Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) and its subsidiary European Residential REIT (ERES) have completed asset sales totalling approximately $1.8 billion.

CAPREIT completed the the partial sale of CAPREIT’s manufactured-home community (MHC) portfolio to global asset management giant TPG as part of a previously announced $740-million deal. The properties are now operating under the Compass Communities banner.

Meanwhile, ERES divested 3,179 residential suites in the Netherlands.

CAPREIT said its sale of 11,605 residential lots from its MHC portfolio was finalized for a gross purchase price of $715 million. The deal includes $575 million in cash and an interest-only vendor take-back loan of $140 million, bearing a 3% annual interest rate over five years. The divestments of additional 533 lots, valued at $25 million, are expected to close in the first quarter of 2025.

Meanwhile, ERES completed the sale of its Netherlands properties for approximately $1.1 billion, based on a euro exchange rate of 1.49. The transaction also enables ERES to declare a special cash distribution of $1.49 per unit, payable on December 31, to unitholders of record as of December 23. CAPREIT, which owns a 65% interest in ERES, anticipates that it will receive $227 million from this special distribution.

CAPREIT plans to use proceeds from the MHC sale and the ERES special distribution to repay amounts drawn on its revolving credit facility, fund acquisitions of rental properties in Canada, and for other business purposes, such as capital expenditures, debt repayment, and unit repurchases.

In addition, CAPREIT will issue a special non-cash distribution of $1.18 per unit, payable on December 31 to unitholders of record on the same date. This distribution will be paid in additional CAPREIT units and is intended to distribute a portion of the net capital gains realized in 2024.

Following the payment, CAPREIT will consolidate its units so that the total number of units remains unchanged.

“The special distribution is a tax-efficient way to pass along capital gains to our unitholders,” CAPREIT stated, adding that Canadian residents will see their adjusted cost base increase accordingly. Non-residents may be subject to withholding taxes.

Both CAPREIT and ERES are based in Toronto and headed by Mark Kenney.

Colliers’ manufactured housing and RV team advised CAPREIT on its transaction. Michael Nissey, the group’s vice-chair served as lead advisor to CAPREIT.

In a Linkedin post, he called the deal “a historic transaction not only for the Canadian industry, but also for the global MHRV investment space as a whole.”

Photo: CAPREIT