Press Release

ERES Reit Announces Closing of €227MM Netherlands Portfolio Acquisitions

Company Release - 9/30/2019 8:18 AM ET

TORONTO, Sept. 30, 2019 /CNW/ - European Residential Real Estate Investment Trust (TSX-V:ERE.UN, "ERES") and Canadian Apartment Properties Real Estate Investment Trust (TSX:CAR.UN, "CAPREIT") are pleased to announce the closing of the previously announced acquisition by ERES from CAPREIT (the "Eagle Acquisition") of a portfolio comprised of 18 properties, representing an aggregate of 942 residential suites in seven urban centres in the Netherlands (the "Eagle Portfolio"), as more particularly described in ERES' prospectus supplement dated September 17, 2019 (the "Prospectus Supplement"). Further, ERES is pleased to announce the closing of the previously announced acquisition by ERES from an arm's-length institutional owner based in the Netherlands (the "Additional Acquisition" and together with the Eagle Acquisition, the "Acquisitions") of a portfolio comprised of 16 properties, representing an aggregate of 315 residential suites in eight municipalities in the Netherlands (the "Additional Portfolio"), also as more particularly described in the Prospectus Supplement. 

The approximately €170.5 million (including transaction costs) purchase price for the Eagle Portfolio, which is subject to certain post-closing purchase price adjustments, was satisfied by a combination of:

(i)

approximately €68.6 million in cash raised pursuant to ERES' recently closed equity offering (the "ERESOffering");



(ii)

a bridge promissory note (the "ERES Promissory Note") provided by ERES Limited Partnership ("ERES LP"), a subsidiary of ERES, to CAPREIT in the principal amount of €98.5 million carrying an interest rate of 1.35% per annum with a six-month term to maturity, which ERES can repay without penalty at any time and intends to replace with mortgage financing expected to be provided by a third-party lender for a seven-year term and at a stated interest rate that approximates the ERES Promissory Note; and



(iii)

the issuance of 1,137,139 class B limited partnership units of ERES LP (the "Class B LP Units") to CAPREIT at $4.40 per Class B LP Unit. The Class B LP Units are convertible on a one-to-one basis into trust units of ERES (the "Units")

 

The approximately €64.8 million (including transaction costs) purchase price for the Additional Portfolio was satisfied by a combination of:

(i)

approximately €11.0 million in cash raised pursuant to the ERES Offering; and



(ii)

mortgage funding of approximately €53.8 million (inclusive of upfront and agent fees) for a seven-year term at a stated interest rate of 1.45% which encumbers the Additional Portfolio, as well as an existing portfolio of ERES which was previously unencumbered

 

As a result of the Acquisitions, the value of ERES' investment properties has increased from approximately €880.9 million, at June 30, 2019, to over €1.1 billion.  ERES' portfolio consists of 5,116 multi-residential suites in 122 properties and approximately 400,000 square feet of gross leasable office area in three office properties. ERES' market capitalization has also increased significantly, with the number of Units outstanding (including Class B LP Units) increasing from approximately 158.2 million, at June 30, 2019, to approximately 199.6 million currently (including Class B LP Units issued for the Eagle Portfolio). Upon completion of the Acquisitions, ERES' Debt to Gross Book Value ratio will be approximately 48%, which is within its target Debt to Gross Book Value range of 45% to 50%.

About ERES

ERES is an unincorporated, open-ended real estate investment trust. ERES' Units are listed on the TSX-V under the symbol ERE.UN. ERES is Canada's only European-focused multi-residential REIT, with an initial focus on investing in high-quality multi-residential real estate properties in the Netherlands. ERES owns a portfolio of 122 multi-residential properties, comprised of 5,116 suites located in the Netherlands, and owns two office properties in Germany and one office property in Belgium.

ERES' registered and principal business office is located at 11 Church Street, Suite 401, Toronto, Ontario M5E 1W1.

For more information, please visit our website at www.eresreit.com.

About CAPREIT

As one of Canada's largest residential landlords, CAPREIT is a growth-oriented investment trust managing 63,478 suites and sites across Canada, the Netherlands and Ireland. It owns, directly in Canada and indirectly in Netherlands through its investment in ERES, a total of 59,844 residential units, comprising 48,167 residential suites and 72 manufactured home communities comprising 11,677 sites located in and near major urban centres.

CAPREIT's registered and principal business office is located at 11 Church Street, Suite 401, Toronto, Ontario M5E 1W1.

For more information about CAPREIT, its business and its investment highlights, please refer to their website at www.caprent.com or www.capreit.net and our public disclosure, which can be found under our profile at www.sedar.com.

Cautions Regarding Future Plans and Forward-Looking Information

Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect ERES' current expectations and projections about future results. Forward-looking statements 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", "potential", "could", "likely", "approximately", "scheduled", "forecast", "variation" or "continue", or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.

Except as specifically required by applicable Canadian securities law, ERES does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing ERES' views as of any date subsequent to the date of this press release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Investors are cautioned that, except as disclosed in the Prospectus Supplement, any information released or received with respect to the Acquisitions may not be accurate or complete and should not be relied upon.

Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) have in no way passed upon the merits of the Acquisitions and have neither approved nor disapproved the contents of this news release.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of ERES.

SOURCE European Residential Real Estate Investment Trust

ERES: Mr. Phillip Burns, Chief Executive Officer, (416) 354-0167, p.burns@eresreit.com; Mr. Scott Cryer, Chief Financial Officer, (416) 861-5771; CAPREI: Mr. Michael Stein, Chairman, (416) 861-5788; Mr. Mark Kenney, President & CEO, (416) 861-9404

Contact Us

11 Church Street, Suite 401
Toronto, Ontario, Canada
M5E 1W1

Phillip Burns
Chief Executive Officer
p.burns@eresreit.com
+1 416 354 0167

Scott Cryer
Chief Financial Officer
s.cryer@eresreit.com
+1 416 861 5771