European Residential Real Estate Investment Trust

My name is Drew and I'll be the operator on today's call. After today's prepared remarks, there will be a Q&A session. If you would like to register a question, please press star followed by one on your telephone keypad. And to withdraw your question, it's star followed by two. It's now my pleasure to hand over to Nicole Dolan from Investor Relations to begin. Please go ahead when you're ready.

Thank you, operator, and good morning, everyone. Before we begin, let me remind everyone that during our conference call this morning, we may include forward-looking statements about expected future events and the financial and operating results of eREZ, which are subject to certain risks and uncertainties. We direct your attention to slide two and our other regulatory filings for important information about these statements. I will now turn the call over to Mark Kenney, Chief Executive Officer.

Thanks, Nicole, and good morning, everyone. Joining me this morning is Jenny Chow, our Chief Financial Officer. Let's get started on slide four, with a high-level update on the first quarter of 2025. In Q1, we completed the sale of a total of 415 residential suites in the Netherlands for combined consideration of €90 million, and we used the net sale proceeds to repay €79 million in outstanding debt. In addition, on April 2nd, we entered into an agreement to sell entities owning 1,446 residential suites in the Netherlands for the aggregate proceeds of approximately €337 million, with closing expected in the third quarter of 2025. After repaying associated mortgage debt and amounts outstanding on the revolving credit facility, net proceeds from this upcoming disposition are intended to fund a special cash distribution of an estimated €0.80. per unit, payable to unit holders of record at a date to be determined. Subject to completion, this transaction will leave a remaining portfolio made up of an attractive collection of 10 multi-residential properties in the Netherlands, along with two commercial properties, which I will expand on more in a few minutes. With the incremental debt that we've repaid using disposition proceeds, Our adjusted debt to gross book value ratio decreased further this quarter to 35.2% as of March 31, 2025, down from 39.7% as of the previous year end. Operationally, we continue to realize robust rent growth with our same property occupied AMR increasing by 6.2% to €1,248 at quarter end. And I'll let Jenny elaborate shortly on our same property NOI margin of 75% for the three months ended March 31st, 2025. Turning to slide five, you will note a decrease in our occupancies to 93.6% on both the total and same property residential portfolio. This is due to our value surfacing disposition strategy. in which we've been intentionally maintaining these elevated vacancy levels at certain properties. With that brief introduction, I will now turn the call over to Jenny to walk through our financial performance in greater detail.

Thanks, Mark. Slide 7 summarizes a few key highlights from our performance in the first quarter. As we've strategically taken on vacancy, our same property operating revenues declined by 0.7% as compared to the first quarter of 2024, despite the strong 6.2% growth in occupied AMR. This was compounded by elevated repairs and maintenance expenses, as well as higher property management fees, which drove down same property NOI by 2.5% and resulted in our margin of 75% for the three months ended March 31st, 2025, as compared to 76.4% in the prior year period. Diluted FFO per unit was 1.8 Eurocent for the current quarter end, down from 3.9 Eurocent realized for the three months ended March 31st, 2024, due to significant disposition activity since the comparative period, partially offset by lower interest costs following repayments of debt. We've highlighted our financial position and liquidity on slide eight. As mentioned, we used most of the net proceeds from our strategic dis-decisions in the first quarter to repay outstanding debt. This again lowered our leverage with a conservative ratio of adjusted debt to market value of 36% as of March 31, 2025, down from 40% on December 31, 2024, and 58% on March 31, 2024. We also have ample access to liquidity and continue to ensure our coverage ratios are well in excess of covenant. Slide 9 shows our mortgage renewal profile. Our remaining mortgages carry a low weighted average effective interest rate of 2.5% and you can see that we now only have 7 million euro in mortgages maturing in 2025 with nothing maturing in 2026. This supports our ability to pursue an array of strategic opportunities over the coming quarters, and I will now hand the call back to Mark to speak further on that.

Thank you, Jenny. Let's turn to slide 11 to review our strategy on maximizing returns for unit holders. At the beginning of 2025, we held a special unit holder meeting in which a resolution to amend the REIT's Declaration of Trust was passed. This provided the board with maximum flexibility in assessing and executing on the most attractive opportunities available. In line with this, we have expressly announced that moving forward, we will be seeking to maximize value through servicing the residual value of the platform, whether that be through continued disposition of the REIT's properties and or affecting a sale of the REIT and return that net equity to investors. The Board of Trustees and management are fully aligned on achieving this strategic dissolution in the near term, and we are unified in our determination to take all steps that may be necessary or advisable to execute on this objective in a responsible, disciplined, and timely fashion. To that end, we announce that eRES is currently working with CBRE and Rubens Capital Partners to advise the REIT in connection with the launch of a bid process for the balance of the portfolio, whether that be in part or in full. On slide 12, we've provided a breakdown of that remaining portfolio. You can see the majority of our Dutch properties are located in the high-growth Randstad region of the Netherlands, and approximately two-thirds of the residential units are regulated. We've also provided some detail regarding the bid process, with proposals due to be received in the third quarter of 2025. The Board will diligently and exhaustively evaluate all proposals in the context of our explicit intention to uncover maximum value and distribute the proceeds net of wind-up costs to unit holders. I want to note that the wind-up costs such as commissions, legal, advisory, insurance, and the settlement of contingent liabilities, for example, will depend on the structure of future transactions, and these may be significant. Looking ahead, we are determined to execute on disposition and or dissolution opportunities in the most accretive and punctual way possible. We know this goal hinges on both pricing and timing, and on behalf of the board and management team, we reaffirm our dedication to actioning this in the best interest of all of our unit holders. With that, I would like to thank you for your time this morning, and we would now be pleased to take any questions you may have.

Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. And to withdraw your question, it's star followed by two. We'll pause for just a moment to compile our roster. As a reminder, that is star followed by one on your telephone keypad to ask a question and to withdraw a question, it's star followed by two. It looks like we have no questions registered at this time, so I'll hand back over to Mark Kenney.

Thank you, operator, and thank you to everyone for joining us this morning. If you have any further questions, please do not hesitate to contact any of us at any time. Thank you again.