ERE.UN European Residetial Real Estate Investment Trust

European Residential Real Estate Investment Trust ("ERES" or the "REIT") (TSX: ERE.UN) announced today its results for the three and nine months ended September 30, 2022.

ERES’s unaudited condensed consolidated interim financial statements and management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2022 can be found at www.eresreit.com or under ERES's profile at www.sedar.com.

ANOTHER ACCRETIVE QUARTER

• Achieved rent growth of 5% on the stabilized portfolio
• Net Operating Income increased by 19% versus the prior year quarter, including 7% on stabilized assets
• Significant gains in Funds From Operations and Adjusted Funds From Operations, up in the current quarter versus the prior year period by 13% and 18%, respectively, on a per Unit basis

SIGNIFICANT EVENTS AND HIGHLIGHTS

Business Update

• Since January 1, 2022, the REIT closed on three separate acquisitions consisting of a total of six additional multi-residential properties in the Netherlands for a combined purchase price of €85.4 million (excluding transaction costs and fees), representing an aggregate of 356 suites that increased its suite count by 5% since the prior year end.
• Mortgage financings were secured for the REIT's first quarter 2022 acquisition properties, combined with refinancing of certain existing properties, in the total principal amount of €118 million (excluding transaction costs and fees).
• On February 17, 2022, the Board of Trustees approved an increase of 9% to the REIT's monthly distribution from its previous rate of €0.00917 per Unit (equivalent to €0.11 per Unit annualized) to €0.01 per Unit (equivalent to €0.12 per Unit annualized).

Outperforming Operating Metrics

• Strong operating results continue throughout 2022, fuelled by accretive acquisitions since the prior periods, strong rental growth and ongoing margin expansion. Stabilized portfolio Occupied AMR increased by 5.2%, from €926 as at September 30, 2021, to €974 as at September 30, 2022, demonstrating the REIT's continued achievement of rental growth in excess of its target range, despite various developments in the regulatory regime.
• Turnover was 8.5% for the nine months ended September 30, 2022, with rental uplift on turnover accelerating to 20.0%, representing a strong increase from rental uplift of 15.5% on turnover of 10.9% in the prior year period.
• Occupancy for the residential properties decreased to 97.8% as at September 30, 2022, compared to occupancy on the total residential portfolio of 98.2% as at September 30, 2021, primarily due to an increase in suites undergoing renovation upon turnover, which should provide for further rental uplifts once the suites are leased.
• Net Operating Income ("NOI") increased by 17.2% for the nine months ended September 30, 2022, primarily driven by contribution from accretive acquisitions as well as the aforementioned higher monthly rents, that was further supported by lower property operating costs as a percentage of operating revenues. In aggregate, this drove the REIT's increase in NOI margin to 77.6% compared to 77.2% in the prior year period.

Accretive Financial Performance

• Funds From Operations ("FFO") per Unit increased significantly by 12.8% to €0.044 for the three months ended September 30, 2022, compared to €0.039 in the prior year period, and was up by an even greater 15.2% on a year to date basis, positively driven by accretive acquisitions and increased stabilized NOI contribution.
• Adjusted Funds From Operations ("AFFO") per Unit increased even more significantly by 17.6% to €0.040 for the three months ended September 30, 2022, compared to €0.034 in the three months ended September 30, 2021, and was up by 16.2% on a year to date basis.

Strong Financial Position with Ample Liquidity

• Overall, liquidity and leverage remain stable, with immediately available liquidity of €28.9 million as at September 30, 2022, excluding acquisition capacity on the Pipeline Agreement or promissory note arrangements with CAPREIT.
• Debt metrics are conservative, with an adjusted debt to gross book value ratio in the REIT's target range at 48.7%, and interest and debt service coverage ratios of 4.0x and 3.3x, respectively.
• The REIT's financial position is additionally supported by its well-staggered mortgage profile, with a four-year weighted average term to maturity and a weighted average effective interest rate of 1.77%. Furthermore, the REIT has no mortgage financings coming due for the remainder of 2022, and less than 10% of its mortgage debt maturing in each of the subsequent two years.

Subsequent Events

• On October 27, 2022, upon maturity of the REIT's April 27, 2022 promissory note, the REIT issued a new promissory note to CAPREIT in the principal amount of €25,650, with an interest rate of 3.70% per annum and with a maturity date of April 27, 2023.

"ERES's track record for operational out-performance again continued during this third quarter of 2022. On the front line, the REIT achieved its highest growth in rent to date, with occupied Average Monthly Rent increasing by 5.2% on stabilized assets, significantly in excess of target", commented Phillip Burns, Chief Executive Officer. "The unrelenting nature of the REIT's realization of operational performance continues, notwithstanding the macroeconomic headwinds, regulatory dynamics and capital market pressures. In this respect, we reiterate the unique opportunity for value that this anomaly presents, alongside ERES's core growth and income pillars."

OPERATING METRICS CONTINUE TO STRENGTHEN

Rental Rates
Total Portfolio	Suite Count		Net AMR/ABR1			Occupied AMR/ABR			Occupancy %
As at September 30,	2022	2021	2022	2021	AMR	2022	2021	AMR	2022	2021
			€	€	% Change	€	€	% Change
Residential Properties	6,900	6,183	962	912	5.5	983	928	5.9	97.8	98.2
Commercial Properties2			17.8	17.6	1.1	18.0	17.6	2.3	99.0	100.0

1 Average In-Place Base Rent ("ABR").2 Represents 450,911 square feet of commercial gross leasable area.

Stabilized Portfolio	Suite Count1	Net AMR/ABR			Occupied AMR/ABR			Occupancy %
As at September 30,		2022	2021	AMR	2022	2021	AMR	2022	2021
		€	€	% Change	€	€	% Change
Residential Properties	6,149	953	912	4.5	974	926	5.2	97.8	98.5
Commercial Properties2		17.8	17.6	1.1	18.0	17.6	2.3	99.0	100.0

1 Excludes 1 suite disposition and 17 residential properties (718 suites) acquired, which were not continuously owned by the REIT since September 30, 2021, as well as one newly built residential property (33 suites) acquired on June 30, 2021, which was in the process of being leased and 48% occupied as at September 30, 2021. 2 Represents 450,911 square feet of commercial gross leasable area.

Net and Occupied AMR for the total multi-residential portfolio increased by 5.5% and 5.9%, respectively, while Net and Occupied AMR for the stabilized portfolio increased by 4.5% and 5.2%, respectively, compared to the prior year period. The increases were driven by increased rents on annual indexation, turnover and conversion of regulated suites to liberalized suites. The REIT's achievement of growth in rental revenues significantly in excess of its target range of 3% to 4% demonstrates its ability to consistently operate in a complex and fluid regulatory regime.

Suite Turnovers
For the Three Months Ended September 30,	2022			2021
	Change in Monthly Rent		Turnovers	Change in Monthly Rent		Turnovers
	€	%	%	€	%	%
Regulated suites turnover1	17	2.3	0.4	27	4.9	0.4
Liberalized suites turnover1	184	16.8	2.7	121	12.5	2.7
Regulated suites converted to liberalized suites1	374	50.8	0.3	297	44.2	0.5
Weighted average turnovers1	179	17.7	3.3	137	16.3	3.5
Weighted average turnovers excluding service charge income	176	18.2	3.3	138	15.7	3.5

1 Represents the percentage increase in monthly rent inclusive of service charge income.

For the Nine Months Ended September 30,	2022			2021
	Change in Monthly Rent		Turnovers	Change in Monthly Rent		Turnovers
	€	%	%	€	%	%
Regulated suites turnover1	12	1.7	1.0	19	3.3	1.3
Liberalized suites turnover1	189	17.6	6.6	116	12.3	8.1
Regulated suites converted to liberalized suites1	399	54.1	1.0	287	42.7	1.5
Weighted average turnovers1	193	20.0	8.5	129	15.5	10.9
Weighted average turnovers excluding service charge income	190	20.6	8.5	133	15.4	10.9

1 Represents the percentage increase in monthly rent inclusive of service charge income.

For the three and nine months ended September 30, 2022, turnover was 3.3% and 8.5%, respectively, with average rental uplift (including service charge income) of 17.7% and 20.0%, respectively. This represents a strong increase versus average rental uplift (including service charge income) of only 16.3% and 15.5% for the three and nine months ended September 30, 2021, respectively, on turnover of 3.5% and 10.9%. Rental uplifts were significantly higher on conversions, at 50.8% and 54.1% for the current quarter and year to date, compared to 44.2% and 42.7% for the three and nine months ended September 30, 2021, respectively.

Suite Renewals

Lease renewals generally occur on July 1st for residential suites. Maximum rent indexation on July 1, 2022 for Regulated Suites was set at the Dutch government's determined inflation of 2.3%. Annual rental increases due to indexation for Liberalized Suites are also capped, as per the previously enacted Dutch government legislation, effective for an initial period of three years, from May 1, 2021 up to and including April 30, 2024. For the period from January 1, 2022 to January 1, 2023, the regulations limit indexation for Liberalized Suites to CPI + 1.0%, resulting in a maximum indexation of 3.3% based on the Dutch government's allowed inflation of 2.3%.

Accordingly, for rental increases due to indexation beginning on July 1, 2022, the REIT served tenant notices to 6,499 suites, representing 96% of the residential portfolio, across which the average rental increase due to indexation is 2.95%.

Total Portfolio Performance	Three Months Ended,						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Operating Revenues (000s)	€	22,830		€	19,277		€	66,320		€	56,843
NOI (000s)	€	17,913		€	15,015		€	51,434		€	43,878
NOI Margin1	78.5		%	77.9		%	77.6		%	77.2		%
Weighted Average Number of Suites	6,901			6,184			6,782			6,094

1 Excluding service charge income and expense, the total portfolio NOI margin for the three and nine months ended September 30, 2022 was 84.3% and 83.4%, respectively (three and nine months ended September 30, 2021 — 82.1% for both periods).

Operating revenues increased by 18.4% and 16.7% for the three and nine months ended September 30, 2022, compared to the prior year periods, primarily due to accretive acquisitions and an increase in monthly rents on the stabilized portfolio, as described above.

NOI increased by 19.3% and 17.2% for the three and nine months ended September 30, 2022, versus the same periods last year, likewise driven by contribution from acquisitions since the prior year periods and higher monthly rents on stabilized properties. This was coupled with a decrease in property operating costs as a percentage of operating revenues, predominantly due to lower repairs and maintenance ("R&M") costs and a reduction in landlord levy expense as a result of the lower rate effective in 2022. In aggregate, this drove the strong increases in the REIT's NOI margin, to 78.5% for the three months ended September 30, 2022, from 77.9% in the comparable prior year period. For the nine months ended September 30, 2022, the NOI margin on the total portfolio increased to 77.6% compared to 77.2% in the prior year to date.

Stabilized Portfolio Performance	Three Months Ended,						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Operating Revenues (000s)	€	20,141		€	18,928		€	59,402		€	56,493
NOI (000s)	€	15,778		€	14,769		€	45,965		€	43,632
NOI Margin1	78.3		%	78.0		%	77.4		%	77.2		%
Stabilized Number of Suites2	6,045			6,045			6,045			6,045

1 Excluding service charge income and expense, the stabilized portfolio NOI margin for the three and nine months ended September 30, 2022 was 84.4% and 83.4%, respectively (three and nine months ended September 30, 2021 — 82.2% and 82.1%, respectively).2 Includes all properties owned by the REIT continuously since December 31, 2020, and therefore does not take into account the impact of acquisitions or dispositions completed during 2021 or 2022.

The increases in stabilized NOI contribution by 6.8% and 5.3% for the three and nine months ended September 30, 2022, compared to the prior year periods, were primarily driven by higher operating revenues from increased monthly rents. Combined with lower property operating costs as a percentage of operating revenues, for reasons as described above for the total portfolio, stabilized NOI margin increased to 78.3% for the three months ended September 30, 2022, compared to 78.0% in the prior year period. For the nine months ended September 30, 2022, NOI margin for the stabilized portfolio was 77.4%, which increased compared to 77.2% for the same period last year. These increases evidence the REIT's consistent achievement of an improved NOI margin on a normalized basis. This again reflects the REIT's limited exposure to inflation, alongside strengthening rental revenues and an active program of lowering property operating costs as a percentage of rental revenues.

The REIT is focused on continuing to further improve NOI and NOI margin through a combination of rental growth and cost control, and investment in capital programs to enhance the quality and value of its portfolio. In addition, the REIT notes that its property operating costs are largely insulated from inflation, as tenants are responsible for the majority of their own energy and other utility costs, the REIT has no employees and therefore no wage costs, and property management fees are a fixed percentage of operating revenues. This further preserves the REIT's property operating costs and, combined with its strong growth in rental revenues, improves its normalized NOI margin.

Financial Performance
A reconciliation of net income (loss) to FFO is as follows:
	Three Months Ended						Nine Months Ended
(€ Thousands, except per Unit amounts)	September 30,						September 30,
	2022			2021			2022			2021
Net income and comprehensive income for the period	€	70,000		€	58,616		€	165,206		€	50,934
Adjustments:
Fair value adjustments of investment properties	8,099			(76,908		)	(14,150		)	(107,831		)
Fair value adjustments of Class B LP Units	(65,136		)	2,868			(132,846		)	42,764
Fair value adjustments of Unit Option liabilities	(682		)	200			(1,849		)	51
Interest expense on Class B LP Units	4,261			3,908			12,548			11,603
Deferred income taxes	1,388			19,785			12,704			28,117
Foreign exchange loss1	2,696			1,541			9,396			2,958
Net movement in derivative financial instruments	(10,385		)	(1,264		)	(31,756		)	(2,874		)
Impairment of goodwill	—			—			10,541			—
Mortgage refinancing costs2	30			187			121			187
Acquisition research costs	—			—			11			—
Other prior period adjustments	—			—			—			34
FFO	€	10,271		€	8,933		€	29,926		€	25,943
FFO per Unit – basic3	€	0.044		€	0.039		€	0.129		€	0.112
FFO per Unit – diluted3	€	0.044		€	0.039		€	0.129		€	0.112
Total distributions declared	€	6,958		€	6,359		€	20,467		€	18,868
FFO payout ratio	67.7		%	71.2		%	68.4		%	72.7		%

1 Relates to foreign exchange movements recognized on remeasurement of Unit Option liabilities as well as on remeasurement of the REIT's US Dollar draw on the Revolving Credit Facility (defined herein) as part of effective hedge. 2 Includes break fees of €9 for the three and nine months ended September 30, 2022 (€128 for the three and nine months ended September 30, 2021), as well as accelerated amortization of deferred financing costs of €21 and €112 for the three and nine months ended September 30, 2022 (€59 for the three and nine months ended September 30, 2021), associated with mortgage refinancings and repayments.3 Includes Class B LP Units.

The table below illustrates a reconciliation of the REIT's FFO and AFFO:
	Three Months Ended						Nine Months Ended
(€ Thousands, except per Unit amounts)	September 30,						September 30,
	2022			2021			2022			2021
FFO	€	10,271		€	8,933		€	29,926		€	25,943
Adjustments:
Non-discretionary capital expenditure reserve1	(848		)	(925		)	(2,963		)	(2,784		)
Leasing cost reserve2	(130		)	(94		)	(389		)	(281		)
AFFO	€	9,293		€	7,914		€	26,574		€	22,878
AFFO per Unit – basic3	€	0.040		€	0.034		€	0.115		€	0.099
AFFO per Unit – diluted3	€	0.040		€	0.034		€	0.115		€	0.099
Total distributions declared	€	6,958		€	6,359		€	20,467		€	18,868
AFFO payout ratio	74.9		%	80.4		%	77.0		%	82.5		%

1 Non-discretionary capital expenditure reserve has been calculated based on the annual 2022 forecast of €580 per weighted average number of residential suites during the period (2021 — annual 2021 forecast of €607 per weighted average number of residential suites). The adjustments are based on the reserve amount as the REIT considers this to be more normalized on a long-term basis and therefore more relevant.2 Leasing cost reserve is based on annualized 10-year forecast of external leasing costs on the commercial properties.3 Includes Class B LP Units.

The increases in FFO and AFFO were driven by the positive impact of increased stabilized NOI and accretive acquisitions since the prior year periods.

FFO is a measure of operating performance based on the funds generated by the business before reinvestment or provision for other capital needs. AFFO is a supplemental measure which adjusts FFO for costs associated with capital expenditures, leasing costs, and tenant improvements. FFO and AFFO as presented are in accordance with the recommendations of the Real Property Association of Canada ("REALpac") as published in January 2022, with the exception of certain adjustments made to the REALpac defined FFO, which in the current period relate to (i) acquisition research costs, and (ii) mortgage refinancing costs. FFO and AFFO may not, however, be comparable to similar measures presented by other real estate investment trusts or companies in similar or different industries. Management considers FFO and AFFO to be important measures of the REIT’s operating performance. Please refer to "Basis of Presentation and Non-IFRS Measures" within this press release for further information.

Net Asset Value
A reconciliation of Unitholders' equity to Net Asset Value ("NAV") is as follows:
(€ Thousands, except per Unit amounts)
As at	September 30, 2022			December 31, 2021
Unitholders' equity	€	601,078		€	441,765
Goodwill	—			(10,541		)
Class B LP Units	312,296			445,142
Unit-based compensation financial liabilities	492			2,016
Net deferred income tax liability1	97,488			84,784
Net derivative financial (asset) liability2	(23,551		)	286
NAV	€	987,803		€	963,452
NAV per Unit – diluted3	€	4.26		€	4.16
NAV per Unit – diluted (in C$)3,4	$	5.73		$	5.99

1  Represents deferred income tax liability of €99,210 net of deferred income tax asset of €1,722 (December 31, 2021 — deferred income tax liability of €87,435 net of deferred income tax asset of €2,651).2 Represents non-current and current derivative financial assets of €22,526 and €1,025, respectively (December 31, 2021 — non-current and current derivative financial liabilities of €722 and €494, respectively, net of non-current derivative financial assets of €930). 3 Includes Class B LP Units and the dilutive impact of unexercised Unit Options, calculated based on the treasury method. 4 Based on the foreign exchange rate of 1.3463 on September 30, 2022 (foreign exchange rate of 1.4391 on December 31, 2021).

NAV represents total Unitholders' equity per the REIT's consolidated statements of financial position, adjusted to exclude certain amounts in order to provide what management considers to be a key measure of the intrinsic value of the REIT on a going concern basis. Management believes that this measure reflects the residual value of the REIT to its Unitholders on a going concern basis and is therefore used by management on both an aggregate and per Unit basis to evaluate the net asset value attributable to Unitholders, and changes thereon based on the execution of the REIT's strategy. Please refer to the "Basis of Presentation and Non-IFRS Measures" section within this press release for further information.

Other Financial Highlights	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022	2021		2022		2021
Weighted Average Number of Units – Basic1 (000s)	231,894	231,113		231,647		230,956
Closing Price of REIT Units2, 3			€	2.20	€	2.97
Closing Price of REIT Units (in C$)2			$	2.96	$	4.40
Market Capitalization (millions)1, 2, 3			€	510	€	687
Market Capitalization (millions in C$)1, 2			$	687	$	1,017

1 Includes Class B LP Units.2 As at September 30. 3 Based on the foreign exchange rate of 1.3463 on September 30, 2022 (foreign exchange rate of 1.4801 on September 30, 2021).

FINANCIAL POSITION REMAINS FIRM

As at	September 30, 2022			December 31, 2021
Ratio of Adjusted Debt to Gross Book Value1		48.7	%		46.8	%
Weighted Average Mortgage Effective Interest Rate		1.77	%		1.52	%
Weighted Average Mortgage Term (years)		3.7			3.9
Debt Service Coverage Ratio (times)1,2		3.3x			3.3x
Interest Coverage Ratio (times)1,2		4.0x			4.2x
Available Liquidity3	€	28,924		€	39,437

1 Please refer to the "Basis of Presentation and Non-IFRS Measures" section of this press release for further information. 2 For the rolling 12 months ended.3 Includes cash and cash equivalents of €19.0 million and unused credit facility capacity of €9.9 million as at September 30, 2022 (cash and cash equivalents of €10.3 million and unused credit facility capacity of €29.1 million as at December 31, 2021).

ERES's liquidity and leverage remain stable, supported by the REIT's staggered mortgage profile with a four-year weighted average term to maturity and a weighted average effective interest rate of 1.77%. Furthermore, the REIT has no mortgage financings coming due for the remainder of 2022, and less than 10% of its mortgage debt maturing in each of the subsequent two years. The REIT has immediately available liquidity of €29 million as at September 30, 2022, reinforced by conservative debt metrics, including an adjusted debt to gross book value ratio within its target range at 48.7%.

Management aims to maintain an optimal degree of debt to gross book value of the REIT's assets depending on a number of factors at any given time. Capital adequacy is monitored against investment and debt restrictions contained in the REIT's fourth amended and restated declaration of trust dated April 28, 2020 (the "Declaration of Trust"), and the amended and renewed credit agreement dated October 29, 2021, between the REIT and two Canadian chartered banks, providing access to up to €100.0 million (the "Revolving Credit Facility"). The REIT manages its overall liquidity risk by maintaining sufficient available credit facilities and available cash on hand to fund its ongoing operational and capital commitments and distributions to Unitholders, and to provide future growth in its business.

"The REIT's solid financial position is a product of the pro-active and strategic management of liquidity and leverage, which is not a new initiative, but one of increasing importance in the context of the current macroeconomic environment", commented Jenny Chou, Chief Financial Officer. "With ERES's staggered mortgage profile, its targeted leverage and consistently conservative debt metrics, the REIT remains well-positioned to withstand forthcoming volatility."

DISTRIBUTIONS

During the nine months ended September 30, 2022, the REIT declared monthly distributions of €0.00917 per Unit (equivalent to €0.11 per Unit annualized) in respect of January and February, and €0.01 per Unit (equivalent to €0.12 per Unit annualized) thereafter, following an increase of 9% in the REIT's monthly distribution rate. Such distributions are paid to Unitholders of record on each record date, on or about the 15th day of the month following the record date. The REIT intends to continue to make regular monthly distributions, subject to the discretion of its Board of Trustees.

CONFERENCE CALL

A conference call hosted by Phillip Burns, Chief Executive Officer and Jenny Chou, Chief Financial Officer, will be held on Tuesday, November 8, 2022 at 9:00 am EST. The telephone numbers for the conference call are Canadian Toll Free: 1 (833) 950-0062 / International: +1 (929) 526-1599. The Passcode for the call is 050647.

A replay of the call will be available for 7 days after the call, until Tuesday, November 15, 2022. The telephone numbers to access the replay are Canadian Toll Free: 1 (226) 828-7578 or International +44 (204) 525-0658. The Passcode for the replay is 978548.

The call will also be webcast live and accessible through the ERES website at www.eresreit.com — click on "Investor Info" and follow the link at the top of the page. The webcast will also be available by clicking on the link below:

https://events.q4inc.com/attendee/706206158

A replay of the webcast will be available for 1 year after the webcast at the same link.

The slide presentation to accompany management's comments during the conference call will be available on the ERES website an hour and a half prior to the conference call.

About European Residential Real Estate Investment Trust

ERES is an unincorporated, open-ended real estate investment trust. ERES's REIT Units are listed on the TSX under the symbol ERE.UN. ERES is Canada’s only European-focused multi-residential REIT, with a current initial focus on investing in high-quality, multi-residential real estate properties in the Netherlands. ERES owns a portfolio of 158 multi-residential properties, comprised of 6,900 suites and ancillary retail space located in the Netherlands, and owns one office property 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.

Basis of Presentation and Non-IFRS Measures

Unless otherwise stated, all amounts included in this press release are in thousands of Euros, the functional currency of the REIT. The REIT's unaudited condensed consolidated interim financial statements ("Interim Financial Statements") are prepared in accordance with International Financial Reporting Standards ("IFRS"). Financial information included within this press release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the REIT's Interim Financial Statements and MD&A for the three and nine months ended September 30, 2022, which is available on the REIT's website at www.eresreit.com and on SEDAR at www.sedar.com.

Consistent with the REIT's management framework, management uses certain financial measures to assess the REIT's financial performance, which are not in accordance with IFRS ("Non-IFRS Measures"). Since these Non-IFRS Measures are not recognized under IFRS, they may not be comparable to similar measures reported by other issuers. The REIT presents Non-IFRS Measures because management believes Non-IFRS Measures are relevant measures of the ability of the REIT to earn revenue, generate sustainable economic earnings, and to evaluate its performance and financial condition. The Non-IFRS Measures should not be construed as alternatives to the REIT's financial position, net income or cash flows from operating activities determined in accordance with IFRS as indicators of the REIT’s performance or the sustainability of distributions. For full definitions of these measures, please refer to "Non-IFRS Measures" in Section I and Section IV of the REIT's MD&A for the three and nine months ended September 30, 2022.

Where not otherwise disclosed, reconciliations for certain Non-IFRS Measures included within this press release are provided below.

Adjusted Debt and Adjusted Debt Ratio

The REIT's Declaration of Trust requires compliance with certain financial covenants, including the Ratio of Adjusted Debt to Gross Book Value. Management uses Total Debt Adjusted for Declaration of Trust and the Ratio of Adjusted Debt to Gross Book Value as indicators in assessing if the debt level maintained is sufficient to provide adequate cash flows for distributions and for evaluating the need to raise funds for further expansion.

A reconciliation from total debt is as follows:

(€ Thousands)
As at	September 30, 2022			December 31, 2021
Mortgages payable1	€	876,214		€	814,422
Bank indebtedness		90,117			70,911
Promissory note		25,650			—
Total Debt	€	991,981		€	885,333
Fair value adjustment on mortgages payable		(1,314	)		(1,608	)
Total Debt Adjusted for Declaration of Trust	€	990,667		€	883,725
Ratio of Adjusted Debt to Gross Book Value2		48.7	%		46.8	%

1  Represents non-current and current mortgages payable of €814,018 and €62,196, respectively (December 31, 2021 — €762,318 and €52,104, respectively).2  Gross book value is defined by the REIT's Declaration of Trust as the gross book value of the REIT's assets as per the REIT's financial statements, determined on a fair value basis for investment properties.

Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value

Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value ("EBITDAFV") is calculated as prescribed in the REIT's Revolving Credit Facility for the purpose of determining the REIT's Debt Service Coverage Ratio and Interest Coverage Ratio, and is defined as net income (loss) attributable to Unitholders, reversing, where applicable, income taxes, interest expense, amortization expense, depreciation expense, impairment, adjustments to fair value and other adjustments as permitted in the REIT's Revolving Credit Facility. Management believes EBITDAFV is useful in assessing the REIT's ability to service its debt, finance capital expenditures and provide for distributions to its Unitholders.

A reconciliation of net income (loss) to EBITDA is as follows:

(€ Thousands)
For the Three Months Ended,	Q3 22			Q2 22			Q1 22			Q4 21			Q3 21			Q2 21			Q1 21			Q4 20
Net income (loss) and comprehensive income (loss)	€	70,000		€	126,935		€	(31,729	)	€	45,204		€	58,616		€	27,991		€	(35,673	)	€	12,512
Adjustments:
Fair value adjustments of investment properties	8,099			9,790			(32,039		)	(86,748		)	(76,908		)	(34,908		)	3,985			(4,387		)
Fair value adjustments of Class B LP Units	(65,136		)	(133,499		)	65,789			22,352			2,868			2,668			37,228			(9,437		)
Fair value adjustments of Unit Option liabilities	(682		)	(2,258		)	1,091			129			200			(161		)	12			(293		)
Net movement in derivative financial instruments	(10,385		)	(10,649		)	(10,722		)	(987		)	(1,264		)	(1,117		)	(493		)	1,656
Impairment of goodwill	—			10,541			—			—			—			—			—			—
Foreign exchange loss (income)	2,696			5,003			1,697			285			1,541			935			482			(1,726		)
Interest expense on Class B LP Units	4,261			4,262			4,025			3,907			3,908			3,907			3,788			3,728
Interest on mortgages payable	3,862			3,186			3,046			2,899			2,830			2,810			2,785			2,708
Interest on bank indebtedness	262			167			150			143			203			110			95			132
Interest on promissory notes	97			256			50			15			—			—			—			—
Amortization	149			207			231			90			234			143			142			178
Income tax expense (recovery)	2,371			540			12,302			25,715			20,526			9,948			(447		)	6,502
EBITDAFV	€	15,594		€	14,481		€	13,891		€	13,004		€	12,754		€	12,326		€	11,904		€	11,573
Cash taxes	983			875			651			1,088			741			601			568			461
EBITDAFV after cash taxes	€	14,611		€	13,606		€	13,240		€	11,916		€	12,013		€	11,725		€	11,336		€	11,112
Principal repayments1	€	548		€	547		€	547		€	546		€	546		€	545		€	547		€	544

1  For use in Debt Service Coverage Ratio calculation.

Debt Service Coverage Ratio

The Debt Service Coverage Ratio is defined as EBITDAFV less cash taxes, divided by the sum of interest expense (including on mortgages payable, bank indebtedness and promissory notes) and all regularly scheduled principal payments made with respect to indebtedness during the period (other than any balloon, bullet or similar principal payable at maturity or which repays such indebtedness in full). The Debt Service Coverage Ratio is calculated as prescribed in the REIT's Revolving Credit Facility, and is based on the trailing four quarters. Management believes the Debt Service Coverage Ratio is useful in determining the ability of the REIT to service the principal and interest requirements of its outstanding debt.

(€ Thousands)
As at	September 30, 2022		December 31, 2021
EBITDAFV after cash taxes1	€	53,373	€	46,990
Debt service payments1,2	€	16,321	€	14,074
Debt Service Coverage Ratio (times)	3.3x		3.3x

1  For the trailing 12 months ended.2  Includes principal repayments as well as interest on mortgages payable, bank indebtedness and promissory notes, and excludes interest expense on Class B LP Units.

Interest Coverage Ratio

The Interest Coverage Ratio is defined as EBITDAFV divided by interest expense (including on mortgages payable, bank indebtedness and promissory notes). The Interest Coverage Ratio is calculated as prescribed in the REIT's Revolving Credit Facility, and is based on the trailing four quarters. Management believes the Interest Coverage Ratio is useful in determining the REIT's ability to service the interest requirements of its outstanding debt.

(€ Thousands)
As at	September 30, 2022		December 31, 2021
EBITDAFV1	€	56,970	€	49,988
Interest expense1,2	€	14,133	€	11,890
Interest Coverage Ratio (times)	4.0x		4.2x

1  For the trailing 12 months ended.2 Includes interest on mortgages payable, bank indebtedness and promissory notes, and excludes interest expense on Class B LP Units.

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”, “forward”, “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. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although ERES believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect. Accordingly, readers should not place undue reliance on forward-looking statements.

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.

For further information:

Phillip Burns	Jenny Chou
Chief Executive Officer	Chief Financial Officer
Email: p.burns@eresreit.com	Email: j.chou@eresreit.com

Category: Earnings