CAPREIT (CAR-UN-T) and its majority-owned subsidiary European Residential Real Estate Investment Trust (ERE-UN-T) have announced the pending sales of a portfolio of 1,446 apartments in the Netherlands for $522 million, another $39-million property, and an intention to sell ERES’ remaining properties and wind up the trust.

An affiliate of Fortress Investment Group will buy the portfolio, which is the latest major divestment by ERES since it began monetizing its portfolio over a year and a half ago.

ERES is also divesting an additional 104-suite property in the Netherlands for $39 million in a separate transaction to a different buyer, for a total of over $560 million in new property sales.

In previous interviews with RENX, ERES and CAPREIT CEO Mark Kenney had hinted that the divestment strategy would lead to a sale of, or wind-up of ERES, but had always left open the possibility for other courses of potential action.

Plan to sell ERES, or divest remaining assets

Today’s announcement formally recognizes the plan to either divest the REIT, or sell all properties and cease operations.

“Looking ahead, in line with our commitment to value maximization, the board considers it to be in the best interests of the REIT and its unitholders to uncover the residual value of the platform and return that net equity to investors,” Gina Parvaneh Cody, chair of the board, said in the announcement.

“Accordingly, consistent with the recent amendments to the REIT’s declaration of trust, the board has authorized management to take all steps as may be necessary or advisable to execute on the continued disposition of the REIT’s properties and/or effect a sale of the REIT, and we are confident in management’s ability to action this in a responsible, disciplined and timely manner.”

Proceeds of the divestment, after payment of mortgages and other costs by ERES, are to be paid out in a special cash distribution to unitholders of approximately $12.40 per share. This would result in CAPREIT receiving proceeds of about $189 million, at its 65 per cent ownership stake in the trust. CAPREIT intends to use the proceeds for capital recycling, debt repayments and other general purposes.

When the transactions close, ERES will have divested about 90 per cent of the portfolio it held at the beginning of the process. ERES notes the Fortress portfolio sale remains subject to a number of customary conditions, and is scheduled to close sometime between August and September.

“We’re pleased to continue to strategically and systematically dispose of our properties at strong pricing, and surface significant additional liquidity that we’re planning to distribute to unitholders directly through another special cash distribution,” Kenney said in the announcement.

“After completion, our remaining portfolio will be comprised of an attractive collection of 10 multiresidential properties, the majority of which are located in the high-growth Randstad region in the Netherlands, along with two commercial properties."

ERES had already divested an additional 311 apartments for just over $100 million earlier in 2025.

When all of the announced transactions have been closed, the ERES portfolio will comprise the 12 multires assets which contain 1148 apartments plus approximately 286,000 square feet of space in the commercial properties.

CAPREIT's portfolio and strategy

From CAPREIT's perspective, the divestments will allow the Toronto-based trust to focus on its Canadian portfolio, which will comprise approximately 45,000 apartments once the ERES transactions close. Kenney has been focused on a strategy of divesting CAPREIT's older properties in recent years, recycling the proceeds into modernizing the portfolio.

“We’re proud of the strong progress made on the execution of our repositioning objectives since the start of last year,” Kenney said in a CAPREIT release today. “These upcoming transactions will further reduce CAPREIT’s non-core European exposure. . .

"Looking ahead, CAPREIT remains supportive of ERES’s strategy to surface the value of its remaining portfolio and distribute that net equity to its investors, and on our end, we’re looking forward to repatriating that liquidity and reinvesting it back into the residential apartment market in Canada.”

CAPREIT is Canada's largest publicly traded rental housing owner and operator. The value of its holdings, as at Dec. 31, 2024, was approximately $15.2 billion.