CAPREIT Announces That ERES Has Agreed to Sell Over $1 Billion of European Properties

This news release constitutes a “designated news release” for the purposes of CAPREIT’s prospectus supplement dated February 22, 2024, to its short form base shelf prospectus dated May 9, 2023.

TORONTO, Sept. 16, 2024 (GLOBE NEWSWIRE) — Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) announced today that certain subsidiaries of European Residential Real Estate Investment Trust (TSX:ERE.UN) (“ERES”) have entered into agreements to sell 3,179 residential suites in the Netherlands (the “Residential Dispositions”) and have closed on the disposition of one commercial building in Germany for aggregate proceeds, net of certain adjustments, of approximately $1.1 billion. Amounts disclosed herein exclude transaction costs and other customary adjustments, and are presented in Canadian dollars based on a Euro foreign exchange rate of 1.51 on September 13, 2024.

In connection with the Residential Dispositions, ERES announced that a portion of the net proceeds from the sales are expected to be used to fund the payment of a special cash distribution of an estimated $1.13 per ERES Unit and ERES Limited Partnership’s exchangeable Class B LP Unit (together, the “ERES Units”), payable to holders of the ERES Units of record at a date to be determined (the “Special Distribution”, and together with the Residential Dispositions, the “Transactions”). Based on CAPREIT’s effective interest in ERES of approximately 65%, CAPREIT expects to receive approximately $172 million from the Special Distribution following the closing of the Residential Dispositions.

In connection with and following completion of the Residential Dispositions, ERES also announced that it intends to reduce its monthly rate of distribution by approximately 50%.

The Residential Dispositions are in part subject to compliance with the Dutch Competition Act, as well as other closing conditions. Subject to the receipt of all regulatory approvals and satisfaction of closing conditions for each of the Residential Dispositions, ERES announced that closings are anticipated by, or before, early Q1 2025. There can be no assurance that all conditions of closing will be obtained, satisfied or waived. Further details of the Transactions have been provided by ERES in its press release dated September 16, 2024.

CAPREIT intends to utilize the proceeds from the Special Distribution: (1) to repay certain amounts drawn on its revolving credit facility; (2) to fund future acquisitions of on-strategy rental properties in Canada; and (3) for general business purposes, which may include capital expenditures, debt repayment and the repurchase of CAPREIT’s Trust Units under its normal course issuer bid.

“The sale of approximately half of ERES’s residential suites is not only generating liquidity, which ERES can use to reduce its leverage and solidify its balance sheet, but it also returns meaningful capital to its Unitholders to reallocate as they see fit,” commented Mark Kenney, President and Chief Executive Officer of CAPREIT. “This will afford CAPREIT the ability to redeploy the proceeds of the Special Distribution into highest-value alternatives that are aligned with our strategy. Ultimately, these dispositions by ERES will substantially reduce CAPREIT’s non-core investment segment and surface capital that can be put towards the continued upgrading of its Canadian apartment portfolio.”

“The Transactions achieve a multitude of strategic objectives for both ERES and CAPREIT, and unlock significant value for all Unitholders,” added Gina Parvaneh Cody, Chair of the Board of Trustees of CAPREIT. “The Board is excited about the strong progress that CAPREIT has made so far this year on its portfolio repositioning and capital reallocation initiatives, and we continue to support this strategy.”

ABOUT CAPREIT
CAPREIT is Canada’s largest publicly traded provider of quality rental housing. As at June 30, 2024, CAPREIT owns approximately 64,200 residential apartment suites, townhomes and manufactured home community sites well-located across Canada and the Netherlands, with approximately $16.6 billion of investment properties in Canada and Europe. For more information about CAPREIT, its business and its investment highlights, please visit our website at www.capreit.ca and our public disclosure which can be found under our profile on SEDAR+ at www.sedarplus.ca.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws. 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. Forward-looking statements in this press release include, but are not limited, statements with respect to the expected completion and timing of the Residential Dispositions, the intended use of proceeds from the Residential Dispositions and the amount and timing of the Special Distribution. The forward-looking statements made in this press release reflect CAPREIT’s current expectations and projections about future results and events based on information available to CAPREIT as of the date on which such statements are made. 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. Although CAPREIT believes that the expectations reflected in forward-looking statements contained herein are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Accordingly, readers should not place undue reliance on such forward-looking statements.

Forward looking statements in this press release are subject to certain risks and uncertainties, many of which are beyond CAPREIT’s control, which could result in actual results differing materially from these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described under the heading “Risks and Uncertainties” in CAPREIT’s 2023 Annual Report and under the heading “Risk Factors” in CAPREIT’s Annual Information Form for the year ended December 31, 2023, each of which is available under CAPREIT’s profile on SEDAR+ at www.sedarplus.ca.

Except as specifically required by applicable Canadian securities law, CAPREIT 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 CAPREIT’s views as of any date subsequent to the date of this press release.

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