Eres Reit Announces Special Meeting of Unitholders

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TORONTO, Nov. 06, 2024 (GLOBE NEWSWIRE) — European Residential Real Estate Investment Trust (“ERES” or the “REIT”) (TSX:ERE.UN) announced today that the board of trustees of the REIT (the “Board”) has called and will hold, virtually on January 7, 2025, a special meeting (the “Meeting”) of Unitholders (as defined below) of record as of November 25, 2024 to consider, and if deemed appropriate, pass a special resolution (“Special Resolution”) to amend the REIT’s fifth amended and restated declaration of trust dated May 2, 2024 (the “Declaration of Trust”) to provide the Board with the authority: (i) to sell all or substantially all of the assets of the REIT in one or more transactions at such times and on such terms and conditions as determined by the Board, (ii) to distribute the net proceeds of any such sales to Unitholders in the amounts and at the times determined by the Board, and (iii) to wind-up, liquidate, dissolve or take any such similar action to terminate the REIT on such terms and conditions determined by the Board, in each case without any requirement for further Unitholder approval (subject to applicable securities laws). Such an amendment would provide the Board with maximum flexibility in assessing the REIT’s alternatives both with respect to its properties as well as regarding the future of the REIT. The amendment does not adversely impact the protections afforded to minority Unitholders under applicable securities laws.

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ERES is in the process of actively marketing certain portfolios of properties pursuant to its value enhancement strategy, in which it is exploring all available opportunities to surface value. To that end, the REIT considers the flexibility to sell properties without the delay of the potential need for a meeting of Unitholders (where the sale amounts to substantially all of the REIT’s properties or in the event of a wind-up or liquidation) would augment its ability to execute on this strategic objective and maximize value. This added flexibility is expected to enable the REIT to move swiftly and opportunistically without the delays and costs of holding a Unitholder meeting, increasing the REIT’s ability to pursue the most attractive transactions available to the REIT. The Board believes that Unitholders are well-aligned in a desire to maximize value and effect attractive sale transactions as swiftly as reasonably possible, which the proposed amendment will facilitate.

In the event that one or more attractive transactions can be secured, the sale of all or substantially all of the properties of the REIT may be in the best interest of the Unitholders. If that were to happen, the Board may consider another special cash distribution. In those circumstances, the Board may also consider a possible sale of either the REIT itself or its remaining properties as the costs of maintaining a public company become increasingly burdensome as the size of the business decreases.

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At present, the REIT has entered into two separate agreements to sell a total of 3,179 residential suites in the Netherlands, as described in its press release dated September 16, 2024. Further to that announcement, ERES expects that the 232-suite disposition will close on or about December 2, 2024. In addition, approval has been received from the Dutch competition authority (ACM) for the 2,947-suite disposition, which is expected to close by no later than early Q1 2025. There can be no assurance that all requirements for closing of the aforementioned transactions will be obtained, satisfied or waived. Apart from these disclosed transactions, there are no other agreements currently entered into for the sale of any of the REIT’s properties. The REIT is not in a position to speculate on whether any future sales of properties is likely, or when such sales might occur.

The proposed amendment to the Declaration of Trust must be approved by 66 2/3% of the trust units of the REIT (“Trust Units”) and special voting units of the REIT (“Special Voting Units” and together with the Trust Units, the “Units”) voted at the Meeting of holders of Units (“Unitholders”) voting as a single class that will be held virtually on January 7, 2025. More detailed information will be contained in the management information circular for the meeting which will be available on the REIT’s profile on SEDAR+ at www.sedarplus.ca. Unitholders are urged to read those and other relevant materials when they become available.

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The Board, made up of five independent trustees and the REIT’s Chief Executive Officer, has concluded that the proposed amendment to the Declaration of Trust is in the best interests of the REIT and unanimously recommend that Unitholders vote for the Special Resolution. In addition, Canadian Apartment Properties Real Estate Investment Trust, which is ERES’s largest Unitholder with an approximate 65% effective interest, has indicated that it will vote in favour of the amendment to the Declaration of Trust.

“The proposed amendment would strengthen our transactional efficiency and enhance our ability to execute on opportunities to maximize value for Unitholders,” commented Mark Kenney, Chief Executive Officer of ERES. “This remains our over-arching objective, and we’re committed to pursuing that through all possible means.”

“The Board is recommending that Unitholders vote for the proposed amendment,” added Gina Parvaneh Cody, Chair of the Board of Trustees of ERES. “The Meeting will take place virtually, and we encourage all Unitholders to join and send in their form of proxy as directed in the information circular that will be distributed.”

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Although the effect of the proposed amendment to the Declaration of Trust is to provide the Board with the authority to effect, without a further Unitholder vote, a sale of all or substantially all of the properties of the REIT, there is no change to applicable securities or other laws that apply to the REIT. For example, the REIT will continue to be subject to applicable securities laws that provide for the protection of minority security holders in certain transactions, including transactions with CAPREIT. These securities laws may require independent valuations and approvals by minority Unitholders in certain circumstances, and the proposed amendment to the REIT’s Declaration of Trust has no impact on the rule.

The effect of the proposed amendment to the Declaration of Trust is that the Board could agree to sell some or all of the properties of the REIT and then distribute the proceeds and wind-up the REIT without a further vote by the Unitholders (except to the extent required by the applicable securities laws). If substantially all of the properties of the REIT are sold and the proceeds distributed, the REIT may no longer meet the criteria for a listing on the Toronto Stock Exchange, and the Units of the REIT could be delisted.

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ABOUT ERES
ERES is an unincorporated, open-ended real estate investment trust. ERES’s Units are listed on the Toronto Stock Exchange under the symbol ERE.UN. ERES is Canada’s only European-focused multi-residential REIT, with a current portfolio of high-quality, multi-residential real estate properties in the Netherlands. As at September 30, 2024, ERES owned approximately 6,300 residential suites, including approximately 3,200 suites classified as assets held for sale, and ancillary retail space located in the Netherlands, and owned one commercial property in Germany and one commercial property in Belgium, with a total fair value of approximately €1.6 billion, including approximately €0.7 billion of assets held for sale. For more information about ERES, its business and its investment highlights, please visit our website at www.eresreit.com and our public disclosure which can be found under our profile on SEDAR+ at www.sedarplus.ca.
        
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute forward-looking information, future-oriented financial information, or financial outlooks (collectively, “forward-looking information”) within the meaning of applicable Canadian securities laws, which reflect ERES’s current expectations and projections about future results. Forward-looking information 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 information in this press release relates 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 information contained in this press release. Any number of factors could cause actual results to differ materially from this forward-looking information. Although ERES believes that the expectations reflected in forward-looking information are reasonable, it can give no assurances that the expectations of any forward-looking information will prove to be correct. Such forward-looking information is based on a number of assumptions that may prove to be incorrect, including regarding the expected completion and timing of the transactions, the satisfaction of closing conditions with respect to the transactions, the REIT’s ability to source and execute on attractive transactions, move swiftly and opportunistically, and maximize value, and the expected completion, timing and impact of the proposed amendment to the REIT’s Declaration of Trust and Meeting. Accordingly, readers should not place undue reliance on forward-looking information.

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Forward looking information in this press release is subject to certain risks and uncertainties that could result in actual results differing materially from this forward-looking information, including with respect to the expected closing of the transactions and the proposed amendment to the REIT’s Declaration of Trust. Risks and uncertainties pertaining to ERES are more fully described in regulatory filings that can be obtained on SEDAR+ at www.sedarplus.ca.

Except as specifically required by applicable Canadian securities law, ERES does not undertake any obligation to update or revise publicly any forward-looking information, whether as a result of new information, future events or otherwise, after the date on which the information is provided or to reflect the occurrence of unanticipated events. This forward-looking information should not be relied upon as representing ERES’s views as of any date subsequent to the date of this press release.

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