- What ERES has agreed to sell more than 3,000 residential suites in the Netherlands
- Why Proceeds will go toward repaying outstanding mortgage principal
- What next The REIT will pay a special distribution of about $1.13 per unit
European Residential REIT announced €748m ($1.13bn) of strategic dispositions in the Netherlands and Germany. Following the sale, the company will have sold about half of its residential units.
The company has agreed to sell 2,947 residential suites in the Netherlands to a consortium including TPG Angelo Gordon, Dream Unlimited and Stadium Capital Partners for net proceeds of about €695m.
Separately, it’s selling 232 residential suites in the Netherlands for gross proceeds of about €44m.
In Germany, the REIT has closed the sale of a commercial building for gross proceeds of about €9m.
The buyers are paying cash for the properties, and ERES plans to use the proceeds to repay about €421m of outstanding associated mortgage principal. That debt has a weighted average term to maturity of approximately 1.9 years, and a weighted average effective interest rate of approximately 2.0%.
Remaining proceeds will go toward paying down the company’s revolving credit facility, other maturing mortgages and a special cash distribution of about $1.13 per unit and ERES LP’s exchangeable class B LP unit.
Given that the transaction will reduce ERES’ portfolio, it intends to reduce its monthly rate of distribution by approximately 50%. The deals are expected to closed early next year.
Separately, Capreit announced that given its effective interest in ERES of approximately 65%, Capreit expects to receive approximately $172m from the special distribution. It will use those funds to repay amounts drawn on its revolving credit facility and to fund purchases of rental properties in Canada, among other things.
