ERES Announces a Further €362 Million in Strategic Dispositions

/EIN News/ -- TORONTO, April 02, 2025 (GLOBE NEWSWIRE) -- European Residential Real Estate Investment Trust (“ERES” or “the REIT”) (TSX:ERE.UN) announced today the following (all amounts disclosed herein exclude transaction costs and other adjustments):

1. A subsidiary of ERES has entered into an agreement (the “Disposition Agreement”) with an affiliate of Fortress Investment Group (the “Fortress Affiliate”) to sell entities owning 1,446 residential suites in the Netherlands for aggregate proceeds, net of an adjustment for deferred taxes and other adjustments, of approximately €337 million (the “Pending Disposition”). The Fortress Affiliate has represented to ERES that an investor group which includes funds managed by affiliates of Fortress Investment Group will be the beneficiary of the acquisition.
2. Certain subsidiaries of ERES have completed the sale of an entity owning one 104-suite property in the Netherlands for proceeds of approximately €25 million (the “Completed Disposition”).
3. To date in 2025, other subsidiaries of ERES have closed on the previously announced sales of a total of 311 residential suites in the Netherlands for combined consideration of approximately €65 million (together with the Completed Disposition, the “Completed Dispositions”).
   

The Pending Disposition

The aggregate sale price for the Pending Disposition will be paid in cash, with proceeds to be used by ERES and its subsidiaries in part to repay approximately €174 million in mortgage debt. Such mortgages currently have a weighted average effective interest rate of approximately 2.2% per annum.

The remaining net proceeds from the Pending Disposition are intended to fund: (i) the repayment of amounts outstanding on the revolving credit facility and (ii) a special distribution to the REIT’s unitholders (“Unitholders”) of an estimated €0.80 per REIT unit (“Unit”) (equivalent to an estimated C$1.24 per Unit based on the foreign exchange rate of 1.55 on April 1, 2025), with a corresponding distribution to be declared on the exchangeable Class B LP units of ERES Limited Partnership (“Class B LP Units”), payable in cash to Unitholders and holders of the Class B LP Units of record at a date to be determined (the “Special Distribution”).

ERES has received a deposit (the “Deposit”) in the amount of approximately €17 million in connection with the execution of the Disposition Agreement. Notwithstanding the Deposit, there can be no assurance that the Pending Disposition will close.

Subject to the receipt of any regulatory approvals and satisfaction of closing conditions, the Pending Disposition is anticipated to close between early August and mid-September 2025. There can be no assurance that all requirements for closing will be obtained, satisfied or waived.

The use of proceeds described in this press release, including the amount and timing of the Special Distribution, assumes the completion of the Pending Disposition on the timeframe disclosed herein. ERES will announce the timing and final amount of the Special Distribution at a later date, shortly following closing of the Pending Disposition, subject to the discretion of the Board of Trustees of the REIT (the “Board”).

The Completed Disposition

The Completed Disposition closed in March 2025 and the sale price was settled in cash, with net proceeds redeployed in part to repay outstanding mortgage debt, which had an effective interest rate of approximately 1.3% per annum for a remaining term to maturity of approximately 2.5 years.

Pro Forma

The following table sets out consolidated financial metrics of the REIT as of the date of the latest financial statements, and after adjusting as outlined below:

1. December 31, 2024, after adjusting for the estimated effect of the Completed Dispositions; and
2. December 31, 2024, after adjusting for the estimated effect of the Completed Dispositions, the Pending Disposition, and payment of the Special Distribution.

	December 31, 2024	Pro Forma A	Pro Forma B1
Total residential suite count	3,009	2,594	1,148
Total portfolio IFRS fair value	€0.84 billion	€0.75 billion	€0.38 billion
Mortgage debt principal balance	€0.34 billion	€0.28 billion	€0.11 billion
Mortgage debt weighted average effective interest rate	2.3%	2.5%	2.9%
Mortgage debt weighted average term to maturity	2.5 years	2.6 years	2.8 years
Amounts outstanding on the revolving credit facility	€nil	€nil	€nil
Ratio of adjusted debt to gross book value	40%	35-37%	24-28%
Deferred income tax liability	€0.02 billion	€0.02 billion	€0.00 billion

1. Remaining portfolio comprised of: (i) Havendijk, Schiedam (88 suites); (ii) De Kameleon, Amsterdam (222 suites and 106,358 square feet of gross leasable retail space); (iii) The Mill, Rotterdam (84 suites); (iv) De Horizon, Amsterdam (33 suites); (v) Generaal, Rijswijk (165 suites); (vi) Groningensingel, Arnhem (201 suites); (vii) Grienderwaard, Rotterdam (110 suites); (viii) Casimir, Roermond (37 suites); (ix) Nassauflat, Valkenburg (88 suites); (x) Chopinlaan, Doorswerth (120 suites) (xi) one commercial property in Brussels, Belgium (170,414 square feet of gross leasable area); and (xii) one commercial property in Landshut, Germany (116,130 square feet of gross leasable area) (collectively, the “Remaining Portfolio”).
   

“We’re pleased to continue to strategically and systematically dispose of our properties at strong pricing, and surface significant additional liquidity that we’re planning to distribute to Unitholders directly through another special cash distribution,” commented Mark Kenney, Chief Executive Officer of ERES. “After completion, our Remaining Portfolio will be comprised of an attractive collection of ten multi-residential properties, the majority of which are located in the high-growth Randstad region in the Netherlands, along with two commercial properties.”

Future Outlook

The Board has determined that moving forward, it is in the best interests of the REIT and its Unitholders to maximize the value of the Remaining Portfolio through continuing property or portfolio sales and/or a sale of the REIT, subject, where applicable, to Unitholder approval. The Board has therefore authorized the REIT to commence a process pursuant to which the REIT will explore all options available to surface the value of the Remaining Portfolio and distribute the proceeds, net of wind-up costs, to its Unitholders. The costs associated with the wind-up, liquidation, dissolution or any such similar action to terminate or sell the REIT after or as part of any property or portfolio sales will impact the net proceeds available for distribution and may be significant.

“Looking ahead, in line with our commitment to value maximization, the Board considers it to be in the best interests of the REIT and its Unitholders to uncover the residual value of the platform and return that net equity to investors,” said Dr. Gina Parvaneh Cody, Chair of the Board. “Accordingly, consistent with the recent amendments to the REIT’s Declaration of Trust, the Board has authorized management to take all steps as may be necessary or advisable to execute on the continued disposition of the REIT’s properties and/or effect a sale of the REIT, and we are confident in management’s ability to action this in a responsible, disciplined and timely manner.”

The description of the Disposition Agreement in this news release is a summary only and is qualified in its entirety by the terms of the Disposition Agreement. Pursuant to the Disposition Agreement, ERES has made certain representations and warranties to the purchaser and has agreed to indemnify the purchaser in certain circumstances. Further details regarding the terms of the Pending Disposition are set out in the Disposition Agreement, which will be filed by the REIT on SEDAR+ at www.sedarplus.ca. ERES encourages review of the full text of the Disposition Agreement.

ABOUT ERES
ERES is an unincorporated, open-ended real estate investment trust. ERES’s Units are listed on the TSX under the symbol ERE.UN. ERES is Canada’s only European-focused multi-residential REIT, with a current portfolio of high-quality, multi-residential real estate properties in the Netherlands. As at December 31, 2024, ERES owned 3,009 residential suites, including 311 suites classified as assets held for sale, and ancillary retail space located in the Netherlands, and owned one commercial property in Germany and one commercial property in Belgium, with a total fair value of approximately €838.7 million, including approximately €64.7 million of assets held for sale. For more information about ERES, its business and its investment highlights, please visit our website at www.eresreit.com and our public disclosure which can be found under our profile on SEDAR+ at www.sedarplus.ca.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute forward-looking information, future-oriented financial information, or financial outlooks (collectively, “forward-looking information”) within the meaning of applicable Canadian securities laws, which reflect ERES’s current expectations and projections about future results. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plans”, “predict”, “estimate”, “forward”, “potential”, “could”, “likely”, “approximately”, “scheduled”, “forecast”, “variation” or “continue”, or similar expressions suggesting future outcomes or events. The forward-looking information in this press release relates only to events or information as of the date on which the statements are made in this press release. Actual results and developments may differ, and may differ materially, from those expressed or implied by the forward-looking information contained in this press release. Any number of factors could cause actual results to differ materially from this forward-looking information. Although ERES believes that the expectations reflected in forward-looking information are reasonable, it can give no assurances that the expectations of any forward-looking information will prove to be correct. Such forward-looking information is based on a number of assumptions that may prove to be incorrect, including with regards to the expected completion and timing of the Pending Disposition, the satisfaction of closing conditions with respect to the Pending Disposition, the intended use of proceeds of the Pending Disposition, the amount and timing of the Special Distribution, and the impact of the transactions on ERES’s financial performance and metrics. There can be no assurance as to the ability of the REIT to effect any continuing property or portfolio sales and/or a sale of the REIT, the timing, terms or use of proceeds of any such sales (including values the REIT may obtain for the relevant properties), or the timing of or costs associated with the wind-up, liquidation, dissolution or any such similar action to terminate or sell the REIT after the completion of any such sales. Accordingly, readers should not place undue reliance on forward-looking information.

Forward looking information in this press release is subject to certain risks and uncertainties that could result in actual results differing materially from this forward-looking information, including with respect to the ability of the relevant parties to complete the Pending Disposition on the timing and terms described herein, the ability of closing conditions to the Pending Disposition to be satisfied, governmental and regulatory requirements and actions by governmental authorities, relationships with tenants, and general market and economic conditions.Risks and uncertainties pertaining to ERES are more fully described in regulatory filings that can be obtained on SEDAR+ at www.sedarplus.ca.

Except as specifically required by applicable Canadian securities law, ERES does not undertake any obligation to update or revise publicly any forward-looking information, whether as a result of new information, future events or otherwise, after the date on which the information is provided or to reflect the occurrence of unanticipated events. This forward-looking information should not be relied upon as representing ERES’s views as of any date subsequent to the date of this press release.

The purpose of disclosing any future-oriented financial information or financial outlooks within the meaning of Canadian securities laws in this press release is to provide investors with more information concerning the expected financial impact on ERES of the transactions described in this press release. Readers are cautioned that such information may not be appropriate for other purposes.

For more information, please contact:

ERES	ERES	ERES
Dr. Gina Parvaneh Cody	Mr. Mark Kenney	Ms. Jenny Chou
Chair of the Board of Trustees	Chief Executive Officer	Chief Financial Officer
(437) 219-1765	(416) 861-9404	(416) 354-0188