/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, Dec. 10, 2019 /CNW/ – (TSX-V:ERE.UN) â European Residential Real Estate Investment Trust (“ERES”) announced today that due to strong demand, the size of its previously announced bought deal equity offering in connection with which it entered into an agreement to sell trust units to a syndicate of underwriters led by RBC Capital Markets has increased to 26,883,000 trust units at a price of C$4.65 per trust unit for gross proceeds of approximately C$125 million (the “Offering”). ERES has granted the underwriters an over-allotment option (the “Over-Allotment Option”), exercisable in whole or in part up to 30 days after closing of the Offering, to purchase up to an additional 4,032,400 trust units to cover over-allotments, if any. If the Over-Allotment Option is exercised in full, the gross proceeds would increase to approximately C$144 million.
ERES will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada, a prospectus supplement to its short form base shelf prospectus dated August 19, 2019 (the “Base Shelf Prospectus”) relating to the issuance of the trust units. Closing of the Offering is expected to occur on or about December 18, 2019.
ERES intends to use the anticipated â¬82 million of net proceeds of the Offering:
to repay â¬50 million to be drawn on the previously announced new one-year â¬50 million credit facility that ERES has entered into with two Canadian chartered banks (the “New Credit Facility”), to finance the previously announced acquisition of a Netherlands property for approximately â¬105 million (excluding transaction costs and other adjustments) (the “Kameleon Property”), expected to close on December 16, 2019;
to repay â¬23 million drawn on ERES’ existing credit facility (including â¬20 million to be drawn to finance the acquisition of the Kameleon Property);
to repay â¬9 million of the â¬37 million promissory note to be issued to CAPREIT (the “CAPREIT Promissory Note”) to finance the acquisition of the Kameleon Property; and
the remainder, if any, to finance future acquisitions, to repay indebtedness, for revenue-enhancing capital expenditures, and for general trust purposes.
The proceeds of the Over-Allotment Option, if any, are expected to be used to finance future acquisitions, to repay indebtedness, for revenue-enhancing capital expenditures, and for general trust purposes.
The Kameleon Property, the New Credit Facility, and the CAPREIT Promissory Note are described in more detail in ERES’ press release dated December 9, 2019.
As a part of the Offering, CAPREIT has agreed to purchase 5,377,000 of the trust units being offered, representing approximately C$25 million. CAPREIT currently holds a 74% effective interest in ERES through ownership of trust units and Class B LP units (assuming all the Class B LP units are converted into trust units). After the Offering closes, CAPREIT expects its effective ownership interest to be approximately 67%.
Copies of the prospectus supplement, following filing thereof, and accompanying Base Shelf Prospectus may be obtained on SEDAR at www.sedar.com. The Base Shelf Prospectus contains, and the prospectus supplement will contain, important detailed information about ERES and the Offering. Prospective investors should read the prospectus supplement and accompanying Base Shelf Prospectus and the other documents ERES has filed before making an investment decision.
ERES intends to make monthly cash distributions to unitholders of record on each record date, on or about the 15th day of the month following the record date. ERES’ current monthly cash distribution is â¬0.00875 per unit (â¬0.105 annually). The first cash distribution to which purchasers of the trust units under this Offering will be entitled to participate will be for the month of December 2019, with a record date of December 31, 2019 and a payment date of January 15, 2020.
The euro-denominated monthly cash distribution will be paid in Canadian dollars based on the exchange rate on the date of payment. Registered unitholders will be provided with an option to elect to receive such distribution in euros rather than Canadian dollars. If no such election is made, registered unitholders will be paid the distribution in Canadian dollars based on the above exchange rate mechanism. Beneficial unitholders will not have an option to elect to receive the distribution in euros.
This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold in the United States absent registration or pursuant to applicable exemption from registration.
ERES is an unincorporated, open-ended real estate investment trust. ERES’ 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 currently owns a portfolio of 131 multi-residential properties, comprised of 5,410 suites located in the Netherlands, and owns two office properties in Germany and one office property in Belgium.
ERES’ 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.
CAPREIT is a growth-oriented investment trust managing 64,028 suites and sites across Canada, the Netherlands and Ireland. It owns interests directly in Canada and indirectly in the Netherlands through its investment in ERES a total of 60,362 residential units, comprising 48,687 residential suites and 72 manufactured home communities comprising 11,675 sites, all located in and near major urban centres. 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.
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 which reflect ERES’ current expectations and projections about future results, including but not limited to: the completion of the acquisition of the Kameleon Property (the “Kameleon Property Acquisition”) on the terms described herein, the anticipated closing date of the Kameleon Property Acquisition, the filing of the prospectus supplement relating to the issuance of the units within the time frame described herein, the intended use of the proceeds from the Offering by ERES, including proceeds acquired from exercise of the over-allotment option, and the purchase of 5,377,000 trust units by CAPREIT pursuant to the Offering and its effective ownership interest upon closing of the Offering. 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. 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’ 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.
The Offering and the Kameleon Property Acquisition are subject to a number of conditions. There can be no assurance that the Offering or the Kameleon Property Acquisition will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the prospectus supplement or the Base Shelf Prospectus, any information released or received with respect to the Offering or the Kameleon Property 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 Kameleon Property Acquisition or the Offering and have neither approved nor disapproved the contents of this news release.
SOURCE European Residential Real Estate Investment Trust
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