ERES REIT: ERES Provides Update on Strategic Dispositions, Declares Special Distribution and December 2024 Distribution

TORONTO, Dec. 16, 2024 (GLOBE NEWSWIRE) -- European Residential Real Estate Investment Trust ("ERES" or "the REIT") (TSX:ERE) announced today that it has closed on the previously announced dispositions of an aggregate 3,179 residential suites in the Netherlands for gross proceeds, net of estimated adjustments, of approximately €739 million. Please refer to the REIT's press releases dated September 16, 2024 and November 22, 2024 for additional details. All amounts disclosed herein exclude transaction costs and other customary adjustments."We're very pleased to have completed these dispositions, which surfaced significant capital for the benefit of the REIT and its unitholders," commented Mark Kenney, Chief Executive Officer. "ERES is concluding the year in a stronger position as compared to its start, and we'll continue to actively explore all possible opportunities to surface additional value." ERES further announced that, through certain of its subsidiaries, it has closed on the sale of one 25-suite property, and has entered into several agreements to sell a total of 374 residential suites in the Netherlands, for combined gross consideration of approximately €83.7 million (the "Pending Dispositions"). Proceeds are expected to be partially used to pay down associated mortgage debt of approximately €46.2 million. Closing dates are anticipated to occur between December 2024 through to the first quarter of 2025. There can be no assurance that all requirements for closing of the Pending Dispositions will be obtained, satisfied or waived.After paying down associated mortgage debt, net cash proceeds from the Pending Dispositions and a portion of the net cash proceeds from the closed dispositions are expected to be used for the repayment of amounts outstanding on the revolving credit facility and the prepayment of certain mortgages maturing in the near term, in order to lower the REIT's leverage and strengthen its financial position. Remaining net cash proceeds from the closed dispositions are being used to fund a special cash distribution, as outlined below, that will return a meaningful amount of capital to ERES's unitholders.Special DistributionIn connection with the closed dispositions, the Board of Trustees of the REIT (the "Board") today declared a special distribution to the holders ("Unitholders") of the trust units of the REIT ("Units") of €1.00 per Unit, payable in cash (the "Special Distribution"). The incremental capital expected to be received from the Pending Dispositions, which is expected to be used to further pay down debt, has provided the REIT with the opportunity to responsibly increase the amount of the Special Distribution, as compared to the estimated €0.75 per Unit that was previously provided in its press releases, while still paying down a meaningful amount of debt. The Special Distribution will be payable to Unitholders of record at the close of business on December 23, 2024 (the "Record Date"), with payment on December 31, 2024 (the "Payment Date"). The Special Distribution will not qualify for the REIT's Distribution Reinvestment Plan (the "DRIP"). A corresponding €1.00 per unit distribution has been declared on the exchangeable Class B LP units of ERES Limited Partnership ("Class B LP Units"), which will be payable to holders of record of the Class B LP Units on the Record Date and paid on the Payment Date. See "Due Bills" below for additional details regarding trading of Units and the Special Distribution.The Euro-denominated Special Distribution will be paid in Canadian dollars based on the foreign exchange rate on the Payment Date (estimated C$1.49 per Unit based on the foreign exchange rate of 1.49 on December 13, 2024, applicable throughout this press release). Registered Unitholders will be provided with an option to elect to receive the Special Distribution in Euros rather than Canadian dollars. If no such election is made, registered Unitholders will be paid the Special Distribution in Canadian dollars based on the above exchange rate mechanism. Beneficial Unitholders will not have an option to elect to receive the Special Distribution in Euros."We're using net proceeds from the sale of this large portion of our residential portfolio to pay the Special Distribution, and corresponding special distribution to the holders of Class B LP Units, while also reducing the REIT's indebtedness, and we believe this will result in both value for our Unitholders and a stronger balance sheet for ERES moving forward," added Jenny Chou, Chief Financial Officer."The declaration of this Special Distribution is consistent with the Board's mission to maximize returns for the REIT's Unitholders," said Gina Parvaneh Cody, Chair of the Board. "Looking ahead into 2025, we remain committed to making continued progress on the execution of our value-maximization strategy."For Canadian income tax purposes, the Special Distribution will be partially comprised of a return of capital in the range of approximately 70-75%. The remainder of the Special Distribution is principally being made to distribute to Unitholders a portion of the net capital gains of ERES realized during the twelve-month period ending December 31, 2024, and will therefore be in the form of a capital gain in the range of approximately 20-25%, with the remainder comprising ordinary income in the range of approximately 0-5%. Taxable Canadian-resident Unitholders will generally be required to include their proportionate share of ERES's net taxable capital gain and income, as allocated and designated by ERES, in computing their respective income for the tax year that includes the year end of ERES (i.e., December 31, 2024). Unitholders who are not resident in Canada for Canadian federal income tax purposes may be subject to applicable withholding taxes in connection with the payment of the Special Distribution. ERES cautions that the foregoing comments are not intended to be, and should not be construed as, legal or tax advice to any Unitholder. ERES recommends that Unitholders consult their own tax advisors regarding the income tax consequences to them of this anticipated Special Distribution.Pro FormaThe following table sets out consolidated financial metrics of the REIT as of the date of the latest interim financial statements, and after adjusting as outlined below:September 30, 2024, after adjusting for the estimated effect of the completed dispositions and payment of the Special Distribution ...Full story available on Benzinga.com