CAPREIT (CAR.UN-T) and its subsidiary ERES REIT (ERE.UN-T) are ending 2024 in a blizzard of activity, announcing the closures of over $1.8 billion of real estate transactions and two new divestments including the $104-million pending sale of an apartment portfolio in Montreal.

Both CAPREIT and ERES unitholders will also be getting a holiday bonus of sorts as a result of the transactions, with the trusts planning special cash or unit distributions in coming weeks.

The transactions include:

• Closing of the previously announced $1.1-billion sale of 3,179 apartments in the Netherlands to a venture including Toronto-based Dream Unlimited Inc. and its joint venture partners TPG Angelo Gordon and Stadium Capital Partners;
• Closure of the majority of its deal to sell its portfolio of manufactured housing in Canada, comprising 12,138 residential lots in 75 communities, to TPG Real Estate for $740 million. About 533 lots remain to close in this transaction, and this is expected in early 2025;
• A deal to sell a portfolio of 717 apartments in Montreal to the City of Montreal, which exercised its right to acquire the properties for $103.8 million when they went onto the market; and
• New deals by ERES to sell an additional 399 apartments in the Netherlands in a series of transactions for approximately $125 million (all exchanges based on a rate of C$1.49 per Euro).

The two new transaction announcements

CAPREIT released few details about the most recent divestment in Montreal, other than to note the properties will become part of the city’s affordable housing portfolio. Proceeds will be used in part to repay $27.2 million in existing mortgages on the portfolio.

That transaction is expected to close in Q1 2025, pending completion of all closing requirements.

“We’re proud to be passing along these properties to the City of Montreal’s affordable housing initiative, and we’re looking forward to collaborating on this important sale,” Mark Kenney, CAPREIT’s president and chief executive officer, said in the release. “We are committed to ensuring a smooth and successful transition of this portfolio to an administration focused on preserving the affordability of these homes in perpetuity, alongside the enjoyment, safety and satisfaction of its residents.”

The newly announced Netherlands transactions involve a series of deals, one of which has closed and the rest of which are to close during the coming weeks and into early 2025. A portion of the proceeds will be used to pay down existing mortgages of approximately $69 million.

ERES portfolio sale results in special distributions

The closing of the ERES portfolio sale will result in special distributions for shareholders of both REITS. CAPREIT owns approximately 65 per cent of ERES units.

“We’re very pleased to have completed these dispositions, which surfaced significant capital for the benefit of the REIT and its unitholders,” Kenney, who is also the CEO of ERES REIT, said in a separate announcement. “ERES is concluding the year in a stronger position as compared to its start, and we’ll continue to actively explore all possible opportunities to surface additional value.”

ERES declared a cash distribution of $1.49 per unit for its eligible unitholders, which means CAPREIT expects to receive approximately $227 million from the payout. CAPREIT intends to make a non-cash distribution of $1.18 per unit to its eligible shareholders, which will be payable in units of the trust.

ERES made two other announcements in the release, suspending its DRIP program and reducing its distribution by 50 per cent to reflect its smaller portfolio of income-producing properties.

The CAPREIT manufactured housing transaction was paid for via $535 million in cash, and a $140-million vendor takeback loan, with a five-year-term and three per cent interest rate. The final tranche of this sale is to be completed early next year via a cash payment of $25 million.

Those properties are now operating as Compass Communities.

Both CAPREIT and ERES also intend to use portions of the proceeds for a variety of other means, including potential share repurchases, debt repayments and/or future acquisitions, the releases state.

CAPREIT has been making a series of transactions over the past few months to acquire new, or near-new apartment properties, as it continues to modernize its assets.

About CAPREIT and ERES

CAPREIT is Canada’s largest publicly traded provider of rental housing. 

As at Sept. 30, CAPREIT owned approximately 63,400 residential apartment suites, townhomes and manufactured home community sites, including approximately 15,400 suites classified as assets held for sale, across Canada and the Netherlands. Its total fair value was approximately $16.9 billion, including approximately $1.9 billion of assets held for sale. 

ERES is Canada’s only European-focused multiresidential REIT, with a current portfolio of properties in the Netherlands.

As at Sept. 30, ERES owned approximately 6,300 residential suites, including approximately 3,200 suites classified as assets held for sale, and ancillary retail space in the Netherlands, and owned one commercial property in Germany and one commercial property in Belgium.

Its total fair value was approximately $2.4 billion, including approximately $1.05 billion of assets held for sale.