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:
(i)
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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;
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(ii)
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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
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(iii)
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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
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"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%.
CAPREIT's Ownership
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.
About ERES
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.
About CAPREIT
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