Dr. Gina Cody reports

ERES PROVIDES UPDATE ON PREVIOUSLY DISCLOSED STRATEGIC DISPOSITIONS, DECLARES SPECIAL DISTRIBUTION AND CESSATION OF MONTHLY DISTRIBUTION

European Residential Real Estate Investment Trust, subject to the completion of standard notary procedures, has closed on the previously announced disposition of entities owning 1,446 residential suites in the Netherlands for aggregate proceeds, net of an adjustment for deferred taxes and other adjustments, of approximately 336 million euros. In addition to having closed on the sale of its commercial property in Brussels, Belgium, European Residential has also completed the previously disclosed disposition of its commercial property in Landshut, Germany, for aggregate gross proceeds of approximately 31 million euros. Please refer to the REIT's news releases dated April 2, 2025, and July 31, 2025, for additional details. All amounts disclosed herein exclude transaction costs and other customary adjustments.

Special distribution

In connection with the closed dispositions, the board of trustees of the REIT declared a special distribution to the holders of the trust units of the REIT of 0.90 euro per unit, payable in cash. The special distribution will be payable to unitholders of record at the close of business on Sept. 22, 2025, with payment on Sept. 25, 2025. A corresponding 0.90-euro-per-unit distribution has been declared on the exchangeable Class B LP (limited partnership) units of European Residential LP, which will be payable to holders of record of the Class B LP units on the record date and paid on the payment date. See due bills below for additional details regarding trading of units and the special distribution.

The euro-denominated special distribution will be paid in Canadian dollars based on the foreign exchange rate on the payment date (estimated at $1.46 (Canadian) per unit based on the foreign exchange rate of 1.62 on Sept. 12, 2025, applicable throughout this news release). Registered unitholders will be provided with an option to elect to receive the special distribution in euros rather than Canadian dollars. If no such election is made, registered unitholders will be paid the special distribution in Canadian dollars based on the above exchange rate mechanism. Beneficial unitholders will not have an option to elect to receive the special distribution in euros.

For Canadian income tax purposes, the special distribution will partially comprise a return of capital in the range of approximately 55 to 70 per cent. The remainder of the special distribution is principally being made to distribute to unitholders a portion of the net capital gains of European Residential realized during the 12-month period ending Dec. 31, 2025, and will therefore be in the form of a capital gain in the range of approximately 30 to 40 per cent, with the remainder comprising ordinary income in the range of approximately 0 to 5 per cent. Taxable Canadian-resident unitholders will generally be required to include their proportionate share of European Residential's net taxable gain and income, as allocated and designated by European Residential, in computing their respective income for the tax year that includes the year-end of European Residential (Dec. 31, 2025). Unitholders who are not resident in Canada for Canadian federal income tax purposes may be subject to applicable withholding taxes in connection with the payment of the special distribution. European Residential cautions that the foregoing comments are not intended to be, and should not be construed as, legal or tax advice to any unitholder. European Residential recommends that unitholders consult their own tax advisers regarding the income tax consequences to them of this anticipated special distribution.

Due bills

The Toronto Stock Exchange has determined to implement its due bill trading procedures with respect to the special distribution. Due bills attach to the underlying listed securities between the record date and the payment date, allowing the underlying listed securities to carry the value of the special distribution until it is paid. When due bills are used, the ex distribution date is deferred to the first trading day after the payment date.

As stated above, the record date will be Sept. 22, 2025, and the payment date will be Sept. 25, 2025. The ex distribution date will be Sept. 26, 2025.

Due bills will attach to the units from the opening of business on the record date. This means that unitholders will receive the special distribution payment, provided they hold the applicable units at close of business on the payment date. The units will commence trading on an ex distribution basis from the open of business on the ex distribution date, as of which date purchasers of the units will no longer have an attaching entitlement to payment of the special distribution. Unitholders entitled to be paid the special distribution owing on the due bills will receive that payment when the due bills are redeemed, which is expected to occur on, or in the days following, the payment date.

Pro forma

The attached table sets out consolidated financial metrics of the REIT as of the date of the latest interim financial statements, and after adjusting for the estimated effect of the closed dispositions, payment of the special distribution and corresponding special distribution to the holders of Class B LP units, and completion of the previously announced disposition of one 110-suite property in Rotterdam, the Netherlands, expected to close by the end of September, 2025.

Sale process

European Residential is continuing to work with its financial and real estate advisers in connection with the sale process for the remaining portfolio. Buyer interest across the remaining portfolio remains active and the REIT is continuing to explore several potential alternatives following receipt of non-binding proposals, including: (i) additional asset dispositions; and/or (ii) a larger portfolio disposition. The REIT anticipates pursuing several individual asset dispositions in the near term, which continue to represent an attractive value proposition, as the REIT continues to advance certain structural and outstanding tax items, including the previously disclosed reassessment of certain subsidiaries by the Dutch tax authority.

The REIT will announce further updates regarding or arising from the sale process at a later date. There can be no assurance that the sale process will result in the successful completion of the sale of any portion of the remaining portfolio or that any such sales will be completed at, or above, previously reported IFRS (international financial reporting standards) fair value. It is anticipated that the proceeds of any such sales will be distributed to unitholders after deducting transaction costs, taxes, wind-up costs and other expenses (which could be significant).

Cessation of monthly distribution

As previously announced, given the disposition of approximately two-thirds of the REIT's portfolio since the start of the year along with the continuing sale process for the remaining portfolio, the board has approved the cessation of European Residential's regular monthly cash distributions. The REIT has made the decision in line with its commitment to maximize returns for unitholders, with a view to executing on this objective through its value-surfacing disposition strategy and prudent financial management. The final regular monthly distribution is payable to holders of the units and Class B LP units of record at the close of business on Aug. 29, 2025, in the amount of 0.809 Canadian cent per unit and Class B LP unit, with payment expected today.

About European Residential Real Estate Investment Trust

European Residential is an unincorporated, open-ended real estate investment trust. European Residential's units are listed on the TSX under the symbol ERE.UN. European Residential is Canada's only European-focused multiresidential REIT, with a current portfolio of high-quality, multiresidential real estate properties in the Netherlands. As at June 30, 2025, European Residential owned 2,592 residential suites, including 1,556 suites classified as assets held for sale, and ancillary retail space located in the Netherlands, and owned one commercial property in Germany and one commercial property in Belgium, with a total fair value of approximately 709.8 million euros, including approximately 366.0 euros million of assets held for sale. For more information about European Residential, its business and its investment highlights, please visit the REIT's website and its public disclosure, which can be found under its profile on SEDAR+.

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