Dream Unlimited Inc. and its joint venture partners TPG Angelo Gordon and Stadium Capital Partners have announced plans to acquire a $1.05-billion portfolio of Dutch housing from European Residential REIT (ERES).

The deal consists of 2,947 single-family and multifamily units across approximately 90 sites in the Netherlands, a release states. The units will be managed and operated by the investor group.

Closing of the transaction is anticipated to happen on or before early Q1 2025.

“Our partnership with TPG Angelo Gordon and Stadium Capital aligns with our strategic focus on the residential sector,” Jane Gavan, Dream’s president of asset management, said in the release.

“This joint venture allows us to leverage our extensive expertise in residential asset management and builds on our long history of investing and operating in Europe across multiple asset classes.”

Details of the Dream, TPG Angelo Gordon and Stadium Capital partnership were not released.

Dream (DRM-T) is a Toronto-based developer with $25 billion in assets under management, while ERES (ERE-UN-T) is a Toronto-headquartered subsidiary of Canadian company CAPREIT.

Real estate investment firm TPG Angelo Gordon is based in San Francisco, and was acquired by Fort Worth-based TPG Inc. in 2023. Stadium is a real estate investor based in Amsterdam.

Details of the acquisition

From ERES’s side, the cash proceeds from the acquisition will be used to repay its approximately $637 million in associated mortgage principal outstanding. Remaining proceeds will be used to repay its revolving credit facility, prepayment of mortgages maturing in the near-term and pay a special cash distribution to unitholders.

ERES has been taking steps to lighten its debt, including selling 530 rental apartments and an office property in the Netherlands for approximately $173 million in July.

CAPREIT expects to receive approximately $172 million from the special distribution, which it will use to pay down its revolving credit facility, fund future acquisitions of Canadian rental properties and spend on general expenses such as capital expenditures, debt repayment and repurchasing CAPREIT’s trust units.

Following the transaction, which happened simultaneously with separate dispositions of 232 residential units in the Netherlands and a commercial building in Germany, ERES will hold 3,100 residential suites and a portfolio valued according to IFRS fair value at $1.26 billion. From it starting point of 6,743 units, ERES has sold just over half of the portfolio.

Its mortgage debt principal balance is also expected to fall from approximately $1.33 billion to approximately $454 million after the disposition.

“The sale of approximately half of ERES’s residential suites is not only generating liquidity, which ERES can use to reduce its leverage and solidify its balance sheet, but it also returns meaningful capital to its unitholders to reallocate as they see fit," Mark Kenney, president and CEO of CAPREIT, said in its announcement.

“This will afford CAPREIT the ability to redeploy the proceeds of the special distribution into highest-value alternatives that are aligned with our strategy. Ultimately, these dispositions by ERES will substantially reduce CAPREIT’s non-core investment segment and surface capital that can be put towards the continued upgrading of its Canadian apartment portfolio.”

Dream reported strong 2024

Dream expanding its interest in European residential assets is a parallel to its ongoing focus on industrial properties on the continent. One of Dream's other entities, Dream Industrial REIT, expanded into Europe in 2020.

Dream founder Michael Cooper said in a Q2 financial conference call the company’s first half of 2024 was highly profitable, pushed by its diversified business model.