TORONTO, June 28, 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 "Pipeline Acquisition"), effective June 30, 2019, of a portfolio comprised of 21 properties, representing an aggregate of 511 residential suites in six locations in the Netherlands (the "Additional Portfolio"), as more particularly described in ERES's management information circular dated April 23, 2019 (the "Circular"). The purchase price for the Additional Portfolio, of approximately €98 million, implies a forward capitalization rate of approximately 3.8%, attesting to the high quality of the properties. The Additional Portfolio is approximately 96% occupied, and has an occupied average monthly rent of €739 per suite (excluding service charges).
The €98 million purchase price (the "Purchase Price") for the Additional Portfolio, which is subject to certain post-closing purchase price adjustments and transaction costs, was satisfied by a combination of:
approximately €60 million of new mortgage debt on the Additional Portfolio, bearing a 0.97% fixed interest rate and a 4 year term to maturity;
a €22 million draw on ERES's new revolving credit facility to be provided to ERES by two Canadian chartered banks shortly after closing of the acquisition of the Additional Portfolio (the "Credit Facility"); and
the issuance of 8,339,260 class B LP units of ERES Limited Partnership (the "Class B LP Units"), at a price of C$4.00 per Class B LP Unit. The Class B LP Units are convertible on a one-to-one basis into trust units of ERES ("Units"). If the Credit Facility is not available to ERES within 20 business days after the acquisition of the Additional Portfolio, ERES will pay the remainder of the Purchase Price by way of, at ERES's sole option, either cash or an additional 12,762,403 Class B LP Units
"ERES's and CAPREIT's joint commitment to capitalize on the unique multi-residential growth opportunities in the Netherlands is highlighted by the closing of another attractive portfolio acquisition," said Phillip Burns, Chief Executive Officer of ERES. "The Additional Portfolio represents a well-located portfolio of high quality properties that further enhances the quality and scale of ERES."
The Pipeline Acquisition was completed pursuant to the previously announced pipeline agreement dated March 29, 2019 between ERES and CAPREIT Limited Partnership, which was approved by the holders of Units and special voting units of ERES at a special meeting held on March 21, 2019. The issuance of Class B LP Units in connection with the acquisition of the Additional Portfolio was overwhelmingly approved by disinterested unitholders of ERES at ERES's annual and special meeting held on May 23, 2019. After June 30, 2019, any acquisitions pursuant to ERES's pipeline agreement that are funded with Class B LP Units or Units will be priced using the market value of the Units on the relevant payment date.
As a result of the Pipeline Acquisition and other acquisitions completed subsequent to March 31, 2019, the value of ERES's investment properties has increased from approximately €530 million, at March 31, 2019, to over €860 million. ERES's portfolio consists of 3,859 multi-residential suites in 88 properties and approximately 400,000 square feet of gross leasable office area in three office properties. ERES's market capitalization has also increased significantly, with the number of Units outstanding (including Class B LP units) increasing from approximately 99 million, at March 31, 2019, to approximately 158 million currently. Upon completion of the Pipeline Acquisition, ERES's Debt to Gross Book Value ratio will be approximately 49%, which is within its target Debt to Gross Book Value range of 45% to 50%.
As a result of the Pipeline Acquisition, CAPREIT beneficially owns, controls or exercises direction over 140,903,682 Class B LP Units, representing approximately 89% of the issued and outstanding Units and Class B LP Units. Immediately before the completion of the Pipeline Acquisition, CAPREIT owned, controlled or exercised direction over 132,564,422 Class B LP Units, representing approximately 88% of the issued and outstanding Units and Class B LP Units. Subject to the terms set out in the investor rights agreement dated March 29, 2019 between CAPREIT and ERES, CAPREIT may seek to sell or otherwise dispose of some or all of ERES's securities (which may include, but is not limited to, transferring some or all of such securities to its affiliates) from time to time, and/or may seek to acquire additional securities of ERES (which may include rights or securities exercisable or convertible into securities of ERES) from time to time, in each case, in open market or private transactions, block sales or acquisitions or otherwise.
ERES is an unincorporated, open-ended real estate investment trust. ERES's 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 88 multi-residential properties, comprised of 3,859 suites located in the Netherlands, and owns two office properties in Germany and one office property in Belgium.
ERES's 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.
As one of Canada's largest residential landlords, CAPREIT is a growth-oriented investment trust owning interests in 57,476 residential units, comprising 45,800 residential suites and 72 manufactured home communities comprising 11,676 sites located in and near major urban centres across Canada and the Netherlands.
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 our 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's 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's 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 Circular, any information released or received with respect to the Pipeline Acquisition 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 Pipeline Acquisition 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
For further information: ERES: Mr. Phillip Burns, Chief Executive Officer, (416) 354-0167, [email protected]; Mr. Scott Cryer, Chief Financial Officer, (416) 861-5771; CAPREIT: Mr. Michael Stein, Chairman, (416) 861-5788; Mr. Mark Kenney, President & CEO, (416) 861-9404