market-based condition: The expected performance of I-RES shares over the vesting period is calculated using a Monte Carlo simulation. Inputs are share price volatility for I-RES and the average growth rate. These inputs are calculated with reference to relevant historical data and financial models. It should be recognised that the assumption of an average growth rate is not a prediction of the actual level of returns that will be achieved. The volatility assumption in the distribution gives a measure of the range of outcomes that may occur on either side of this average value. This is used to amortise the fair value of an expected cost over the vesting period. On vesting, any difference in amounts accrued versus actual is amended through reserves.

50% of the award is subjected to an EPS measure and 50% is subject to TSR measure relative to constituents of the FTSE EPRA/NAREIT Europe Developed Index. Results and inputs are summarised in the table below:

Fair value per award (TSR tranche) (per share) €0.57 Inputs Source Three year Risk free interest rate (%) European Central Bank (0.70%) Three year Historical volatility 22.21 % Fair value per award (EPS tranche) (per share) €1.05 Inputs Source Two year Risk free interest rate (%) European Central Bank (0.71%) Two year Expected volatility 24.06 %

The expected volatility is based on historic market volatility prior to the issuance.

The total share-based compensation expense relating to options for year ended 31 December 2020 was €232,000 (31 December 2019: €236,000) and total share-based compensation expense relating to restricted stock unit award for the year ended 31 December 2020 was €90,000 (31 December 2019: € nil).

13. Shareholders’ Equity

All equity shares outstanding are fully paid and are voting shares. Equity shares represent a shareholder’s proportionate undivided beneficial interest in I-RES. No equity share has any preference or priority over another. No shareholder has or is deemed to have any right of ownership in any of the assets of I-RES. Each share confers the right to cast one vote at any meeting of shareholders and to participate pro rata in any distributions by I-RES and, in the event of termination of I-RES, in the net assets of I-RES remaining after satisfaction of all liabilities. Shares will be issued in registered form and are transferable.

The number of shares authorised is as follows:

For the year ended 31 December 31 December 2020 2019 Authorised Share Capital 1,000,000,000 1,000,000,000 Ordinary shares of €0.10 each

The number of issued and outstanding ordinary shares is as follows:

For the year ended 31 December 31 December 2020 2019 Ordinary shares outstanding, beginning of year 521,678,946 434,153,946 New shares issued(1) 3,400,000 87,525,000 Ordinary shares outstanding, end of year 525,078,946 521,678,946

(1) In 2020, 3,400,000 shares were issued for options under the LTIP. On 12 June 2019 and 9 July 2019, I-RES successfully completed a placing of 86,550,000 new Ordinary Shares at a price of €1.55 per share raising gross proceeds of approximately €134.2 million (before commissions, fees and expenses). The additional 975,000 shares in 2019 were new shares issued for options issued under the LTIP.

134 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Revenue from Investment Properties

I-RES generates revenue primarily from the rental income from investment properties. Rental income represents lease revenue earned from the conveyance of the right to use the property, including access to common areas, to a lessee for an agreed period of time. The rental contract also contains an undertaking that common areas and amenities will be maintained STRATEGIC REPORT to a certain standard. This right of use of the property and maintenance performance obligation is governed by a single rental contract with the tenant. I-RES has evaluated the lease and non-lease components of its rental revenue and has determined that common area maintenance services constitute a single non-lease element, which is accounted for as one performance obligation under IFRS 15 and is recognised separately to Rental Income.

31 December 31 December 2020 2019 €’000 €’000 Rental Income 66,055 53,946 Revenue from services 7,962 7,055 Car park income 727 1,096 Revenue from contracts with customers 8,689 8,151 Total Revenue 74,744 62,097

15. Financing Costs GOVERNANCE 31 December 31 December 2020 2019 €’000 €’000 Financing costs on RCF 9,910 9,325 Financing costs on private placement debt 3,340 — Cost associated with early close out of debt instrument — 3,153 Gross financing costs 13,250 12,478 Less: Capitalised interest (434) (442) Financing costs 12,816 12,036

16. Realised and Unrealised Gains and Losses on Derivative Financial Instruments

On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to a notional amount of €160 million. FINANCIAL STATEMENTS The agreements have an effective date of 23 March 2017 and a maturity date of 14 January 2021. On 15 September 2017, I-RES entered into a new interest rate swap agreement totalling a notional amount of €44.8 million. The new agreement has an effective date of 15 September 2017 and a maturity date of 14 January 2021. Upon the expiration of the interest rate swap agreements on 14 January 2021, the interest on the entire RCF of €600 million is paid at a rate of 1.75% per annum plus the higher of the one-month or three-month EURIBOR rate (at the option of I-RES) or at a floor of zero if EURIBOR is negative. (see note 10 for further details)

In 2020, a fair value gain of €709,000 (31 December 2019: gain of €131,000) has been recorded in the consolidated statement of profit or loss and other comprehensive income and the fair value of the interest rate swaps was a liability of €84,000 at 31 December 2020 (31 December 2019: liability of €788,000).

On 12 February 2020, I-RES entered into a cross-currency swap to (i) hedge the US-based loan of USD $75 million into €68.8 million effective 11 March 2020 and (ii) convert the fixed interest rate on the US-based loan to a fixed Euro interest rate, maturing in 10 March, 2027 and 10 March 2030. (See note 11 for derivative fixed rates) This hedging agreement is accounted for as a cashflow hedge in accordance with the requirements of IFRS 9. Hedges are measured for effectiveness at each reporting date with the effective portion being recognised in equity in the hedging reserve, and the ineffective portion being SUPPLEMENTARY INFORMATION recognized through profit or loss within financing costs.

In 2020, the ineffective portion that has been recorded in the consolidated statement of profit or loss and other comprehensive income was €nil and effective portion of €4,533,000 included in the cash flow hedge reserve. The fair value of the interest rate swaps was an asset of €770,000 and a liability of €8,075,000 at 31 December 2020.

2020 Annual Report 135 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Financial Instruments, Investment Properties and Risk Management

a) Fair Value of Financial Instruments and Investment Properties

The Group classifies and discloses the fair value for each class of financial instrument based on the fair value hierarchy in accordance with IFRS 13. The fair value hierarchy distinguishes between market value data obtained from independent sources and the Group’s own assumptions about market value. The hierarchy levels are defined below:

» Level 1 - Inputs based on quoted prices in active markets for identical assets or liabilities; » Level 2 - Inputs based on factors other than quoted prices included in Level 1 and may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals; and » Level 3 - Inputs which are unobservable for the asset or liability and are typically based on the Group’s own assumptions as there is little, if any, related market activity.

The Group’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement and considers factors specific to the asset or liability.

The following table presents the Group’s estimates of fair value on a recurring basis based on information available as at 31 December 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

As at 31 December 2020, the fair value of the Group’s private placement debt is estimated to be €152.8 million. (31 December 2019: €nil) due to changes in interest rates since the private placement debt was issued and the impact of the passage of time on the fixed rate of the private placement debt. The fair value of the private placement debt is based on discounted future cash flows using rates that reflect current rate for similar financial instruments with similar duration, terms and conditions, which are considered Level 2 inputs. As at 31 December 2020, the fair value of the Group’s RCF approximates the carrying value as the interest rate of the RCF is on a 1 month or 3 month basis.

As at 31 December 2020 Level 1 Level 2 Level 3 Quoted prices in active Significant other Significant Total markets for identical observable unobservable assets and liabilities inputs inputs(1) €’000 €’000 €’000 €’000 Recurring Measurements - Assets Investment properties — — 1,380,354 1,380,354 Derivative financial instruments — 770 — 770 770 1,380,354 1,381,124 Recurring Measurements - Liability Derivative financial instruments(2)(3) — (8,159) — (8,159) Total — (7,389) 1,380,354 1,372,965 As at 31 December 2019 Level 1 Level 2 Level 3 Quoted prices in active Significant other Significant Total markets for identical observable unobservable assets and liabilities inputs inputs(1) €’000 €’000 €’000 €’000 Recurring Measurements - Assets Investment properties — — 1,359,201 1,359,201 Recurring Measurements - Liability Derivative financial instruments(2) — 788 — 788 Total 788 1,359,201 1,359,989

(1) See note 5 for detailed information on the valuation methodologies and fair value reconciliation. (2) The valuation of the interest rate swap instrument is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. The fair value is determined using the market-standard methodology of netting the discounted future fixed cash payments and the discounted variable cash receipts of the derivatives. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. If the total mark-to-market value is positive, I-RES will include a current value adjustment to reflect the credit risk of the counterparty, and if the total mark-to-market value is negative, I-RES will include a current value adjustment to reflect I-RES’ own credit risk in the fair value measurement of the interest rate swap agreements. (3) The cross currency swaps are valued by constructing the cash flows of each side and then discounting them back to the present using appropriate discount factors, including consideration of credit risk, in those currencies. The cash flows of the more liquidly quoted currency pair will be discounted using standard discount factors, while the cash flows of the less liquid currency pair will be discounted using cross-currency basis-adjusted discount factors. Following discounting, the spot rate will be used to convert the present value amount of the non-valuation currency into the valuation currency.

136 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Financial Instruments, Investment Properties and Risk Management (continued) b) Risk Management

The main risks arising from the Group’s financial instruments are market risk, interest rate risk, liquidity risk and credit risk. The STRATEGIC REPORT Group’s approach to managing these risks are summarised as follows:

Market Risk Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks.

The Group’s financial assets currently comprise short-term bank deposits, trade receivables, deposit on acquisition and derivatives.

Short-term bank deposits are held while awaiting suitable investment properties for investment. These are denominated in euros. Therefore, exposure to market risk in relation to these is limited to interest rate risk.

The Group also has private placement note that is denoted in USD. The Group’s risk management strategy is to mitigate foreign exchange variability to the extent that it is practicable and cost effective to do so. The Group utilizes cross currency swaps to hedge the foreign exchange risk associated with a portion of the Company’s existing, fixed foreign-currency denominated Borrowings. The use of cross-currency interest rate swaps is consistent with the Group’s risk management strategy to effectively eliminate variability in the Group’s functional currency equivalent cash flows on a portion of its Borrowings due to variability in the USD-EUR exchange rate. The hedges protect the Group against adverse variability in GOVERNANCE foreign exchange rates and the effective portion is recognised in equity in the hedging reserve, with the ineffective portion being recognised through profit or loss within financing costs.

Derivatives designated as hedges against foreign exchange risks are accounted for as cash flow hedges. Hedges are measured for effectiveness at each accounting date and the accounting treatment of changes in fair value revised accordingly. Specifically, the Company is hedging (1) the foreign exchange risk on the USD interest payments and (2) the foreign exchange risk on the USD principal repayment of the USD Borrowings at maturity. This hedging relationship qualifies for foreign currency cash flow hedge accounting.

On 12 February 2020, I-RES entered into cross-currency swaps to (i) exchange the USD loan of USD $75 million into €68.8 million effective 11 March 2020 and (ii) convert the fixed interest rate on the USD loan to a fixed Euro interest rate, maturing in 10 March 2027 and 10 March 2030.

At the inception of the hedging relationship the Company has identified the following potential sources of hedge ineffectiveness: FINANCIAL STATEMENTS

1. Movements in the Company’s and hedging counterparty’s credit spread that would result in movements in fair value of the Hedging Instrument that would not be reflected in the movements in the value of the Hedged Transactions. 2. The possibility of changes to the critical terms (e.g. reset dates, index mismatches, payment dates) of the Hedged Transaction due to a refinancing or debt renegotiation such that they no longer match those of the Hedging Instrument. The company would reflect such mismatch when modelling of the hypothetical derivative and this could be a potential source of hedge ineffectiveness.

Whilst sources of ineffectiveness do exist in the hedging relationship, the Company expects changes in value of both the Hedging Instrument and the Hedged Transaction to offset and systematically move in opposite directions given the critical terms of the Hedging Instrument and the Hedged Transactions are closely aligned at inception as described above. Therefore, the Company has qualitatively concluded that there is an economic relationship between the Hedging Instrument and the Hedged Transaction in accordance with IFRS 9. SUPPLEMENTARY INFORMATION

2020 Annual Report 137 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Financial Instruments, Investment Properties and Risk Management (continued)

b) Risk Management (continued)

Cash Flow Hedges At 31 December 2020, the Group held the following instruments to hedge exposures to changes in foreign currency:

31 December 31 December 31 December 2020 2027 2030 Cross Currency Swaps Net exposure ( €’000) 68,852 22,951 — Average fixed interest rate 1.96 % 2.25 % —

The amounts at the reporting date relating to items designated as hedged items were as follows:

Change in value used Cashflow hedge for calculating reserve hedge ineffectiveness (€’000) (€’000) Private placement debt (4,533) (77)

The amounts relating to items designated as hedging instruments and hedge ineffectiveness were as follows:

Carrying amount Changes in Hedge Line items in Amount Line items in Nominal Assets Liability the value ineffectiveness profit or loss reclassed profit or loss amount of hedging recognized in that includes from affected by instrument profit or loss hedge hedging reclassification recognized ineffectiveness reserve in OCI to profit or loss (€’000) (€’000) (€’000) (€’000) (€’000) (€’000) Gain on derivative Cross Currency financial Swaps 68,852 770 (8,075) 4,370 — instruments 4,293 Financing costs

Master netting or similar agreements The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under these agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. In certain circumstances, all outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions. The ISDA agreements do not meet the criteria for offsetting in the statement of financial position. This is because the Group does not have any currently legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events.

The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.

Gross amounts of Related financial Net amount financial instruments instruments that in the statement of are not offset financial position 31 December, 2020 Note (€’000) (€’000) (€’000) Financial assets Derivative financial instruments 16 770 (770) — Financial liabilities Derivative financial instruments 16 (8,075) 770 (7,305)

138 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Financial Instruments, Investment Properties and Risk Management (continued) b) Risk Management (continued)

Managing interest rate benchmark reform and associated risks STRATEGIC REPORT A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (“IBORs”) with alternative nearly risk-free rates (referred to as ‘IBOR reform’). The Group does not have any exposures to IBORs on its financial instruments that will be replaced or reformed as part of these market-wide initiatives. There is uncertainty over the timing and the methods of transition in some jurisdictions that the Group operates in. The Group anticipates that IBOR reform will not impact its risk management and hedge accounting.

Interest Rate Risk With regard to the cost of borrowing, I-RES has used, and may continue to use hedging, where considered appropriate, to mitigate interest rate risk.

As at 31 December 2020, I-RES’ RCF was drawn for €354.0 million. On 28 February 2017 and 15 September 2017, I-RES entered into interest rate swap agreements aggregating to €204.8 million. The interest rate swap agreements effectively convert the hedged portion of the RCF from a variable rate to a fixed rate facility to January 2021. The fixed interest rate with the swap is at 1.66% (1.75% less 0.09%). The agreements effectively convert borrowings on a EURIBOR-based floating rate RCF to a fixed rate facility. The interest on the remaining portion of the RCF is paid at a rate of 1.75% per annum plus the higher of the one-month or three-month EURIBOR rate (at the option of I-RES) or at a floor of zero if EURIBOR is negative. Subsequent to the year end, the interest rate swap agreements matured on 14 January 2021 and the interest on the entire RCF of €600 million is paid at a rate of 1.75% per annum plus the higher of the one-month or three-month EURIBOR rate (at GOVERNANCE the option of I-RES) or a floor of zero if EURIBOR is negative. The Group does not currently expect for the EURIBOR to go above zero in the medium term and therefore have not entered into new swaps to hedge the variable rate exposure. I-RES will continue to monitor the changes in the EURIBOR rate to determine whether additional interest rate hedging is required. As at 31 December 2020, 35% of our total debt is fixed at fixed interest rates. For the year ended 31 December 2020, a 100-basis point change in interest rates would have the following effect on the unhedged portion:

As at 31 December 2020

Change in Increase (decrease) interest rates in net income Basis Points €’000 EURIBOR rate debt(1) +100 (782) EURIBOR rate debt(2) -100 — FINANCIAL STATEMENTS

(1) Based on the fixed margin of 1.75% plus the one-month EURIBOR rate as at 31 December 2020 of -0.578% on the unswapped portion of the RCF. (2) Based on the fixed margin of 1.75% plus the floor of zero on the unswapped portion of the RCF.

As at 31 December 2019

Change in Increase (decrease) interest rates in net income Basis Points €’000 EURIBOR rate debt(1) +100 (1,849) EURIBOR rate debt(2) -100 —

(1) Based on the fixed margin of 1.75% plus the one-month EURIBOR rate as at 31 December 2019 of -0.472% on the unswapped portion of the RCF. (2) Based on the fixed margin of 1.75% plus the floor of zero on the unswapped portion of the RCF.

Liquidity Risk SUPPLEMENTARY INFORMATION Liquidity risk is the risk that the Group may encounter difficulties in accessing capital markets and refinancing its financial obligations as they come due.

The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors the level of expected cash inflows on trade and other receivables, together with expected cash outflows on trade and other payables and capital commitments.

2020 Annual Report 139 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Financial Instruments, Investment Properties and Risk Management (continued)

b) Risk Management (continued)

Liquidity Risk (continued)

As at 31 December 2020 Total 6 months 6 to 12 1 to 2 2 to 5 More than or less(1) months(1) years(1) years(1) 5 years(1) €’000 €’000 €’000 €’000 €’000 €’000 Non-derivative financial liabilities Loan drawn down 354,020 — — — 354,020 — Bank indebtedness interest (2) 21,352 3,072 3,123 6,195 8,962 — Private placement debt 191,385 — — — — 191,385 Private placement debt interest 40,965 2,295 2,295 4,590 13,770 18,015 Lease liability 12,082 314 314 628 1,883 8,943 Other liabilities 8,139 8,139 — — — — Security deposits 7,562 7,562 — — — — 635,505 21,382 5,732 11,413 378,635 218,343

Derivative financial liabilities Interest rate swaps used for hedging 84 84 — — — — Forward exchange rate used for hedging: Outflow (79,733) (687) (687) (1,381) (4,114) (72,864) Inflow 77,586 1,075 1,075 2,150 6,450 66,836 (2,063) 472 388 769 2,336 (6,028)

(1) Based on carrying value at maturity dates. (2) Based on current in-place interest rate for the remaining term to maturity.

As at 31 December 2019 Total 6 months 6 to 12 1 to 2 2 to 5 More than or less(1) months(1) years(1) years(1) 5 years(1) €’000 €’000 €’000 €’000 €’000 €’000 Loan drawn down 555,020 — — — 555,020 — Bank indebtedness interest (2) 42,446 4,757 4,809 9,540 23,340 — Derivative financial instruments 788 — — 788 — — Lease liability 12,553 314 314 628 1,883 9,414 Other liabilities 7,360 7,360 — — — — Security deposits 7,158 7,158 — — — — 625,325 19,589 5,123 10,956 580,243 9,414

(1) Based on carrying value at maturity dates. (2) Based on current in-place interest rate for the remaining term to maturity.

The carrying value of bank indebtedness and trade and other payables (other liabilities) approximates their fair value.

Credit Risk Credit risk is the risk that: (i) counterparties to contractual financial obligations will default; or (ii) the possibility that the Group’s tenants may experience financial difficulty and be unable to meet their rental obligations.

The Group monitors its risk exposure regarding obligations with counterparties through the regular assessment of counterparties’ credit positions.

140 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Financial Instruments, Investment Properties and Risk Management (continued) b) Risk Management (continued)

Credit Risk (continued) STRATEGIC REPORT The Group mitigates the risk of credit loss with respect to tenants by evaluating the creditworthiness of new tenants and obtaining security deposits wherever permitted by legislation.

The Group monitors its collection experience on a monthly basis and ensures that a stringent policy is adopted to provide for all past due amounts. All residential accounts receivable balances exceeding 30 days are written off to bad debt expense and recognised in the consolidated statement of profit or loss and other comprehensive income. Subsequent recoveries of amounts previously written off are credited in the consolidated statement of profit or loss and other comprehensive income. The Group’s allowance for expected credit loss amounted to €991,000 for the year ended 31 December 2020 and is recorded as part of property operating costs in the consolidated statement of operations. (31 December 2019: €581,000)

Cash and cash equivalents are held by major Irish and European institutions with credit ratings of A and AAA respectively. The Company deposits cash with individual institutions to avoid concentration of risk with any one counterparty. The Group has also engaged the services of a depository to ensure the security of the cash assets.

Risk of counterparty default arising on derivative financial instruments is controlled by dealing with high- quality institutions and by a policy limiting the amount of credit exposure to any one bank or institution. Derivative financial instrument counter parties have credit ratings in the range of A+ to BBB. GOVERNANCE

Capital Management The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, I-RES may issue new shares or consider the sale of assets to reduce debt. I-RES, through the Irish REIT Regime, is restricted in its use of capital to making investments in real estate property in Ireland. I-RES intends to make distributions if its results of operations and cash flows permit in the future.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. At 31 December 2020, capital consists of equity and debt, and Group Total Gearing was 39.2%. I-RES seeks to use gearing to enhance shareholder returns over the long term. The level of gearing is monitored carefully by the Board.

The Board monitors the return on capital as well as the level of dividends paid to ordinary shareholders. Subject to distributable reserves, it is the policy of I-RES to distribute at least 85% of the Property Income of its Property Rental FINANCIAL STATEMENTS Business for each accounting period. SUPPLEMENTARY INFORMATION

2020 Annual Report 141 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Taxation

I-RES elected for REIT status on 31 March 2014. As a result, from this date the Group is exempt from paying Irish corporation tax on the profits and gains from qualifying rental business in Ireland provided it meets certain conditions.

Instead, dividends paid to shareholders in respect of the Property Rental Business are treated for Irish tax purposes as income in the hands of shareholders. Corporation tax is still payable in the normal way in respect of income and gains from any residual business (generally including any property trading business) not included in the Property Rental Business. I-RES is also liable to pay other taxes such as VAT, stamp duty, land tax, local property tax and payroll taxes in the normal way.

Within the Irish REIT Regime, for corporation tax purposes the Property Rental Business is treated as a separate business from the residual business. A loss incurred by the Property Rental Business cannot be offset against profits of the residual business.

An Irish REIT is required, subject to having sufficient distributable reserves, to distribute to its shareholders (by way of dividend), on or before the filing date for its tax return for the accounting period in question, at least 85% of the Property Income of the Property Rental Business arising in each accounting period. Failure to meet this requirement would result in a tax charge calculated by reference to the extent of the shortfall in the dividend paid. A dividend paid by an Irish REIT from its Property Rental Business is referred to as a property income distribution. Any normal dividend paid from the residual business by the Irish REIT is referred to as a non-property income distribution dividend.

The Directors confirm that the Group has remained in compliance with the Irish REIT Regime up to and including the date of this Report and that there has been no profit arising from residual business activities.

19. Dividends

Under the Irish REIT Regime, subject to having sufficient distributable reserves, I-RES is required to distribute to shareholders at least 85% of the Property Income of its Property Rental Business for each accounting period, provided it has sufficient distributable reserves.

On 07 August 2020, the Directors resolved to pay an additional dividend of €14.3 million for the six months ended 30 June 2020. The dividend of 2.75 cents per share was paid on 11 September 2020 to shareholders on record as at 21 August 2020.

On 20 February 2020, the Directors resolved to pay an additional dividend of €16.2 million for the year ended 31 December 2019. The dividend of 3.1 cents per share was paid on 23 March 2020 to shareholders on record as at 28 February 2020.

On 9 August 2019, the Directors resolved to pay an interim dividend of €14.1 million for the six months ended 30 June 2019. The dividend of 2.7 cents per share was paid on 13 September 2019 to shareholders on record as at 23 August 2019.

On 22 February 2019, the Directors resolved to pay an additional dividend of €13.0 million for the year ended 31 December 2018. The dividend of 3.0 cents per share was paid on 29 March 2019 to shareholders on record as of 8 March 2019.

31 December 31 December 2020 2019 €’000 €’000 Profit for the year 58,263 86,282 Less: unrealized loss/(gain) in net movement in fair value of investment properties (19,092) (56,234) Property Income of the Property Rental Business 39,171 30,048 Add back: Share-based compensation expense 322 236 Unrealised change in fair value of derivatives (709) (131) Distributable Reserves 38,784 30,153

142 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Supplemental Cash Flow Information

Breakdown of Operating Income Items Related to Financing and Investing Activities

For the year ended 31 December 31 December STRATEGIC REPORT 2020 2019 €’000 €’000 Financing costs as per the consolidated statement of profit or loss and other comprehensive income 12,816 12,036 Interest expense accrual (1,311) (315) Capitalised interest 434 442 Lease interest 241 — Less: amortisation of financing fees (1,409) (2,486) Interest Paid 10,771 9,677

Changes in Operating Assets and Liabilities

For the year ended 31 December 31 December 2020 2019 €’000 €’000 GOVERNANCE Prepayments (350) (1,358) Trade receivables (676) 160 Other receivables (97) 1,018 Accounts payable and other liabilities 303 274 Security deposits 404 1,864 Changes in operating assets and liabilities (416) 1,958

Issuance of Shares

For the year ended 31 December 31 December 2020 2019 €’000 €’000

Issuance of shares 3,536 135,142 FINANCIAL STATEMENTS Issuance costs — (3,129) Net proceeds 3,536 132,013 SUPPLEMENTARY INFORMATION

2020 Annual Report 143 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Supplemental Cash Flow Information (continued)

Changes in Liabilities Due to Financing Cash Flows

Changes from Financing Cash flows Non-cash Changes

1 January 2020 private from Proceeds debt placement Facility Credit Revolving drawdown Facility Credit Revolving repayment Lease payments Financing placement private on fees debt other of Amortisation financing costs Foreign exchange derivatives on Gain to relating accrual Interest derivatives New hedging instrument 2020 December 31

Bank indebtedness 555,020 — 17,000 (218,000) — — — — — — — 354,020 Deferred loan costs, net (5,169) — — — — — 1,198 — — — — (3,971) Private Placement debt — 196,342 — — — — — (4,956) — — — 191,386 Deferred loan costs, net — — — — — (2,595) 211 — — — — (2,384) Derivative financial instruments 788 — — — — — — — (709) 5 8,075 8,159 Lease liability 9,872 — — — (386) — — — — — — 9,486 Total liabilities from financing activities 560,511 196,342 17,000 (218,000) (386) (2,595) 1,409 (4,956) (709) 5 8,075 556,696

Changes from Financing Cash flows Non-cash Changes 1 January 2019 1 January Revolving Credit Facility drawdown Revolving Credit Facility repayment Lease payments on fees Financing Revolving Credit Facility other of Amortisation financing costs Payable Liability Lease derivatives on Gain accrual Interest derivatives to relating 2019 December 31

Bank indebtedness 309,159 637,451 (391,590) — — — — — — 555,020 Deferred loan costs, net (1,665) — — — (5,990) 2,486 — — — (5,169) Derivative financial instruments 913 — — — — — — (131) 6 788 Lease liability — — — (247) — — 10,118 — — 9,871 Total liabilities from financing activities 308,407 637,451 (391,590) (247) (5,990) 2,486 10,118 (131) 6 560,510

144 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Related Party Transactions

CAPREIT LP has an indirect 18.8% beneficial interest in I-RES and has determined that it has significant influence over I-RES. The beneficial interest is held through a qualifying investor alternative investment fund, Irish Residential Properties Fund,

CAPREIT LP’s wholly-owned subsidiary. STRATEGIC REPORT

Effective 1 November 2015, CAPREIT LP’s wholly-owned subsidiary, IRES Fund Management Limited (“the Manager” or “IRES Fund Management”) entered into the investment management agreement with I-RES (the “Investment Management Agreement”), as amended or restated or as may be amended or restated from time to time, pursuant to which I-RES pays 3.0% per annum of its gross rental income as property management fees and 0.5% per annum of its net asset value together with relevant reimbursements as asset management fees to the Manager. The Investment Management Agreement governs the provision of portfolio management, risk management and other related services to the Company by the Manager on a day-to-day basis. The Investment Management agreement had an initial term of five years and thereafter continues in force for consecutive five-year periods.

The Manager has the ability to terminate the Investment Management Agreement by serving 12 months’ notice of termination at any time after 1 November 2019. The Manager may also terminate the Investment Management Agreement at any time if required to do so by any competent regulatory authority, if the Company commits a material breach of the agreement which remains unremedied for 30 days, or if the Company enters an event of insolvency.

The Company may terminate the Investment Management Agreement if the Manager commits a material breach of the agreement which remains unremedied for 30 days, enters an event of insolvency, is no longer authorised to carry out the services under the Investment Management Agreement or if CAPREIT LP (or one of its affiliate) ceases to beneficially own GOVERNANCE 5% of the Company or ceases to control the Manager.

The Company also has the right to terminate the Investment Management Agreement since 1 November 2020 if it determines that internalisation of the management of the Company, subject to relevant regulatory approval, is in the Company’s best interests. In such circumstances, the Investment Management Agreement provides for the Company to purchase the issued shares of the Manager on a liability free (other than liabilities in the ordinary course of business) / cash free basis for €1.

In November 2020, I-RES provided an update on the Investment Management Agreement between the Company, I-RES Residential Properties Limited and the Manager.

In advance of the expiry of the initial five year term of the Investment Management Agreement on 1 November 2020, the Related Party Committee (a committee of the Board which did not include either Mark Kenney or Phillip Burns given their respective relationships to CAPREIT LP) was appointed in November 2019 to conduct a scheduled review of the Investment Management Agreement and related Services Agreement, evaluate the strategic options available to I-RES in relation to them and consider certain related matters. FINANCIAL STATEMENTS

On the expiry date of the initial Investment Management Agreement term on 1 November 2020, the Related Party Committee had not reached agreement on new terms for a revised Investment Management Agreement with the Manager. As a result, in accordance with its terms the Investment Management Agreement has now continued for a second five-year term under the existing terms. Both parties have termination rights under the Investment Management Agreement which can now be exercised. In conjunction with the rollover of the Investment Management Agreement, I-RES announced that it would augment the management resources of the Company in line with its growth strategy and increased scale.

Certain transitional provisions apply under the Investment Management Agreement upon its termination in order to effect an orderly transition of the services to the Company. Other than fees or other monies accrued up to the point of termination, the Manager is not entitled to compensation on termination of the agreement.

In providing its services to the Company under the Investment Management Agreement, the Manager also has access to the expertise and resources provided by CAPREIT LP, pursuant to the Services Agreement between among the Company, CAPREIT LP and the Manager (as amended from time to time), which covers the performance of property and asset SUPPLEMENTARY INFORMATION management services by CAPREIT LP. Among other customary termination provisions, the Services Agreement terminates on the termination of the Investment Management Agreement or where CAPREIT LP (or one of its affiliates) ceases to control the Manager.

For the year ended 31 December 2020, I-RES incurred €4.4 million in asset management fees. In addition, €2.2 million in property management fees were incurred and recorded under operating expenses. For the year ended 31 December 2019, €4.0 million in asset management fees and €1.9 million in property management fees were recorded. For the year ended 31 December 2020, CAPREIT LP charged back €2.3 million (31 December 2019: €1.4 million) relating to salaries.

2020 Annual Report 145 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Related Party Transactions (continued)

The amount payable to CAPREIT LP (including IRES Fund Management) totalled €1.4 million as at 31 December 2020 (€2.0 million as at 31 December 2019) related to asset management fees, property management fees, and payroll-related costs. The amount receivable from CAPREIT LP (including IRES Fund Management) totalled €0.2 million as at 31 December 2020 (€0.1 million as at 31 December 2019) related to the leasing of office space.

IRES Fund Management has one remaining lease for office space with I-RES as at 31 December 2020. The rental income for the office space for the year ended 31 December 2020 was €145,000 (€116,000 for the year ended 31 December 2019). The lease expires on 1 December 2021. Minimum annual rental payments from IRES Fund Management for the next year is as follows:

2021 €’000 Minimum annual rent payments from IRES Fund Management 34

Directors

Phillip Burns is considered to be a non-independent director. Phillip Burns is Chief Executive Office, a director and a shareholder of European Residential Real Estate Investment Trust (“ERES”), a Canadian company that is a subsidiary of CAPREIT and has its shares listed on the Toronto Stock Exchange. In having regard to Euronext Dublin Listing Rule 2.10.11 and the provisions of the UK Corporate Governance Code given that, (i) in connection with a transaction entered into between ERES and CAPREIT, pursuant to which CAPREIT indirectly acquired control of ERES, Phillip Burns was appointed as a senior employee of CAPREIT LP, which has a material business relationship with the Company as it is the parent company of the Manager and (ii) this appointment together with the transaction completed between ERES and CAPREIT in March 2019 gives rise to a significant link with another director on the Board of the Company, Mark Kenney, President, Chief Executive Officer and trustee of CAPREIT.

Mark Kenney is a non-executive director of I-RES. He is also the President, Chief Executive Officer and a trustee of CAPREIT.

Purchase of I-RES Shares

On 20 November 2020, certain employees of CAPREIT and CAPREIT LP, including Mark Kenney, (the “Participants”) assigned I-RES options granted to them under the LTIP to a subsidiary of CAPREIT LP, Irish Residential Properties Fund (the “QIAIF”). Immediately following the assignment of these I-RES options, the QIAIF exercised these options and acquired an additional 3,400,000 Ordinary Shares in I-RES. The QIAIF paid each of the Participants the amount of €0.4770 per option, representing the difference between the exercise price (of €1.04 each) and the volume weighted average price of the underlying Ordinary Shares for the five business day period to close of business on 19 November 2020, being the business day immediately prior to the date of assignment. As CAPREIT is a related party of the Company under the Euronext Dublin Listing Rules, the allotment of the 3,400,000 shares to CAPREIT (through the QIAIF) immediately following the assignment constituted a smaller Related Party Transaction under LR 11.1.15 of the Listing Rules. As at 31 December 2020, CAPREIT LP’s beneficial interest in I-RES is 18.8% (31 December 2019: 18.3%).

As part of these assignments on 20 November 2020, Mark Kenney assigned 1,000,000 of his I-RES options to the QIAIF.

On 18 June 2019, CAPREIT LP indirectly purchased 8,778,387 shares of I-RES. On 10 July 2019, CAPREIT LP indirectly purchased an additional 8,721,613 shares of I-RES.

Remuneration

Total remuneration is comprised of remuneration of the non-executive Directors of €433,000 for the year ended 31 December 2020 and €384,000 for the year ended 31 December 2019, excluding remuneration related to the Chief Executive Officer.

Owners’ Management Companies Not Consolidated As a result of the acquisition by the Group of apartments or commercial space in certain residential rental properties, the Group holds voting rights in the relevant owners’ management companies associated with those developments. Where the Group holds the majority of those voting rights, this entitles it, inter alia, to control the composition of such owners’ management companies’ boards of directors. However, as each of those owners’ management companies is incorporated as a company limited by guarantee for the purpose of owning the common areas in residential or mixed-use developments, they are not intended to be traded for gains. For these reasons, I-RES does not consider these owners’ management companies to be material for consolidation as the total asset of the owner’s management companies is less than 0.3% of the Group’s consolidated total assets, either individually or collectively. I-RES has considered the latest available financial statements of these owners’ management companies in making this assessment.

146 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Related Party Transactions (continued)

Owners’ Management Companies Not Consolidated (continued) Details of the owners’ management companies in which the Group had an interest during the year ended 31 December

2020, along with the relevant service fees paid by the Group to them, are as follows: STRATEGIC REPORT

Owners’ Management Entity Registered Development Percentage Service Payable Prepaid Official Address Managed of Voting Fees by I-RES by I-RES Rights Held Incurred €’000 €’000 % of total(1) in the Period €’000 Majority voting rights held Priorsgate Estate Owners’ Management Company Limited by Guarantee Unit 4B Lazer Lane, Grand Priorsgate 52.4 215.8 — — Canal Square, Dublin 2 GC Square (Residential) Owners’ Management Company GOVERNANCE Limited by Guarantee Unit 4B Lazer Lane, Grand The Marker 80.0 234.7 — — Canal Square, Dublin 2 Residences Landsdowne Valley Owners’ Management Company Limited by Guarantee(5) Unit 4B Lazer Lane, Grand Lansdowne 78.6 512.8 — 213.8 Canal Square, Dublin 2 Gate Charlestown Apartments Owners’ Management Company Limited by Guarantee(3) Unit 4B Lazer Lane, Grand Charlestown 82.5 478.9 — 39.9 Canal Square, Dublin 2 Bakers Yard Owners’

Management Company FINANCIAL STATEMENTS Limited By Guarantee Ulysses House, Foley Street, Bakers Yard 63.8 187.4 — — Dublin 1

Rockbrook Grande Central Owners’ Management Company Limited by Guarantee Unit 4B Lazer Lane, Grand Grande 76.9 359.8 — — Canal Square, Dublin 2 Central Rockbrook South Central Owners’ Management Company Limited by Guarantee Unit 4B Lazer Lane, Grand South Central 83.8 512.1 — — Canal Square, Dublin 2

Rockbrook Estate Management SUPPLEMENTARY INFORMATION Company Limited by Guarantee Unit 4B Lazer Lane, Grand Rockbrook 64.3(2) 22.9 — — Canal Square, Dublin 2 Commercial TC West Estate Management Company Limited by Guarantee Charter House, 5 Pembroke Tallaght 75.0 390.4 — 417.3 Row, Dublin 2 D02 FW61 Commercial

2020 Annual Report 147 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Related Party Transactions (continued)

Owners’ Management Companies Not Consolidated (continued)

Owners’ Management Entity Registered Development Percentage Service Payable Prepaid Official Address Managed of Voting Fees by I-RES by I-RES Rights Held Incurred €’000 €’000 % of total(1) in the Period €’000 TC West Residential Owners’ Management Company Limited by Guarantee(4) Charter House, 5 Pembroke Tallaght 87.2 859.6 — — Row, Dublin 2 D02 FW62 Residential Gloucester Maple Owners’ Management Company Limited by Guarantee Ti Phuirseil Freeport, Barna, City Square 85.2 51.6 2.9 — Galway H91 W90P Elmpark Green Residential Owners’ Management Company Limited By Guarantee 2 Lansdowne, Shelbourne Elmpark Green 60.5 531.3 — 125.0 Ballsbridge Dublin 4 Coldcut Owners’ Management Company Limited By Guarantee c/o Brehan Capital Partners Coldcut Park 97.7 249.7 — — Limited, 2nd Floor, Guild House, Guild Street, Dublin 1 Time Place Property Management Company Limited By Guarantee RF Property Management, Time Place 74.4 150.5 — — Ground Floor Ulusses House, Dublin 18 23/24 Foley Street, Dublin 1, D01 W2T2 Burnell Green Management Company Company Limited By Guarantee City Junction Business Park, Burnell Green 87.0 143.1 — — Northern Cross, Malahide Northern Road, Dublin 17 Cross Dublin 17 Feltrim Court Owners Management Company Company Limited By Guarantee 87 Forrest Walk, Swords, Co Russell Court 80.6(7) 57.2 — — Dublin, K67 V022 Swords Co Dublin Minority voting rights held BSQ Owners’ Management Company Limited by Guarantee(6) 5th Floor, St Stephen’s Green Beacon South 11.3 821.3 59.0 — House, Earlsfort Terrace St Quarter Stephens Green, Dublin 2 GC Square Management Company Limited by Guarantee 2nd Floor, Guild House Guild The Marker 48.0 6.0 — — Street, Dublin 1 Commercial

148 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Related Party Transactions (continued)

Owners’ Management Companies Not Consolidated (continued) STRATEGIC REPORT

Owners’ Management Entity Registered Development Percentage Service Payable Prepaid Official Address Managed of Voting Fees by I-RES by I-RES Rights Held Incurred €’000 €’000 % of total(1) in the Period €’000 Sandyford Forum Management Company Company Limited by Guarantee 28/30 Burlington Road The Forum 6.3 12.7 — 6.1 Dublin 4 Stapolin Management Company Limited By Guarantee 15 Adelaide Street Dun Staploin 11.4 39.8 — 11.3 Laoghaire, Co Dublin A96 D8Y9 GOVERNANCE Red Arches Management Company Limited by Guarantee 16 Adelaide Street Dun Red Arches 6.0 (1.4) — 5.0 Laoghaire, Co Dublin A96 D8Y9 Stillbeach Management Company Company Limited By Guarantee Wyse 9 Lower Baggot Street Beechwood 31.6 181.1 0.9 — Dublin 2 D02 XN82 Court, Stillorgan Co Dublin Burnell Court Management

Company FINANCIAL STATEMENTS Company Limited By Guarantee City Junction Business Park, Burnell Court 24.0 103.1 — — Northern Cross, Malahide Northern Road, Dublin 17 Cross Dublin 17 Carrington Park Residential Property Management Company Limited By Guarantee Rfpm Ulysses House Foley Carrington 41.0 287.8 — — Street Dublin 1, D01 W2T2 Park Dublin 9 Heywood Court Management Company (Dublin) Company Limited By Guarantee Lansdowne Partnership, 69 Heywood 43.0 103.3 25.8 —

Mespil Road, Dublin 4 Court Dublin 9 SUPPLEMENTARY INFORMATION Hartys Quay Management Company Limited By Guarantee David O’Suillivan & Co 1st Hartys Quay 29.0 104.8 — — Floor Red Abbey Bld, Unit Co Cork 20, South Link Industrial Estate Cork Belville Court Management Company Company Limited By Guarantee 1/2 Windsor Terrace, Dun Belville Dublin 48.0 55.0 22.9 — Laoghaire, Co Dublin 18

2020 Annual Report 149 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21. Related Party Transactions (continued)

Owners’ Management Companies Not Consolidated (continued)

Owners’ Management Entity Registered Development Percentage Service Payable Prepaid Official Address Managed of Voting Fees by I-RES by I-RES Rights Held Incurred €’000 €’000 % of total(1) in the Period €’000 Stag Management Company Limited By Guarantee Rathgar House 53a Rathgar Belleville 18.2(7) 19.6 — — Avenue, Rathgar, Dublin 6, Castleknock D06 K5K2 Dublin 15 The Mills Twelfth Lock Management Company Company Limited By Guarantee 11 The Mills, Castleknock, Twelfth Lock, 7.3(7) 6.2 — — Dublin 15, D15 FC64 Castleknock, Dublin 15 St Edmunds Management Company Limited By Guarantee Smith Property Management Palmerstown 5.8(7) 32.4 — — Block 37/41, Dunboyne Dublin 20 Business Park, Dunboyne, Co Meath A86 Xy27 Custom House Square Management Company Limited By Guarantee C/O Anne Brady McQuillain Custom House 2.0 29.6 — — Dfk, Iveagh Court, Harcourt Square, IFSC, Road, Dublin 2. Dublin 1 Malahide Waterside Management Company Limited By Guarantee Office 3 The Eden Business Waterside 9.6 10.3 — 5.2 Centre, Grande Road, Rathfarnham, Dublin 16, D16 T293 Total 6,769.4 111.5 823.6

(1) For residential apartments the voting rights are calculated based on one vote per apartment regardless of the size of that apartment. For commercial, it is based on square footage of the units or the memorandum and articles of the particular management company. (2) Includes voting rights controlled directly and indirectly. (3) Formerly known as Charlestown Apartments Management Company, Company Limited By Guarantee. (4) Formerly known as TC West Residential Owners Management Company, Company Limited by Guarantee. (5) Formerly known as Landsdowne Valley Management Company, Company Limited by Guarantee. (6) Formerly known as BSQ Management Company, Company Limited by Guarantee. (7) Properties disposed during 2020 resulting in no ownership interest at 31 December 2020.

All of the owners’ management companies are incorporated in Ireland and are property management companies. As noted above, as at 31 December 2020, €111,500 is payable and €823,600 is prepaid by the Group to the owners’ management companies. As at 31 December 2019, €92,500 was payable and €164,400 was prepaid by I-RES to the owners’ management companies.

150 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

22. Contingencies

At Beacon South Quarter, in addition to the capital expenditure work that has already been completed, water ingress and fire remediation works were identified in 2016, and I-RES is working with the Beacon South Quarter owners’ management company to resolve these matters. In 2017, in relation to these water ingress and fire remedial works, levies were approved STRATEGIC REPORT by the members of the Beacon South Quarter owners’ management company. I-RES’ portion of these levies as at 31 December 2020 is circa €0.6 million. There is also an active insurance claim with respect to the water ingress and related damage. The amount of potential costs relating to these structural remediation works cannot be currently measured with sufficient reliability.

23. Commitments

In November 2018, the Company entered into a share purchase agreement to acquire 69 residential units for a total consideration of €47.16 million (including VAT but excluding other transaction costs). Practical completion of the units is expected to be on or around early 2022.

In January 2020, the Company entered into a development contract to develop 61 units for a total consideration of circa €16 million and the amount outstanding as of 31 December 2020 is circa €12.5 million.

In June 2020, the Company entered into a contract for fire remedial works at 17 properties in its portfolio for a total of circa €4.5 million and the remaining amount as at 31 December 2020 is circa €2.1 million.

24. Earnings per Share GOVERNANCE

Earnings per share amounts are calculated by dividing profit for the reporting period attributable to ordinary shareholders of I-RES by the weighted average number of ordinary shares outstanding during the reporting period.

For the year ended 31 December 31 December 2020 2019 Profit attributable to shareholders of I-RES (€’000) 58,263 86,282 Basic weighted average number of shares 522,069,110 478,563,272 Diluted weighted average number of shares(1)(2) 524,130,528 481,508,009 Basic Earnings per share (cents) 11.2 18.0 Diluted Earnings per share (cents) 11.1 17.9

(1) Diluted weighted average number of shares includes the additional shares resulting from dilution of the long-term incentive plan options as of the FINANCIAL STATEMENTS reporting period date. (2) At 31 December 2020, 4,596,499 options (31 December 2019: 4,596,499) were excluded from the diluted weighted average number of ordinary shares because their effect would have been anti-dilutive.

EPRA issued Best Practices Recommendations most recently in October 2019, which gives guidelines for performance matters.

EPRA Earnings represents the earnings from the core operational activities (recurring items for I-RES). It is intended to provide an indicator of the underlying performance of the property portfolio and therefore excludes all components not relevant to the underlying and recurring performance of the portfolio, including any revaluation results and results from the sale of properties. EPRA Earnings per share amounts are calculated by dividing EPRA Earnings for the reporting period attributable to shareholders of I-RES by the weighted average number of ordinary shares outstanding during the reporting period. SUPPLEMENTARY INFORMATION

2020 Annual Report 151 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

24. Earnings per Share (continued)

EPRA Earnings per Share (continued)

For the year ended 31 December 31 December 2020 2019

Profit for the year (€’000) 58,263 86,282 Adjustments to calculate EPRA Earnings exclude: Costs associated with early close out of debt instrument (€’000) — 3,153 Changes in fair value on investment properties (€’000) (19,092) (56,234) Profit or losses on disposal of investment property (4,432) — Changes in fair value of derivative financial instruments (€’000) (709) (131) EPRA Earnings (€’000) 34,030 33,070

Basic weighted average number of shares 522,069,110 478,563,272 Diluted weighted average number of shares 524,130,528 481,508,009

EPRA Earnings per share (cents) 6.5 6.9 EPRA Diluted Earnings per share (cents) 6.5 6.9

25. Net Asset Value per Share

EPRA issued Best Practices Recommendations most recently in October 2019, which gives guidelines for performance matters.

In October 2019, EPRA introduced three EPRA NAV metrics to replace the existing EPRA NAV calculation that was previously being presented. The three EPRA NAV metrics are EPRA Net Reinstatement Value (“EPRA NRV”), EPRA Net Tangible Asset (“EPRA NTA”) and EPRA Net Disposal Value (“EPRA NDV”). Each EPRA NAV metric serves a different purpose. The EPRA NRV measure is to highlight the value of net assets on a long term basis. EPRA NTA assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability. Lastly, EPRA NDV provides the reader with a scenario where deferred tax, financial instruments, and certain other adjustments are calculated to the full extent of their liabilities. The table below presents the transition between the Group’s shareholders’ equity derived from financial statements and the various EPRA NAV.

EPRA NAV per Share

As at 31 December 2020

EPRA NRV EPRA NTA(1) EPRA NDV(2) Net assets (€’000) 841,695 841,695 841,695 Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 84 84 — Fair value of fixed interest rate debt (€’000) — — 36,219 Real estate transfer tax (€’000)(3) 62,138 — — EPRA net assets (€’000) 903,917 841,779 877,914 Number of shares outstanding 525,078,946 525,078,946 525,078,946 Diluted number of shares outstanding 526,289,910 526,289,910 526,289,910 Basic Net Asset Value per share (cents) 160.3 160.3 160.3 EPRA Net Asset Value per share (cents) 171.8 159.9 166.8

152 I-RES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

25. Net Asset Value per Share (continued)

As at 31 December 2019

EPRA NRV EPRA NTA(1) EPRA NTA(2) STRATEGIC REPORT Net assets (€’000) 810,169 810,169 810,169 Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 788 788 — Adjustments to calculate EPRA net assets include: Real estate transfer tax (€’000)(3) 56,753 — — EPRA net assets (€’000) 867,710 810,957 810,169 Number of shares outstanding 521,678,946 521,678,946 521,678,946 Diluted number of shares outstanding 524,529,943 524,529,943 524,529,943 Basic Net Asset Value per share (cents) 155.3 155.3 155.3 EPRA Net Asset Value per share (cents) 165.4 154.6 154.5

(1) Following changes to the Irish REIT legislation introduced in October 2019, if a REIT disposes of an asset of its property rental business and does not (i) distribute the gross disposal proceeds to shareholders by way of dividend; (ii) reinvest them into other assets of its property rental business (whether by acquisition or capital expenditure) within a three-year window (being one year before the sale and two years after it); or (iii) use them to repay debt specifically used to acquire, enhance or develop the property sold, then the REIT will be liable to tax at a rate of 25% on 85% of the gross disposal

proceeds, subject to having sufficient distributable reserves. For the purposes of EPRA NTA, the Group have assumed any such sales proceeds are GOVERNANCE reinvested within the required three year window. (2) Deferred tax is assumed as per the IFRS statement of financial position. To the extent that an orderly sale of the Group’s asset was undertaken over a period of several years, during which time (i) the Group remained a REIT; (ii) no new assets were acquired or sales proceeds reinvested; (iii) any developments completed were held for three years from completion; and (iv) those assets were sold at 31 December 2020 valuations, the sales proceeds would need to be distributed to shareholders by way of dividend within the required time frame or else a tax liability amounting to up to 25% of distributable reserves plus current unrealised revaluation gains could arise for the Group. (3) This is the purchaser costs amount as provided in the valuation certificate. Purchasers’ costs consist of items such as stamp duty on legal transfer and other purchase fees that may be incurred and which are deducted from the gross value in arriving at the fair value of investment for IFRS purposes. Purchasers’ costs are in general estimated at 9.96% for commercial and 4.46% for residential.

26. Directors’ Remuneration, Employee Costs and Auditor Remuneration

Key Management personnel of the Group consist of the Board of directors. The remuneration of the key management personnel paid during the year were as follows:

For the year ended 31 December 31 December FINANCIAL STATEMENTS 2020 2019 €’000 €’000 Directors’ remuneration Short-term employee benefits 962 1,361 Pension costs 60 60 Other benefits(1) 139 125 Share-based payments(2) 322 236 Total 1,483 1,782

(1) Included in this amount is pay-related social insurance and benefits paid for the Directors. (2) Included in share-based payments are 4,596,499 stock options that were anti-dilutive as at 31 December 2020.

For the year ended 31 December 31 December 2020 2019 SUPPLEMENTARY INFORMATION €’000 €’000 Employees costs Salaries, benefits and bonus 678 1,040 Social insurance costs 112 90 Pension costs 65 60 Share-based payments 322 236 Total 1,177 1,426

2020 Annual Report 153 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

26. Directors’ Remuneration, Employee Costs and Auditor Remuneration (continued)

For the year ended 31 December 31 December 2020 2019 €’000 €’000 Auditor remuneration (including expenses)(1) Audit of the Group accounts 135 128 Other assurance services(2) 15 22 Non-assurance services(3) 100 — Total 250 150

(1) Included in the auditor remuneration for the Group is an amount of €125,000 (31 December 2019: €125,000) that relates to the audit of the Company’s financial statements. (2) Non-audit remuneration for 31 December 2020 and 31 December 2019 relates to review of interim financial statements (3) Non-assurance services advisory fee for a transaction that did not close due to Covid-19.

27. Holding Company Details

The name of the holding company of the Group is Irish Residential Properties REIT plc. The legal form of the Company is a public limited company. The place of registration of the holding company is Dublin, Ireland and its registration number is 529737. The address of the registered office is South Dock House, Hanover Quay, Dublin 2, Ireland.

28. Subsequent Events

On 28 January 2021, I-RES announced that it has completed the purchase of 146 residential units at Phoenix Park racecourse for a purchase price of €60 million (including VAT but excluding other transaction costs). The transaction is funded by the RCF.

On 25 February 2021, I-RES has exercised an option for one year extension for €395 million of its RCF.

154 I-RES COMPANY STATEMENT OF FINANCIAL POSITION As at 31 December 2020

31 December 31 December 2020 2019 Note €’000 €’000

Assets STRATEGIC REPORT Non-Current Assets Investment properties III 1,247,332 1,224,787 Investment in subsidiary VI 873 873 Property, plant and equipment V 9,722 10,088 1,257,927 1,235,748 Current Assets Loan advances to the subsidiary VI 97,513 97,012 Other current assets VIII 15,229 11,631 Cash and cash equivalents 10,847 5,818 123,589 114,461 Total Assets 1,381,516 1,350,209

Liabilities Non-Current Liabilities Bank indebtedness X 350,049 549,851 GOVERNANCE Private placement debt XI 128,421 — Loan advances from the subsidiary VII 68,852 — Lease liability IV 9,486 9,872 Derivative financial instrument — 788 556,808 560,511 Current Liabilities Accounts payable and accrued liabilities IX 10,996 9,945 Derivative financial instruments XVI 84 — Security deposits 6,980 6,550 18,060 16,495 Total Liabilities 574,868 577,006

Shareholders’ Equity FINANCIAL STATEMENTS Share capital XIII 52,507 52,167 Share premium XIII 500,440 497,244 Other reserve 1,169 1,147 Retained earnings 252,532 222,645 Total Shareholders’ Equity 806,648 773,203 Total Shareholders’ Equity and Liabilities 1,381,516 1,350,209

Company profit after tax for the financial year ended 31 December 2020 was €60.1 million (31 December 2019: €76.5 million).

The accompanying notes form an integral part of these financial statements.

Declan Moylan Margaret Sweeney Chairman Executive Director SUPPLEMENTARY INFORMATION

2020 Annual Report 155 COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2020

Note 31 December 31 December 2020 2019 €’000 €’000 Operating Revenue Revenue from investment properties XIV 67,744 56,114 Operating Expenses Property taxes (687) (600) Property operating costs (12,137) (9,883) (12,824) (10,483) Net Rental Income (“NRI”) 54,920 45,631 General and administrative expenses (7,349) (4,258) Asset management fee XXI (4,444) (4,024) Share-based compensation expense XII (322) (236) Net movement in fair value of investment properties III 20,920 46,704 Gain on disposal of investment properties 4,432 — Gain on derivative financial instruments 709 131 Depreciation of property, plant and equipment (526) (32) Lease interest (241) (4) Operating Profit 68,099 83,912 Finance costs XV (12,667) (12,036) Interest from intercompany loan VI 4,673 4,650 Profit for the Year 60,105 76,526 Total Comprehensive Income for the Year Attributable to Shareholders 60,105 76,526

Basic Earnings per Share (cents) XXIII 11.5 16.0 Diluted Earnings per Share (cents) XXIII 11.5 15.9

The accompanying notes form an integral part of these financial statements.

156 I-RES COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2020

Note Share Share Retained Other Capital Premium Earnings Reserve Total €’000 €’000 €’000 €’000 €’000

Shareholders’ Equity at 1 January 2020 52,167 497,244 222,645 1,147 773,203 STRATEGIC REPORT Total comprehensive income for the year Profit for the year — — 60,105 — 60,105 Total comprehensive income for the year — — 60,105 — 60,105

Transactions with owners, recognised directly in equity Long-term incentive plan XII — — — 322 322 Share issuance XII 340 3,196 300 (300) 3,536 Dividends paid XIX — — (30,518) — (30,518) Transactions with owners, recognised directly in equity 340 3,196 (30,218) 22 (26,660)

Shareholders’ Equity at 31 December 2020 52,507 500,440 252,532 1,169 806,648

Share Share Retained Other Note Capital Premium Earnings Reserve Total €’000 €’000 €’000 €’000 €’000 GOVERNANCE Shareholders’ Equity at 1 January 2019 43,414 370,855 176,257 988 591,514 Total comprehensive income for the year Profit for the year — — 76,526 — 76,526 Total comprehensive income for the year — — 76,526 — 76,526

Transactions with owners, recognised directly in equity Long-term incentive plan XII — — — 236 236 Share issuance XII 8,753 126,389 (3,052) (77) 132,013 Dividends paid XIX — — (27,086) — (27,086) Transactions with owners, recognised directly in equity 8,753 126,389 (30,138) 159 105,163

Shareholders’ Equity at 31 December 2019 52,167 497,244 222,645 1,147 773,203 FINANCIAL STATEMENTS

The accompanying notes form an integral part of these financial statements. SUPPLEMENTARY INFORMATION

2020 Annual Report 157 COMPANY STATEMENT OF CASH FLOWS For the year ended 31 December 2020

31 December 31 December 2020 2019 Note €’000 €’000 Cash Flows from Operating Activities Operating Activities Profit for the year 60,105 76,526 Adjustments for non-cash items: Fair value adjustment - investment properties (20,920) (46,704) Gain on disposal of investment property (4,432) — Depreciation of property, plant and equipment 526 32 Amortisation of other financing costs 1,337 2,486 Share-based compensation expense 322 236 Gain on derivative financial instruments (709) (131) Allowance for ECL 842 — Straight-line rent adjustment III 37 14 Interest accrual relating to derivatives 5 6 37,113 32,465 Financing costs and interest received 6,898 4,589 Changes in operating assets and liabilities XX (167) 1,957 Net Cash Generated from Operating Activities 43,844 39,011

Cash Flows from Investing Activities Net proceeds from disposal of investment property 47,895 — Deposit on acquisitions (5,444) (2,284) Acquisition of investment properties (17,470) (344,684) Development of investment properties (15,704) (23,051) Investment property enhancement expenditure (9,988) (6,631) Direct leasing cost III (150) (52) Purchase of property, plant and equipment V (160) — Interest receivable from subsidiary VI 5,012 4,650 Advances to subsidiary VI (840) (3,410) Net Cash Used in Investing Activities 3,151 (375,462)

Cash Flows from Financing Activities Financing fees on Credit Facility (1,718) (5,990) Interest paid XX (10,732) (9,677) Credit Facility drawdown XX 17,000 637,451 Credit Facility repayment XX (218,000) (391,590) Proceeds from private placement debt XX 130,000 — Loan advances from the subsidiary XX 68,852 — Lease payment XX (386) (247) Proceeds on issuance of shares XX 3,536 135,142 Issuance cost XX — (3,129) Dividends paid to shareholders (30,518) (27,086) Net Cash (Used in)/Generated from Financing Activities (41,966) 334,874

Changes in Cash and Cash Equivalents during the Year 5,029 (1,577) Cash and Cash Equivalents, Beginning of the Year 5,818 7,395 Cash and Cash Equivalents, End of the Year 10,847 5,818

The accompanying notes form an integral part of these financial statements.

158 I-RES NOTES TO COMPANY FINANCIAL STATEMENTS

(I) Significant Accounting Policies

These Company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). STRATEGIC REPORT In preparing these financial statements, the company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU (“EU IFRS”) but makes amendments where necessary in order to comply with the Companies Act 2014 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following disclosures: » Disclosures in respect of capital management; » The effects of new but not yet effective IFRSs.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

The financial statements of the Company are prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of investment properties and derivatives at fair value through profit or loss and the measurement of share options at fair value at the date of grant. The financial statements of the Company have been presented in euros, which is the Company’s functional currency. GOVERNANCE

For Company details, refer to note 27 of the consolidated financial statements.

The significant accounting policies of the Company are the same as those of the Group, which are set out in note 2 of the consolidated financial statements. In addition to the policies set out in Note 2 of the consolidated financial statements, below are accounting policies relating to specific items of the Company statements

» Investment in subsidiaries Investment in subsidiaries is shown at cost less provision for any impairment.

» Intercompany loan receivable An intercompany loan was recognised at amortised cost using the effective interest rate method. Interest income is recognised in the statement of profit or loss and other comprehensive over the expected term of the intercompany loan.

» Intercompany loan payable An intercompany loan was recognised at amortised cost using the effective interest rate method. Under the effective FINANCIAL STATEMENTS interest rate method, any transaction fees, costs and discounts directly related to the intercompany loan were recognised within interest expense on intercompany loan in the statement of profit or loss and other comprehensive income over the expected term of the intercompany loan.

(II) Critical Accounting Estimates, Assumptions and Judgements

For further information on critical accounting estimates, assumptions and judgements, refer to note 3 of the consolidated financial statements.

(III) Investment Properties

For further information on investment properties, refer to note 5 of the consolidated financial statements.

For the Company, an increase of 1% in the Equivalent Capitalisation Rate would have the impact of a €217.0 million reduction in fair value while a decrease of 1% in the Equivalent Capitalisation Rate would result in a fair SUPPLEMENTARY INFORMATION value increase of €337.3 million. An increase between 1% and 4% in Stabilised NRI would have an impact ranging from €49.2 million to €12.3 million respectively in fair value, while a decrease between 1% and 4% in Stabilised NRI would have the impact ranging from €49.2 million to €12.3 million reduction respectively. I-RES believes that this range of change in Stabilised NRI is a reasonable estimate in the next twelve months based on expected changes in Stabilised NRI.

2020 Annual Report 159 NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(III) Investment Properties (continued)

A summary of the Equivalent Capitalisation Rates and ranges along with the fair value of the total portfolio of the Company as at 31 December 2020 and 2019 is presented below:

As at 31 December 2020

Type of Interest Fair Value WA NRI(1) Rate Type(2) Max. Min. Weighted €’000 €’000 Average

Investment properties 1,230,781 2,906 Equivalent Yield 5.62 % 3.75 % 4.70 % Properties under development 8,901 1,004 Equivalent Yield 4.25 % 4.25 % 4.25 % Average Development n/a Cost (per sq ft.) €361.8 €361.8 €361.8 Market Comparable Development land(3) 7,650 n/a (per sq ft.) €133.5 €27.5 €120.7 Total fair value 1,247,332

(1) WA NRI is the NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”). The NRI is calculated by multiplying the Equivalent Yield for each property by its respective fair value. (2) The Equivalent Yield disclosed above is provided by the external valuers. (3) Development land is fair-valued based on the value of the undeveloped site per square foot.

As at 31 December 2019

Type of Interest Fair Value WA NRI(1) Rate Type(2) Max. Min. Weighted €’000 €’000 Average

Investment properties 1,178,087 2,747 Equivalent Yield 6.19 % 4.16 % 4.94 % Properties under development 36,000 1,259 Equivalent Yield 5.93 % 4.75 % 4.94 % Average Development n/a Cost (per sq ft.) €379.0 €319.2 €370.2 Market Comparable (per Development land(3) 10,700 n/a sq ft.) €153.0 €35.6 €105.0 Total fair value 1,224,787

(1) WA NRI is the NRI of each property weighted by its fair value over the total fair value of the investment properties (“WA NRI”). The NRI is calculated by multiplying the Equivalent Yield for each property by its respective fair value. (2) The Equivalent Yield disclosed above is provided by the external valuers. (3) Development land is fair-valued based on the value of the undeveloped site per square foot.

The following table summarises the changes in the investment properties portfolio during the years:

For the year ended 31 December 2020

Income Properties Development Total Properties Under Land Development €’000 €’000 €’000 €’000 Balance at the beginning of the year 1,178,087 36,000 10,700 1,224,787 Additions: Acquisitions 19,330 — — 19,330 Development expenditures 7,865 7,955 187 16,007 Reclassification(1) 38,631 (35,631) (3,000) — Property capital investments and intensification 9,638 — — 9,638 Capitalised leasing costs(2) (37) — — (37) Direct leasing costs(3) 150 — — 150 Disposals(4) (43,463) — — (43,463) Unrealised fair value gain adjustments 20,580 577 (237) 20,920 Balance at the end of the year 1,230,781 8,901 7,650 1,247,332

160 I-RES NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(III) Investment Properties (continued)

For the year ended 31 December 2019

Income Properties Development Total STRATEGIC REPORT Properties Under Land Development €’000 €’000 €’000 €’000 Balance at the beginning of the year 779,039 10,500 9,600 799,139 Additions: Acquisitions 344,684 — — 344,684 Development expenditures — 25,345 1,896 27,241 Reclassification(5) 184 266 (450) — Property capital investments and intensification 6,981 — — 6,981 Capitalised leasing costs (14) — — (14) Direct leasing costs 52 — — 52 Unrealised fair value gain adjustments 47,161 (111) (346) 46,704 Balance at the end of the year 1,178,087 36,000 10,700 1,224,787

(1) Reclassified Bakers Yard from development land to properties under development. Developments at Tallaght Cross West, Piper’s Court and Priorsgate GOVERNANCE were reclassified from properties under development to income properties upon their completion in 2020. (2) Straight-line rent adjustment. (3) Includes cash outlays for new tenants. (4) 151 residential units were disposed of for net proceeds of €47.9 million resulting in a gain of €4.4 million. (5) Reclassified Tallaght Cross West from development land to properties under development and reclassified Coldcut Park from properties under development to income properties in 2019.

The carrying value for the Company of €1,247.3 million for the investment properties at 31 December 2020 (€1,224.8 million at 31 December 2019) was based on an external valuation carried out as at that date. The valuations were prepared in accordance with the RICS Valuation – Global Standards, 2017 (Red Book) and IFRS 13.

(IV) Leases

For further information on the Leases, refer to note 6 of the consolidated financial statements.

(V) Property, Plant and Equipment FINANCIAL STATEMENTS

For further information on the Property, plant and equipment, refer to note 7 of the consolidated financial statements.

(VI) Loan Advances to the Subsidiary

As at 31 December 31 December 2020 2019 €’000 €’000 Balance at the beginning of the year 97,012 93,602 Interest income 4,673 4,650 Interest received (5,012) (4,650) Advances to (repayments from) subsidiary 840 3,410 Balance at the end of the year 97,513 97,012 SUPPLEMENTARY INFORMATION On 31 March 2015, the Company acquired the entire issued share capital of IRES Residential Properties Limited for €873,000 and provided financing to IRES Residential Properties Limited to repay the loan on the Rockbrook Portfolio to CAPREIT LP. The total amount in aggregate receivable from its subsidiary amounted to €97.5 million as at 31 December 2020 (€97.0 million as at 31 December 2019), net of repayments. This receivable is interest bearing at 4.94% per annum fixed and repayable on demand. As this receivable is repayable on demand, its carrying value is considered to be materially in line with its fair value.

2020 Annual Report 161 NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(VII) Loan Advances from the Subsidiary

On 10 March 2020, IRES Residential Properties Limited provided the following facilities to the Company. Interest is paid semi- annually on 9 March and 9 September of each year.

As at 31 December 2020

Maturity Contractual interest rate €’000 Series A Facility 9 March 2027 1.866 % 45,901 Series B Facility 9 March 2030 2.254 % 22,951 68,852

(VIII) Other Assets

As at 31 December 31 December 2020 2019 €’000 €’000 Prepayments(1) 2,417 2,286 Deposits on acquisitions(2) 10,529 6,945 Other receivables(3) 674 577 Trade receivables 1,609 1,823 Total 15,229 11,631

(1) Includes specific costs relating to preparing planning applications of development lands and costs associated with ongoing transactions. (2) Includes deposits paid for the Phoenix Park acquisition which closed on 28 January 2021. (3) Relates to levies received in respect of services to be incurred.

(IX) Accounts Payable and Accrued Liabilities

As at 31 December 31 December 2020 2019 €’000 €’000 Accounts Payable and Accrued Liabilities(1) Rent - early payments 3,133 2,479 Trade creditors 624 435 Accruals(2) 7,158 6,848 Value added tax 81 183 Total 10,996 9,945

(1) The carrying value of all accounts payable and accrued liabilities approximates the fair value. (2) Includes property related accruals, development accruals, property management fees and asset management fees accruals.

(X) Credit Facility

For further information on the Credit Facility, refer to note 10 of the consolidated financial statements.

(XI) Private Placement Debt

On 11 March 2020, I-RES successfully closed the issue of €130 million notes on a private placement basis (collectively, the “Notes”). Interest is paid semi-annually on 10 March and 10 September.

The Notes have been placed in two tranches:

162 I-RES NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(XI) Private Placement Debt (continued)

As at 31 December 2020

Maturity Contractual €’000 STRATEGIC REPORT interest rate EUR Series A Senior Secured Notes 10 March 2030 1.83 % 90,000 EUR Series B Senior Secured Notes 10 March 2032 1.98 % 40,000 130,000 Deferred financing costs, net (1,579) Total 128,421

The Notes are secured by a floating charge over the assets of the Group and a fixed charge over the shares held by the Company in IRES Residential Properties Limited.

(XII) Share-based Compensation

For further information on share-based compensation, refer to note 12 of the consolidated financial statements.

(XIII) Shareholders’ Equity GOVERNANCE For further information on shareholders’ equity, refer to note 13 of the consolidated financial statements.

(XIV) Revenue From Investment Properties

The Company generates revenue primarily from the rental income from investment properties. Rental income represents lease revenue earned from the conveyance of the right to use the property, including access to common areas, to a lessee for an agreed period of time. The rental contract also contains an undertaking that common areas and amenities will be maintained to a certain standard. This right of use of the property and maintenance performance obligation is governed by a single rental contract with the tenant. The Company has evaluated the lease and non-lease components of its rental revenue and has determined that common area maintenance services constitute a single non-lease element, which is accounted for as one performance obligation under IFRS 15 and is recognised separately to Rental Income.

31 December 31 December 2020 2019 €’000 €’000 FINANCIAL STATEMENTS Rental Income 59,903 48,872 Revenue from services 7,182 6,280 Car park income 659 962 Revenue from contracts with customers 7,841 7,242 Total Revenue 67,744 56,114

(XV) Finance cost

31 December 31 December 2020 2019 €’000 €’000 Financing costs on RCF 9,910 9,325

Financing costs on private placement debt 2,111 — SUPPLEMENTARY INFORMATION Financing costs on Loans from advances from subsidiary 1,080 — Cost associated with early close out of debt instrument — 3,153 Gross financing costs 13,101 12,478 Less: Capitalised interest (434) (442) Financing costs 12,667 12,036

2020 Annual Report 163 NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(XVI) Realized and Unrealized Gains and Loss on Derivative

On 28 February 2017, I-RES entered into interest rate swap agreements aggregating to €160 million. The agreements have an effective date of 23 March 2017 and a maturity date of January 2021. On 15 September 2017, I-RES entered into a new interest rate swap agreement totalling €44.8 million. The new agreement has an effective date of 15 September 2017 and a maturity date of 14 January 2021. The interest rate swap agreements effectively convert the hedged portion of the Credit Facility (€204.8 million) from a variable rate to a fixed rate facility to 14 January 2021 (see note 10 of the consolidated financial statements for further details), the fixed interest rate is at 1.66% (1.75% less 0.09%) on the total €204.8 million interest rate swap.

(XVI) Financial Instruments, Investment Properties and Risk Management

a) Fair value of financial instruments and investment properties

For further information on the fair value of financial instruments and investment properties, refer to note 17(a) of the consolidated financial statements.

The following table presents the Company’s estimates of the fair value on a recurring basis based on information available as at 31 December 2020, and aggregated by the level in the fair value hierarchy within which those measurements fall.

As at 31 December 2020, the fair value of the Company’s private placement debt is estimated to be €101.3 million. (31 December 2019: €nil). The fair value of the Company’s loan advances from subsidiary is estimated to be €57.8 million. (31 December 2019: €nil). The change in fair value is due to changes in interest rates since the private placement debt was issued and the impact of the passage of time on the fixed rate of the private placement debt. The fair value of the private placement debt is based on discounted future cash flows using rates that reflect current rate for similar financial instruments with similar duration, terms and conditions, which are considered Level 2 inputs.

As at 31 December 2020

Level 1 Level 2 Level 3 Quoted prices in Significant other Significant Total active markets for observable inputs unobservable identical assets and inputs(1) liabilities €’000 €’000 €’000 €’000 Recurring Measurements - Assets Investment properties — — 1,247,332 1,247,332 Recurring Measurements - Liability Derivative financial instruments(2) — 84 — 84 Total — 84 1,247,332 1,247,416

As at 31 December 2019

Level 1 Level 2 Level 3 Quoted prices in Significant other Significant Total active markets for observable inputs unobservable identical assets and inputs(1) liabilities €’000 €’000 €’000 €’000 Recurring Measurements - Assets Investment properties — — 1,224,787 1,224,787 Recurring Measurements - Liability Derivative financial instruments(2) — 788 — 788 Total — 788 1,224,787 1,225,575

(1) See note 5 of the consolidated financial statements for detailed information on the valuation methodologies and fair value reconciliation. (2) The valuation of the interest rate swap instrument is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. If the total mark-to-market value is positive, I-RES will consider a current value adjustment to reflect the credit risk of the counterparty, and if the total mark-to-market value is negative, I-RES will consider a current value adjustment to reflect I-RES’ own credit risk in the fair value measurement of the interest rate swap agreements.

164 I-RES NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(XVI) Financial Instruments, Investment Properties and Risk Management (continued) b) Risk management

For further information on risk management, refer to note 17(b) of the consolidated financial statements. STRATEGIC REPORT

As at 31 December 2020 Total 6 months 6 to 12 1 to 2 2 to 5 More or less(1) months(1) years(1) years(1) than 5 years(1) €’000 €’000 €’000 €’000 €’000 €’000 Loan drawn down 354,020 — — — 354,020 — Bank indebtedness interest(2) 21,352 3,072 3,123 6,195 8,962 — Private Placement Debt 130,000 — — — — 130,000 Private Placement Debt interest 24,764 1,220 1,220 2,440 7,320 12,564 Loan advance from the subsidiary 68,852 — — — — 68,852 Interest payable for loan advance from the subsidiary 9,349 613 613 1,226 3,678 3,219 Lease liability 12,082 314 314 628 1,883 8,943 Derivative financial instruments 84 84 — — — — Other liabilities 7,782 7,782 — — — —

Security deposits 6,980 6,980 — — — — GOVERNANCE 635,265 20,065 5,270 10,489 375,863 223,578

(1) Based on carrying value at maturity dates. (2) Based on current in-place interest rate for the remaining term to maturity.

As at 31 December 2019 Total 6 months 6 to 12 1 to 2 2 to 5 More or less(1) months(1) years (1) years(1) than 5 years(1) €’000 €’000 €’000 €’000 €’000 €’000 Bank indebtedness 555,020 — — — 555,020 — Bank indebtedness interest(2) 42,446 4,757 4,809 9,540 23,340 — Derivative financial instruments 788 — — 788 — — Lease liability 12,553 314 314 628 1,883 9,414 Other liabilities 7,283 7,283 — — — — FINANCIAL STATEMENTS Security deposits 6,550 6,550 — — — — 624,640 18,904 5,123 10,956 580,243 9,414

(1) Based on carrying value at maturity dates. (2) Based on current in-place interest rate for the remaining term to maturity.

(XVII) Taxation

For further information on taxation, refer to note 18 of the consolidated financial statements.

(XIX) Dividends

For further information on dividends, refer to note 19 of the consolidated financial statements. SUPPLEMENTARY INFORMATION

2020 Annual Report 165 NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(XX) Supplemental Cash Flow Information

Breakdown of operating income items related to financing and investing activities

For the year ended 31 December 31 December 2020 2019 €’000 €’000 Financing costs on credit facility 12,667 12,036 Interest expense accrual (1,273) (315) Lease interest 241 — Capitalised interest 434 442 Less: amortisation of arrangement fee (1,337) (2,486) Interest paid 10,732 9,677

Changes in operating assets and liabilities

For the year ended 31 December 31 December 2020 2019 €’000 €’000 Prepayments (131) (1,373) Trade receivables (628) 109 Other receivables (97) 1,018 Accounts payable and other liabilities 259 420 Security deposits 430 1,783 Changes in operating assets and liabilities (167) 1,957

Issuance of Shares

For the year ended 31 December 31 December 2020 2019 €’000 €’000 Issuance of shares 3,536 135,142 Issuance costs — (3,129) Net proceeds 3,536 132,013

Changes in liabilities due to financing cash flows

Changes from Financing Cash Flows Non-cash Changes Liabilities 1 January 2020 private from Proceeds debt placement from advances Loan the subsidiary Credit Facility drawdown Credit Facility repayment made payments Lease on fees Financing credit facility other of Amortisation financing costs accrual Interest derivatives to relating derivative on Gain instruments financial 2020 December 31

Bank indebtedness 555,020 — — 17,000 (218,000) — — — — — 354,020 Deferred loan costs, net (5,169) — — — — — — 1,198 — — (3,971) Private placement debt — 130,000 — — — — — — — — 130,000 Deferred loan costs, net — — — — — — (1,718) 139 — — (1,579) Loan advances from the subsidiary — — 68,852 — — — — — — — 68,852 Derivative financial instruments 788 — — — — — — — 5 (709) 84 Lease liability 9,872 — — — — (386) — — — — 9,486 Total liabilities from financing activities 560,511 130,000 68,852 17,000 (218,000) (386) (1,718) 1,337 5 (709) 556,892

166 I-RES NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(XX) Supplemental Cash Flow Information (continued)

Changes in liabilities due to financing cash flows (continued)

Changes from Financing Cash flows Non-cash Changes STRATEGIC REPORT 1 January 2019 1 January Revolving Credit Facility drawdown Revolving Credit Facility repayment Lease payments on fees Financing Revolving Credit Facility other of Amortisation financing costs Liability Lease Payable derivatives on Gain accrual Interest derivatives to relating 2019 December 31

Bank indebtedness 309,159 637,451 (391,590) — — — — — — 555,020 Deferred loan costs, net (1,665) — — — (5,990) 2,486 — — — (5,169) Derivative financial instruments 913 — — — — — — (131) 6 788 Lease liability — — — (247) — — 10,118 — — 9,871 Total liabilities from

financing activities 308,407 637,451 (391,590) (247) (5,990) 2,486 10,118 (131) 6 560,510 GOVERNANCE

(XXI) Related Party Transactions

During 2015 the Company financed the purchase of the Rockbrook Portfolio on behalf of its subsidiary, IRES Residential Properties Limited. The total amount in aggregate receivable from its subsidiary amounted to €97.5 million as at 31 December 2020 (€97.0 million as at 31 December 2019), net of repayments. This receivable is interest bearing and repayable on demand. The total amount in aggregate payable to the subsidiary amounted to €68.9 million as at 31 December 2020 (€ nil as at 31 December 2019).

For further information on related party transactions, refer to note 21 of the consolidated financial statements.

(XXII) Contingencies

For further information on contingent liabilities of the Company, refer to note 22 of the consolidated financial statements.

(XXIII) Earnings per Share FINANCIAL STATEMENTS

For further information on earnings per share, refer to note 24 of the consolidated financial statements.

For the year ended 31 December 31 December 2020 2019 Profit attributable to shareholders of I-RES (€’000) 60,105 76,526 Basic weighted average number of shares 522,069,110 478,563,272 Diluted weighted average number of shares 524,130,528 481,508,009 Basic Earnings per share (cents) 11.5 16.0 Diluted Earnings per share (cents) 11.5 15.9

For further information on EPRA Earnings per share, refer to note 24 of the consolidated financial statements.

For the year ended 31 December 31 December SUPPLEMENTARY INFORMATION 2020 2019 Earnings per IFRS statement of profit or loss and other comprehensive income (€’000) 60,105 76,526 Adjustments to calculate EPRA Earnings exclude: Costs associated with early close out of debt instrument (€’000) — 3,153 Changes in fair value on investment properties (€’000) (20,920) (46,704) Profit or losses on disposal of investment property (4,432) — Changes in fair value of derivative financial instruments (€’000) (709) (131) EPRA Earnings (€’000) 34,044 32,844 Basic weighted average number of shares 522,069,110 478,563,272 EPRA Earnings per share (cents) 6.5 6.9

2020 Annual Report 167 NOTES TO COMPANY FINANCIAL STATEMENTS (continued)

(XXIV) Net Asset Value per Share

For further information on net asset value per share, refer to note 25 of the consolidated financial statements.

EPRA NAV per Share

As at 31 December 2020

EPRA NRV EPRA NTA(1) EPRA NDV(2) Net assets (€’000) 806,648 806,648 806,648 Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 84 84 — Fair value of fixed interest rate debt (€’000) — — 38,227 Real estate transfer tax (€’000)(3) 56,785 — — EPRA net assets (€’000) 863,517 806,732 844,875 Number of shares outstanding 525,078,946 525,078,946 525,078,946 Diluted number of shares outstanding 526,289,910 526,289,910 526,289,910

Basic Net Asset Value per share (cents) 153.6 153.6 153.6 EPRA Net Asset Value per share (cents) 164.1 153.3 160.5

As at 31 December 2019

EPRA NRV EPRA NTA(1) EPRA NDV(2) Net assets (€’000) 773,203 773,203 773,203

Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 788 788 — Real estate transfer tax (€’000)(3) 51,836 — — EPRA net assets (€’000) 825,827 773,991 773,203 Number of shares outstanding 521,678,946 521,678,946 521,678,946 Diluted number of shares outstanding 524,529,943 524,529,943 524,529,943

Basic Net Asset Value per share (cents) 148.2 148.2 148.2 EPRA Net Asset Value per share (cents) 157.4 147.6 147.4

(1) Following changes to the Irish REIT legislation introduced in October 2019, if a REIT disposes of an asset of its property rental business and does not (i) distribute the gross disposal proceeds to shareholders by way of dividend; (ii) reinvest them into other assets of its property rental business (whether by acquisition or capital expenditure) within a three-year window (being one year before the sale and two years after it); or (iii) use them to repay debt specifically used to acquire,enchance or develop the property sold, then the REIT will be liable to tax at a rate of 25% on 85% of the gross disposal proceeds, subject to having sufficient distributable reserves. For the purposes of EPRA NTA, the Company have assumed any such sales proceeds are reinvested within the required three year window. (2) Deferred tax is assumed as per the IFRS statement of financial position. To the extent that an orderly sale of the Group’s asset was undertaken over a period of several years, during which time (i) the Group remained a REIT; (ii) no new assets were acquired or sales proceeds reinvested; (iii) any developments completed were held for three years from completion; and (iv) those assets were sold at 31 December 2020 valuations, the sales proceeds would need to be distributed to shareholders by way of dividend within the required time frame or else a tax liability amounting to up to 25% of distributable reserves plus current unrealised revaluation gains could arise for the Group. (3) This is the purchaser costs amount as provided in the valuation certificate. Purchasers’ costs consist of items such as stamp duty on legal transfer and other purchase fees that may be incurred and which are deducted from the gross value in arriving at the fair value of investment for IFRS purposes. Purchasers’ costs are in general estimated at 9.96% for commercial and 4.46% for residential.

(XXV) Directors’ Remuneration, Employee Costs and Auditor Remuneration

For further information on Directors’ remuneration and employee costs, refer to note 26 of the consolidated financial statements.

(XXVI) Commitments

For further information on Commitments, refer to note 23 of the consolidated financial statements.

(XXVII) Subsequent Events

For further information on subsequent events, refer to note 28 of the consolidated financial statements.

168 I-RES Supplementary STRATEGIC REPORT Information

In this Section: Supplementary Information 170 CAPREIT and IRES Fund Management Senior Management 174 Glossary of Terms 175 Forward-Looking Statements 176 Shareholder Information 177 GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION Beechwood Court, Stillorgan 101 Units

2020 Annual Report 169 SUPPLEMENTARY INFORMATION

EPRA Performance Measures EPRA NAV per Share EPRA “topped-up” Net Initial Yield and Disclosures (Unaudited) The three EPRA NAV metrics are EPRA (EPRA “topped-up” NIY) The following EPRA performance Net Reinstatement Value (“EPRA NRV’), EPRA “topped-up” NIY is calculated by measures are presented to improve EPRA Net Tangible Asset (“EPRA NTA”) making an adjustment to the EPRA NIY transparency, comparability and and EPRA Net Disposal Value (“EPRA in respect of the expiration of rent- relevance across the European listed NDV”). Each EPRA NAV metric serves free periods or other unexpired lease real estate industry. a different purpose. The EPRA NRV incentives such as discounted rent measure is to highlight the value of net periods and step rents. It has been EPRA Earnings per Share (EPS) assets on a long term basis. EPRA NTA presented by the Company to improve EPRA Earnings represents the earnings assumes entities buy and sell assets, comparability of yield measures across from the core operational activities thereby crystallising certain levels the European real estate market. (recurring items for the Company). of deferred tax liability. No deferred It is intended to provide an indicator tax liability is calculated for I-RES as EPRA Vacancy Rate of the underlying performance of it is a REIT, and taxes are paid at the EPRA Vacancy Rate is calculated as the property portfolio and therefore shareholder level on the distributions. the percentage of estimated residential excludes all components not relevant Any gains arising from the sale of a rental value of vacant space divided to the underlying and recurring property are expected either to be by the estimated residential rental performance of the portfolio, including revinvested for growth or 85% of the value of the whole portfolio as at the any revaluation results and results from net proceeds are distributed to the reporting date. The estimated rental the sale of properties. EPRA EPS is shareholders to maintain the REIT value excludes properties under calculated by dividing EPRA Earnings status. Lastly, EPRA NDV provides development, commercial properties for the reporting period attributable to the reader with a scenario where and development land. It has been shareholders of the Company by the deferred tax, financial instruments , presented by the Company to improve weighted average number of ordinary and certain other adjustments are comparability of the vacancy measure shares outstanding during the reporting calculated to the full extent of their across the European residential real period. It has been presented as the liabilities. To optimise these measures, estate market. Company believes this measure is I-RES focuses on growing asset value indicative of the performance of the and maximising shareholder value Group’s operations. through active and efficient asset and property management. They have been EPRA Diluted Earnings per Share presented as the Company believes EPRA Diluted EPS is calculated these measures are indicative of the by dividing EPRA Earnings for the Group’s operating performance and reporting period attributable to value growth. shareholders of the Company by the diluted weighted average number of EPRA Net Initial Yield (EPRA NIY) ordinary shares outstanding during the EPRA NIY is calculated as the reporting period. It has been presented annualised rental income based on as the Company believes this measure the cash rents passing at the balance is indicative of the performance of the sheet date, less non-recoverable Group’s operations. property operating expenses, divided by the gross market value of the property. It has been presented by the Company to improve comparability of yield measures across the European real estate market.

170 I-RES EPRA Performance Measure Unit 31 December 31 December 2020 2019

EPRA Earnings €’000 34,030 33,070 STRATEGIC REPORT EPRA EPS € cents/share 6.5 6.9 Diluted EPRA EPS € cents/share 6.5 6.9 EPRA NRV €’000 903,917 867,710 EPRA NRV per share € cents/share 171.8 165.4 EPRA NTA €’000 841,779 810,957 EPRA NTA per share € cents/share 159.9 154.6 EPRA NDV €’000 877,914 810,169 EPRA NDV per share € cents/share 166.8 154.5 EPRA NIY % 4.2 % 4.4 % EPRA “topped up” NIY % 4.2 % 4.4 % EPRA vacancy rate % 1.7 % 2.2 %

EPRA Earnings per Share For the year ended 31 December 31 December 2020 2019 GOVERNANCE Profit for the year (€’000) 58,263 86,282 Adjustments to calculate EPRA Earnings exclude: Costs associated with early close out of debt instrument (€’000) — 3,153 Changes in fair value on investment properties (€’000) (19,092) (56,234) Profit or losses on disposal of investment property (€’000) (4,432) — Changes in fair value of derivative financial instruments (€’000) (709) (131) EPRA Earnings (€’000) 34,030 33,070 Basic weighted average number of shares 522,069,110 478,563,272 Diluted weighted average number of shares 524,130,528 481,508,009 EPRA Earnings per share (cents) 6.5 6.9 EPRA Diluted Earnings per share (cents) 6.5 6.9

EPRA NAV per Share FINANCIAL STATEMENTS As at 31 December 2020

EPRA NRV EPRA NTA(1) EPRA NDV(2) Net assets (€’000) 841,695 841,695 841,695 Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 84 84 — Fair value of fixed interest rate debt (€’000) — — 36,219 Real estate transfer tax (€’000)(3) 62,138 — — EPRA net assets (€’000) 903,917 841,779 877,914 Number of shares outstanding 525,078,946 525,078,946 525,078,946 Diluted number of shares outstanding 526,289,910 526,289,910 526,289,910

Basic Net Asset Value per share (cents) 160.3 160.3 160.3 SUPPLEMENTARY INFORMATION EPRA Net Asset Value per share (cents) 171.8 159.9 166.8

2020 Annual Report 171 As at 31 December 2019 EPRA NRV EPRA NTA(1) EPRA NDV(2) Net assets (€’000) 810,169 810,169 810,169 Adjustments to calculate EPRA net assets exclude: Fair value of derivative financial instruments (€’000) 788 788 — Real estate transfer tax (€’000)(3) 56,753 — — EPRA net assets (€’000) 867,710 810,957 810,169 Number of shares outstanding 521,678,946 521,678,946 521,678,946 Diluted number of shares outstanding 524,529,943 524,529,943 524,529,943

Basic Net Asset Value per share (cents) 155.3 155.3 155.3 EPRA Net Asset Value per share (cents) 165.4 154.6 154.5

(1) Following changes to the Irish REIT legislation introduced in October 2019, if a REIT disposes of an asset of its property rental business and does not (i) distribute the gross disposal proceeds to shareholders by way of dividend; (ii) reinvest them into other assets of its property rental business (whether by acquisition or capital expenditure) within a three-year window (being one year before the sale and two years after it); or (iii) use them to repay debt specifically used to acquire, enhance or develop the property sold, then the REIT will be liable to tax at a rate of 25% on 85% of the gross disposal proceeds, subject to having sufficient distributable reserves. For the purposes of EPRA NTA, the Company have assumed any such sales proceeds are reinvested within the required three year window. (2) Deferred tax is assumed as per the IFRS statement of financial position. To the extent that an orderly sale of the Group’s asset was undertaken over a period of several years, during which time (i) the Group remained a REIT; (ii) no new assets were acquired or sales proceeds reinvested; (iii) any developments completed were held for three years from completion; and (iv) those assets were sold at 31 December 2020 valuations, the sales proceeds would need to be distributed to shareholders by way of dividend within the required time frame or else a tax liability amounting to up to 25% of distributable reserves plus current unrealised revaluation gains could arise for the Group. (3) This is the purchaser costs amount as provided in the valuation certificate. Purchasers’ costs consist of items such as stamp duty on legal transfer and other purchase fees that may be incurred and which are deducted from the gross value in arriving at the fair value of investment for IFRS purposes. Purchasers’ costs are in general estimated at 9.96% for commercial and 4.46% for residential.

EPRA Net Initial Yield (NIY) As at 31 December 31 December 2020 2019 (€’000) (€’000) Annualised passing rent 74,249 72,798 Less: Operating expenses(1) (property outgoings) (14,850) (13,540) Annualised net rent 59,399 59,258

Notional rent expiration of rent-free periods(2) 21 93 Topped-up net annualised rent 59,420 59,351

Completed investment properties 1,346,683 1,293,241 Add: Allowance for estimated purchaser’s cost 62,138 56,260 Gross up completed portfolio valuation 1,408,821 1,349,501

EPRA Net Initial Yield 4.2 % 4.4 % EPRA topped-up Net Initial Yield 4.2 % 4.4 %

(1) Calculated based on the net rental income to operating revenue ratio of 80.0%. (2) For the year ended 31 December 2020.

172 I-RES EPRA Vacancy Rate(3) As at 31 December 31 December 2020 2019 (€’000) (€’000) STRATEGIC REPORT Estimated rental value of vacant space 1,203 1,569 Estimated rental value of the portfolio 72,762 71,788 EPRA Vacancy Rate 1.7 % 2.2 %

(3) Based on the residential portfolio

EPRA Capital Expenditure Disclosure EPRA recommends that capital expenditures, as stated on the financial statements, be split into four components based on the nature of the assets the expenditures were on to allow for enhanced comparability. Namely, the categories are acquisitions, development, like-for-like portfolio, and other items.

For the year ended 31 December 31 December 2020 2019 (€’000) (€’000) Acquisitions 336 671 Development 16,102 28,958 GOVERNANCE Like-for-like(4) 9,650 7,312 Total Capital Expenditure 26,088 36,941

(4) For 2020, Like-for-like is defined as properties held as of 31 December 2019. FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION

2020 Annual Report 173 CAPREIT AND IRES FUND MANAGEMENT SENIOR MANAGEMENT

Mark Kenney Jodi Lieberman Jonathan Fleischer President, Chief Executive Chief Human Resources Executive Vice President, Officer and a trustee Officer of CAPREIT Asset Management of CAPREIT LP of CAPREIT Jodi Lieberman joined Jonathan Fleischer joined CAPREIT, a TSX listed See Board of Directors’ CAPREIT in 2009 and company, in October 2015. He oversees the operations profiles for further detail. has been instrumental in of I-RES. developing the human resources function at the Jonathan has over 25 years’ fiduciary experience, company as well as at I-RES. leading asset and property management teams servicing institutional real estate investors in Canada and abroad. Prior to joining CAPREIT, he was a senior executive at one of Canada’s largest commercial real estate asset management companies. Before leaving South Africa for Canada in 1998, he ran a high quality office REIT listed on both the Johannesburg and London Stock Exchanges.

Jonathan was recognized by his peers for his leadership and industry contribution, and elected Chair of BOMA Toronto for the 2009-2010 term. Scott Cryer Charles Coyle Priyanka Taneja Chief Financial Officer of Vice President, Chief Financial Officer of I-RES and Senior Vice CAPREIT Acquisitions of IRES President Finance at CAPREIT LP Scott Cryer joined CAPREIT Fund Management Priyanka Taneja joined CAPREIT in May 2008 and is in September 2009 and With over 20 years of currently the Senior Vice President of Finance, and is was appointed as the property investment and responsible for overseeing Financial Reporting, Taxation, Chief Financial Officer of development experience, Valuations, Treasury and Financings. She also assists with CAPREIT in 2011. Mr. Cryer Charles Coyle was Investor Relations and leads the finance and financial is also currently a director appointed by IRES Fund reporting functions for I-RES. of IRES Fund Management Management as Vice Limited and supports I- RES President, Acquisitions in all financial and reporting in December 2014. He decisions. supports I-RES with all acquisition and development decisions. Corinne Pruzanski General Counsel and Corporate Secretary of CAPREIT Corinne Pruzanski joined CAPREIT as General Counsel and Corporate Secretary in 2011 with responsibility for all legal and governance matters relating to CAPREIT, including CAPREIT’s acquisitions, dispositions, financing arrangements and compliance with laws. Ms. Pruzanski is also company secretary to IRES Fund Management Limited.

174 I-RES “EPRA” tax, financial instruments , and certain The European Public Real Estate other adjustments are calculated to the GLOSSARY Association; full extent of their liabilities.

OF TERMS “EPRA Diluted EPS” “EPRA NAV per share” STRATEGIC REPORT Calculated by dividing EPRA Calculated by dividing each of the Earnings for the reporting period EPRA NAV metric by the diluted number attributable to shareholders of the of ordinary shares outstanding as at the Company by the diluted weighted end of the reporting period; average number of ordinary shares outstanding during the reporting “Equivalent Yields (formerly period. EPRA Earnings measures the referred as Capitalisation Rate)” level of income arising from operational The rate of return on a property activities. It is intended to provide an investment based on current and indicator of the underlying income projected future income streams that performance generated from leasing such property investment will generate. and management of the property This is derived by the external valuers portfolio, while taking into account and is used to estimate the term and The following explanations are not dilutive effects, and therefore excludes reversionary yields; intended as technical definitions, all components not relevant to the but rather are intended to assist underlying net income performance “Group Total Gearing” the reader in understanding terms of the portfolio, such as unrealised Calculated by dividing the Group’s used in this report. GOVERNANCE changes in valuation and any gains or aggregate borrowings (net of cash) losses on disposals of properties; by the market value of the Group’s “Annualised Passing Rent” portfolio value consistent with the Defined as the actual monthly “EPRA EPS” financial covenant of the Group’s residential and commercial rents under Calculated by dividing EPRA Earnings Revolving Credit Facility and the Notes; contract with residents as at the stated for the reporting period attributable to date, multiplied by 12, to annualize the shareholders of the Company by the “Gross Yield” monthly rent; weighted average number of ordinary Calculated as the Annualised Passing shares outstanding during the reporting Rent as at the stated date, divided “Average Monthly Rent (AMR)” period. EPRA Earnings measures the by the fair value of the investment Actual monthly residential rents, level of income arising from operational properties, excluding fair value of net of vacancies, as at the stated activities. It is intended to provide an development land and investment date, divided by the total number of indicator of the underlying income properties under development as at the apartments owned in the property; performance generated from leasing reporting date; and management of the property “Basic Earnings per share (Basic portfolio and therefore excludes “Irish REIT Regime” FINANCIAL STATEMENTS EPS)” all components not relevant to the Means the provisions of the Irish Calculated by dividing the profit for underlying net income performance laws and regulations establishing the reporting period attributable to of the portfolio, such as unrealised and governing real estate investment ordinary shareholders of the Company changes in valuation and any gains or trusts, in particular, but without in accordance with IFRS by the losses on disposals of properties; limitation, section 705A of the Taxes weighted average number of ordinary Consolidation Act, 1997 (as inserted by shares outstanding during the reporting “EPRA NAV” section 41(c) of the Finance Act, 2013), period; EPRA introduced three EPRA NAV as amended from time to time; metrics to replace the existing EPRA “Companies Act, 2014” NAV calculation that was previously “Market Capitalisation” The Irish Companies Act, 2014; being presented. The three EPRA NAV Calculated as the closing share metrics are EPRA Net Reinstatement price multiplied by the number of “Diluted weighted average number Value (“EPRA NRV’), EPRA Net Tangible shares outstanding; of shares” Asset (“EPRA NTA”) and EPRA Net Includes the additional shares resulting

Disposal Value (“EPRA NDV”). Each “Net Asset Value” or “NAV” SUPPLEMENTARY INFORMATION from dilution of the long-term incentive EPRA NAV metric serves a different Calculated as the value of the Group’s plan options as of the reporting period purpose. The EPRA NRV measure is to or Company’s assets less the value of date; highlight the value of net assets on a its liabilities measured in accordance long term basis. EPRA NTA assumes with IFRS; “EBITDA” entities buy and sell assets, thereby Represents earnings before lease crystallising certain levels of deferred “Net Asset Value per share” interest, financing costs, depreciation tax liability. Any gains arising from the Calculated by dividing NAV by the basic of property, plant and equipment, sale of a property are expected either number of ordinary shares outstanding gain or loss on disposal of investment to be revinvested for growth or 85% as at the end of the reporting period; property, net movement in fair value of the net proceeds are distributed to of investment properties and gain or the shareholders to maintain the REIT “Net Rental Income (NRI)” loss on derivative financial instruments status. Lastly, EPRA NDV provides the Measured as property revenue less to show the underlying operating reader with a scenario where deferred property operating expenses; performance of the Group.

2020 Annual Report 175 “Net Rental Income Margin” Calculated as the NRI over the revenue from investment properties; FORWARD- “Occupancy Rate” LOOKING Calculated as the total number of apartments occupied over the total number of apartments owned as at the STATEMENTS reporting date;

“Property Income” As defined in section 705A of the Taxes Consolidation Act, 1997. It means, in relation to a company or group, the Property Profits of the company or group, as the case may be, calculated using accounting principles, as: (a) reduced by the Property Net Gains of I-RES Disclaimer The forward-looking statements the company or group, as the case This Report includes statements that referred to in this report speak only as may be, where Property Net Gains are, or may deemed to be, forward- at the date hereof. Except as required arise, or (b) increased by the Property looking statements. These forward- by law or any appropriate regulatory Net Losses of the company or group, looking statements can be identified authority, I-RES expressly disclaims any as the case may be, where Property by the use of forward-looking obligation or undertaking to release Net Losses arise; terminology, including the terms publicly any revision or updates to “anticipates”, “believes”, “estimates”, these forward-looking statements to “Property Profits” “expects”, “intends”, “plans”, “projects”, reflect any change in (or any future) As defined in section 705A of the “may” or “should”, or, in each case, events, circumstances, conditions, Taxes Consolidation Act, 1997; their negative or other comparable unanticipated events, new information, terminology, or by discussions of any change in I-RES’ expectations or “Property Net Gains” strategy, plans, objectives, trends, otherwise including in respect of the As defined in section 705A of the goals, projections, future events or Covid-19 pandemic, the uncertainty Taxes Consolidation Act, 1997; intentions. These forward-looking of its duration and impact, and any statements include all matters that government regulations or legislation “Property Net Losses” are not historical facts. They appear related to it. As defined in section 705A of the in a number of places throughout this Taxes Consolidation Act, 1997; Report and include, but are not limited to, statements regarding the intentions, “Property Rental Business” beliefs or current expectations of I-RES As defined in section 705A of the concerning, amongst other things, its Taxes Consolidation Act, 1997; results of operations, financial position, liquidity, prospects, growth, strategies “Sq. ft.” and expectations for its industry. Such Square feet; forward-looking statements are not guarantees of future performance “Sq. m.” and involve known and unknown Square metres; risks, uncertainties and other factors which may cause the actual results, “Stabilised NRI” performance or achievements of Measured as property revenue less I-RES and/or the industry in which it property operating expenses adjusted operates to be materially different from for market-based assumptions such as any future results, performance or long-term vacancy rates, management achievements expressed or implied by fees, repairs and maintenance; such forward-looking statements. As a result, you are cautioned not to place “Vacancy Costs” any reliance on such forward-looking Defined as the value of the rent on statements and neither I-RES nor any unoccupied residential apartments other person accepts responsibility for and commercial units for the the accuracy of such statements. specified period. Nothing in this Report should be construed as a profit forecast or a profit estimate.

176 I-RES SHAREHOLDER

INFORMATION STRATEGIC REPORT

Head Office Registrar and Transfer Agent South Dock House Hanover Quay Computershare Investor Services Dublin 2, Ireland (Ireland) Limited 3100 Lake Drive Tel: +353 (0)1 557 0974 Citywest Business Campus Dublin 24,

Website: www.iresreit.ie Ireland GOVERNANCE Tel: +353 (0)1 447 5566 Directors Aidan O’Hogan Declan Moylan Joan Depositary Garahy Mark Kenney BNP Paribas Securities Services, Dublin Margaret Sweeney Phillip Burns Branch Trinity Point Tom Kavanagh 10-11 Leinster Street South Dublin 2, Ireland Investor Information Analysts, shareholders and others Auditor seeking financial data should visit I-RES’ KPMG website at https://investorrelations. 1 Stokes Place iresreit.ie or contact: St. Stephen’s Green Dublin 2, Ireland

Chief Executive Officer Legal Counsel Margaret Sweeney McCann FitzGerald Riverside One FINANCIAL STATEMENTS Tel: +353 (0)1 557 0974 Sir John Rogerson’s Quay Dublin 2, D02 E-mail: [email protected] X576 Ireland

Company Secretary Stock Exchange Listing Elise Lenser Shares of I-RES are listed on Euronext Tel: +353 (0) 1 557 0974 Dublin under the trading symbol “IRES”. E-mail: [email protected] SUPPLEMENTARY INFORMATION

2020 Annual Report 177 NOTES

178 I-RES STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION

2020 Annual Report 179 180 I-RES Design: www.reddog.ie Irish Residential Properties REIT plc Annual Report 2020

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