European Residential REIT Reports Fourth Quarter and Year End 2025 Results
TORONTO, Feb. 11, 2026 (GLOBE NEWSWIRE) -- European Residential Real Estate Investment Trust ("ERES" or the "REIT") (TSX: ERE.UN) announced today its results for the three months and year ended December 31, 2025.
ERES’s audited consolidated annual financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2025 can be found at www.eresreit.com or under ERES's profile at SEDAR+ at www.sedarplus.ca.
SIGNIFICANT EVENTS AND HIGHLIGHTS
Strategic Initiatives Update
- During the year ended December 31, 2025, through a number of transactions, the REIT disposed of a total of 1,980 residential suites in the Netherlands and its Belgian and German commercial properties for total gross proceeds, excluding transaction costs and other customary adjustments, of €489.7 million.
- In connection with the dispositions closed in 2025, the REIT declared a special distribution to Unitholders of €0.90 per Unit, paid in cash in September 2025. The REIT also announced the cessation of its regular monthly cash distributions effective September 2025. The final regular monthly distribution was declared in August 2025, with payment in September 2025.
- In addition to the completed dispositions, the REIT has announced that it has entered into agreements to sell four properties consisting of 410 residential suites in the Netherlands for approximately €88.5 million, excluding transaction costs and other customary adjustments. One of the four properties was sold, subsequent to the year ended December 31, 2025, in January 2026, and completion of the remaining announced dispositions is anticipated between March and April 2026, subject to the satisfaction of closing conditions. There can be no assurance that all requirements for closing will be obtained, satisfied or waived.
- The announced dispositions represent attractive transaction values for the individual assets and support the REIT’s ongoing sale process for its remaining portfolio. The REIT is continuing to work on a sale process for the remaining portfolio and has retained BMO Capital Markets as its financial advisor. There can be no assurance that this process will result in the successful completion of the sale of any portion of the remaining portfolio or that such sales will be completed at, or above, reported IFRS fair value. Transaction expenses, taxes, wind-up costs and other costs and expenses (which could be significant) will be deducted from the proceeds of any sales.
- These efforts are being advanced in parallel with certain structural and outstanding tax matters, including the previously disclosed reassessment of certain subsidiaries by the Dutch tax authority. These reassessments are subject to ongoing discussions that may extend over a prolonged period, and actual amounts reassessed may differ significantly from what is currently estimated. It is also possible that additional subsidiaries could be subject to reassessment, which the REIT is actively monitoring and managing in consultation with its advisors.
Operating Metrics
- Same property portfolio Occupied Average Monthly Rents ("Occupied AMR") increased by 5.9%, from €1,377 as at December 31, 2024 to €1,458 as at December 31, 2025, demonstrating the REIT's continued achievement of rental growth.
- Same property turnover was 3.6% for the three months ended December 31, 2025, with a slight rental decrease on turnover of 2.3%, compared to rental uplift of 10.9% on same property turnover of 2.6% in the prior year period. Same property turnover was 11.4% for the year ended December 31, 2025, with rental uplift on turnover of 11.4%, compared to rental uplift of 8.1% on same property turnover of 11.3% in the prior year.
- Same property occupancy for the residential properties decreased to 89.3% as at December 31, 2025, compared to 93.9% as at December 31, 2024, primarily related to suites intentionally held vacant to promote value maximization in the context of the REIT's disposition strategy. Same property commercial property occupancy decreased slightly to 99.6% as at December 31, 2025, compared to 100.0% as at December 31, 2024.
- Same property Net Operating Income ("NOI") margin decreased by 13.2% and 4.7% for the three months and year ended December 31, 2025, respectively, compared to the prior year periods, primarily driven by increases in R&M costs, ECL and realty taxes along with lost rent on suites intentionally held vacant to promote value maximization in the context of the REIT's disposition strategy.
Financial Performance
- Diluted Funds From Operations ("FFO") per Unit for the three months and year ended December 31, 2025 decreased by 83.3% and 63.0%, respectively, compared to the prior year periods, primarily due to lower total portfolio NOI as a result of dispositions, partially offset by lower interest costs being incurred following the repayment of debt with net disposition proceeds received.
- Diluted Adjusted Funds From Operations ("AFFO") per Unit for the three months and year ended December 31, 2025 decreased by 78.6% and 61.9%, respectively, compared to the prior year periods, mainly due to the same reasons mentioned above for diluted FFO per Unit.
Financial Position and Liquidity
- On June 23, 2025, the REIT amended its Revolving Credit Facility to reduce the availability from €125 million to €20 million to better align with the liquidity needs of the REIT and save on standby fees. As a result, liquidity decreased to €36.7 million, compared to €132.8 million as at prior year end.
- During the year ended December 31, 2025, the REIT repaid €244.6 million of mortgages payable with a weighted average effective interest rate of 2.01%, including €207.2 million resulting from dispositions.
- Debt coverage metrics are within covenant thresholds, with interest and debt service coverage ratios of 3.9x and 3.4x, respectively, and adjusted debt to gross book value ratio standing at 30.5%.
- As at December 31, 2025, the REIT's mortgage profile had a weighted average term to maturity of 1.7 years and a weighted average effective interest rate of 2.91%.
"Our progress through 2025 reflects meaningful execution of our strategy to unlock value for Unitholders," commented Mark Kenney, Chief Executive Officer. "We sold nearly 2,000 residential suites and close to 300,000 square feet of commercial GLA for total proceeds of €490 million, and returned capital to Unitholders with a special cash distribution of €0.90 per Unit. With the majority of the portfolio now sold or under contract, ERES is well-positioned to pursue a potential final transaction for the remaining assets. Moving forward, we reaffirm our commitment to completing this wind-down with discipline and transparency, and always with the interests of our Unitholders at the forefront."
"We have not wavered in our prioritization of sound financial management throughout this process, underpinned by measured capital allocation and tactical stewardship of the property portfolio," added Jenny Chou, Chief Financial Officer. "The REIT's record-low leverage of 31% and its well-managed debt profile provide us with the flexibility required to continue advancing our disposition strategy, while managing tax and structural matters prudently. We remain focused on surfacing the maximum value of the residual portfolio and efficiently directing capital back to Unitholders, as we head toward the end goal of an ultimate dissolution."
OPERATING RESULTS
Rental Rates
| Total Property Portfolio | Suite Count | Occupied AMR/ABR1 | Occupancy % | ||||
| As at December 31, | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
| € | € | % Change | |||||
| Residential Properties2 | 1,029 | 3,009 | 1,349 | 1,222 | 10.4 | 90.6 | 94.6 |
| Commercial Properties3 | 22.1 | 17.9 | 23.5 | 99.6 | 91.3 | ||
1 Average In-Place Base Rent ("ABR").
2 Excluding service charge income, Occupied AMR for the total portfolio as at December 31, 2025 was €1,256 (December 31, 2024 – €1,135).
3 Represents 106,358 square feet ("sq. ft.") of commercial gross leasable area ("GLA") as at December 31, 2025 (December 31, 2024 — 392,904 sq. ft.).
| Same Property Portfolio | Suite Count1 | Occupied AMR/ABR | Occupancy % | |||
| As at December 31, | 2025 | 2024 | 2025 | 2024 | ||
| € | € | % Change | ||||
| Residential Properties2 | 619 | 1,458 | 1,377 | 5.9 | 89.3 | 93.9 |
| Commercial Properties3 | 22.1 | 21.6 | 2.3 | 99.6 | 100.0 | |
1 Same property suite count for Occupied AMR includes all properties and suites owned by the REIT as at both December 31, 2025 and December 31, 2024, and excludes properties and suites disposed of or classified as assets held for sale as at December 31, 2025.
2 Excluding service charge income, Occupied AMR for the same property portfolio as at December 31, 2025 was €1,372 (December 31, 2024 – €1,292).
3 Include 106,358 sq. ft. of same property commercial GLA as at both December 31, 2025 and December 31, 2024, and exclude commercial GLA disposed of since December 31, 2024.
Same property Occupied AMR as at December 31, 2025 increased to €1,458 from €1,377 as at December 31, 2024, representing an uplift of 5.9%, due to increased rents on indexation and turnover. Same property Occupied ABR increased from €21.6 per sq. ft. as at December 31, 2024 to €22.1 per sq. ft. as at December 31, 2025, due to indexation. Same property occupancy for the residential properties decreased to 89.3% as at December 31, 2025, compared to 93.9% as at December 31, 2024, due to suites intentionally held vacant to promote value maximization in the context of the REIT's disposition strategy. Same property commercial property occupancy decreased slightly to 99.6% as at December 31, 2025, compared to 100.0% as at December 31, 2024.
Suite Turnovers
Total Portfolio Turnover
| For the Three Months Ended December 31, | 2025 | 2024 | ||
|
Change in Monthly Rent |
Turnovers2 |
Change in Monthly Rent |
Turnovers2 | |
| % | % | % | % | |
| Weighted average turnovers1 | (1.7) | 4.1 | 8.9 | 1.3 |
| Weighted average turnovers excluding service charge income | (2.1) | 4.1 | 9.6 | 1.3 |
1 Represents the percentage increase in monthly rent inclusive of service charge income.
2 Percentage of suites turned over during the period based on the weighted average number of total residential suites held during the period.
| For the Year Ended December 31, | 2025 | 2024 | ||
|
Change in Monthly Rent |
Turnovers2 |
Change in Monthly Rent |
Turnovers2 | |
| % | % | % | % | |
| Weighted average turnovers1 | 7.2 | 5.8 | 14.9 | 7.7 |
| Weighted average turnovers excluding service charge income | 7.7 | 5.8 | 15.7 | 7.7 |
1 Represents the percentage increase in monthly rent inclusive of service charge income.
2 Percentage of suites turned over during the year based on the weighted average number of total residential suites held during the year.
Same Property Turnover
The same property residential portfolio for turnover purposes for the years ended December 31, 2025 and 2024, includes all suites continuously owned by the REIT since December 31, 2023, and excludes properties and suites disposed of or classified as assets held for sale as at December 31, 2025.
| For the Three Months Ended December 31, | 2025 | 2024 | ||
|
Change in Monthly Rent |
Turnovers2 |
Change in Monthly Rent |
Turnovers2 | |
| % | % | % | % | |
| Weighted average turnovers1 | (2.3) | 3.6 | 10.9 | 2.6 |
| Weighted average turnovers excluding service charge income | (2.6) | 3.6 | 10.8 | 2.6 |
1 Represents the percentage increase in monthly rent inclusive of service charge income.
2 Percentage of suites turned over during the period based on the weighted average number of same property residential suites held during the period.
| For the Year Ended December 31, | 2025 | 2024 | ||
|
Change in Monthly Rent |
Turnovers2 |
Change in Monthly Rent |
Turnovers2 | |
| % | % | % | % | |
| Weighted average turnovers1 | 11.4 | 11.4 | 8.1 | 11.3 |
| Weighted average turnovers excluding service charge income | 12.4 | 11.4 | 8.5 | 11.3 |
1 Represents the percentage increase in monthly rent inclusive of service charge income.
2 Percentage of suites turned over during the year based on the weighted average number of same property residential suites held during the year.
Suite Renewals
Lease renewals generally occur on July 1 for residential suites. On July 1, 2025, the REIT renewed leases for 85% of its residential suites, across which the average rental increase due to indexation and household income adjustments was 4.1% (July 1, 2024 – renewal of 94% of residential suites with 5.5% average rental increase due to indexation and household income adjustments).
There was one lease renewal in the REIT's commercial portfolio during the year ended December 31, 2025 (year ended December 31, 2024 — one lease renewal).
Total Portfolio Performance
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
|
2025 |
2024 |
2025 |
2024 |
||||||||||||
| Operating Revenues (000s) | € |
4,659 | € | 20,641 | € |
38,421 | € | 92,968 | |||||||
| NOI (000s) | € |
3,466 | € | 16,020 | € |
27,698 | € | 72,867 | |||||||
| NOI Margin1 | 74.4 | % | 77.6 | % | 72.1 | % | 78.4 | % | |||||||
| Weighted Average Number of Suites | 1,030 | 5,681 | 2,195 | 6,426 | |||||||||||
1 Excluding service charge income and expense, the total portfolio NOI margin for the three months and year ended December 31, 2025 was 77.0% and 79.4%, respectively (three months and year ended December 31, 2024 — 82.8% and 83.7%, respectively).
Total portfolio operating revenues decreased by 77.4% and 58.7%, respectively, for the three months and year ended December 31, 2025, compared to the same periods last year. Total portfolio NOI decreased by 78.4% and 62.0%, respectively, for the three months and year ended December 31, 2025, compared to the same periods last year. The decreases in total portfolio operating revenues and NOI were primarily due to decrease in revenue from investment properties as a result of the REIT's strategic dispositions since December 31, 2024 , partially offset by the increases in revenues from indexation and turnover.
For the three months ended December 31, 2025, the NOI margin on the total portfolio decreased to 74.4% from 77.6% for the comparable quarter (excluding service charges, total portfolio NOI margin decreased to 77.0% from 82.8% for the comparable quarter). For the year ended December 31, 2025, the NOI margin on the total portfolio decreased to 72.1% from 78.4% for the comparable year (excluding service charges, total portfolio NOI margin decreased to 79.4% from 83.7% for the comparable year). The decrease in the NOI margins was predominantly due to increases in R&M costs, ECL and realty taxes as a percentage of total operating revenues. Service charge expenses are fully recoverable from tenants via service charge income and therefore have a nil net impact on NOI.
The following table reconciles same property NOI and NOI from dispositions and assets held for sale to total NOI, for the three months and year ended December 31, 2025 and December 31, 2024.
| (€ Thousands) | Three Months Ended | Year Ended | ||||||
| December 31, | December 31, | |||||||
| 2025 | 2024 | 2025 | 2024 | |||||
| Same property NOI | € | 2,028 | € | 2,474 | € | 9,366 | € | 9,868 |
| NOI from dispositions and assets held for sale | 1,438 | 13,546 | 18,332 | 62,999 | ||||
| Total NOI | € | 3,466 | € | 16,020 | € | 27,698 | € | 72,867 |
Same Property Portfolio Performance
| Three Months Ended | Year Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Operating Revenues (000s) | € | 3,099 | € | 3,149 | € | 12,951 | € | 12,810 | ||||
| NOI (000s) | € | 2,028 | € | 2,474 | € | 9,366 | € | 9,868 | ||||
| NOI Margin1 | 65.4 | % | 78.6 | % | 72.3 | % | 77.0 | % | ||||
| Weighted Average Number of Suites2 | 619 | 624 | 622 | 624 | ||||||||
1 Excluding service charge income and expense, the same property portfolio NOI margin for the three months and year ended December 31, 2025 was 68.0% and 79.1%, respectively (three months and year ended December 31, 2024 — 84.4% and 84.2%, respectively).
2 Same property portfolio for NOI includes all properties continuously owned by the REIT since December 31, 2023, and excludes properties disposed of and properties classified as assets held for sale as at December 31, 2025. For the three months and year ended December 31, 2025 and December 31, 2024, same property portfolio also includes 106,358 sq. ft. of commercial GLA.
The same property NOI for the three months and year ended December 31, 2025 decreased by 18.0% and 5.1%, respectively, compared to the prior year periods. For the three months ended December 31, 2025, the NOI margin on the same property portfolio decreased to 65.4% from 78.6% for the comparable prior year quarter (excluding service charges, same property NOI margin decreased to 68.0% from 84.4% for the comparable prior year quarter). For the year ended December 31, 2025, the NOI margin on the same property portfolio decreased to 72.3%, compared to 77.0% for the comparable year (excluding service charges, same property NOI margin decreased to 79.1% compared to 84.2% for the comparable year). The decreases in same property NOI and NOI margins for the three months and year ended December 31, 2025, compared to the comparable periods, were primarily driven by increases in R&M costs, ECL and realty taxes along with lost rent on suites intentionally held vacant to promote value maximization in the context of the REIT's disposition strategy.
FINANCIAL PERFORMANCE
Funds from Operations and Adjusted Funds from Operations
FFO is a measure of operating performance based on the funds generated by the business before reinvestment or provision for other capital needs. AFFO is a supplemental measure which adjusts FFO for costs associated with non-discretionary capital expenditures and leasing costs. FFO and AFFO as presented are in accordance with the most recent recommendations of the Real Property Association of Canada ("REALpac"), with the exception of certain adjustments made to the REALpac defined FFO, which relate to (i) gain from Unit Options forfeited as a result of restructuring, trustee retirement and senior management termination, (ii) mortgage repayment costs, (iii) amortization related to the accelerated vesting of RURs and (iv) tax and costs related to tax authority audits. FFO and AFFO may not, however, be comparable to similar measures presented by other real estate investment trusts or companies in similar or different industries. Management considers FFO and AFFO to be important measures of the REIT’s operating performance. Please refer to "Basis of Presentation and Non-IFRS Measures" within this press release for further information.
A reconciliation of net loss and comprehensive loss to FFO is as follows:
| (€ Thousands, except per Unit amounts) | Three Months Ended | Year Ended | ||||||||||
| December 31, | December 31, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net loss and comprehensive loss for the year | € | (15,366 | ) | € | (52,390 | ) | € | (70,509 | ) | € | (64,288 | ) |
| Adjustments: | ||||||||||||
| Net movement in fair value of investment properties and assets held for sale | 1,957 | (13,873 | ) | 42,611 | (62,022 | ) | ||||||
| Net movement in fair value of Class B LP Units | 11,091 | (86,511 | ) | (116,249 | ) | (31,042 | ) | |||||
| Fair value adjustments of Unit-based compensation liabilities | 654 | 362 | 650 | 1,517 | ||||||||
| Interest expense on Class B LP Units | — | 146,302 | 133,518 | 159,085 | ||||||||
| Deferred income tax expense | 185 | 4,396 | 1,677 | 15,268 | ||||||||
| Foreign exchange loss | 17 | — | 17 | 442 | ||||||||
| Net loss on derivative financial instruments | — | 3,088 | 1,371 | 7,128 | ||||||||
| Transaction costs and other activities1 | 3,503 | 2,567 | 11,077 | 4,619 | ||||||||
| Tax related to dispositions and tax authority audits2 | 135 | 3,124 | 8,871 | 4,521 | ||||||||
| Mortgage repayment costs3 | 4 | 1,344 | 707 | 2,512 | ||||||||
| Amortization related to accelerated vesting of RURs4 | — | — | 913 | — | ||||||||
| Gain from Unit Options forfeited on restructuring, trustee retirement and senior management termination5 | (679 | ) | — | (1,141 | ) | (1,552 | ) | |||||
| FFO | € | 1,501 | € | 8,409 | € | 13,513 | € | 36,188 | ||||
| FFO per Unit – diluted6 | € | 0.006 | € | 0.036 | € | 0.057 | € | 0.154 | ||||
1 Consist of transaction costs and other adjustments on dispositions, as well as costs relating to the Dutch tax authority audits.
2 Included in current income tax expense in the consolidated statements of net loss and comprehensive loss.
3 Relate to repayment penalties and write-off of unamortized deferred financing costs and fair value adjustment related to mortgages repaid.
4 Related to the accelerated vesting of the REIT's RURs vested on May 20, 2025 and January 7, 2025.
5 Represents Unit-based compensation financial liabilities written off due to Unit Options forfeited as a result of restructuring, trustee retirement and senior management termination.
6 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.
Diluted FFO per Unit for the three months and year ended December 31, 2025 decreased by €0.030 (83.3%) and €0.097 (63.0%), respectively, from the same periods last year, primarily due to lower total portfolio NOI as a result of dispositions, partially offset by lower interest costs being incurred following the repayment of debt with net disposition proceeds received.
| The table below illustrates a reconciliation of the REIT's FFO and AFFO: | ||||||||||||
| (€ Thousands, except per Unit amounts) | Three Months Ended | Year Ended | ||||||||||
| December 31, | December 31, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| FFO | € | 1,501 | € | 8,409 | € | 13,513 | € | 36,188 | ||||
| Adjustments: | ||||||||||||
| Actual non-discretionary capital investments | (104 | ) | (1,765 | ) | (845 | ) | (3,005 | ) | ||||
| Leasing cost reserve1 | (3 | ) | (128 | ) | (293 | ) | (510 | ) | ||||
| AFFO | € | 1,394 | € | 6,516 | € | 12,375 | € | 32,673 | ||||
| AFFO per Unit – diluted2 | € | 0.006 | € | 0.028 | € | 0.053 | € | 0.139 | ||||
1 Leasing cost reserve is based on annualized 10-year forecast of external leasing costs on the commercial properties.
2 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.
Diluted AFFO per Unit for the three months and year ended December 31, 2025 decreased by €0.022 (78.6%) and €0.086 (61.9%), respectively, from the same periods last year, mainly due to the same reasons mentioned above for diluted FFO per Unit.
As a result of the termination of regular monthly distributions following the payment of the regular monthly distribution of August 2025, the REIT has discontinued disclosure of the FFO and AFFO payout ratios.
Net Asset Value
Net Asset Value ("NAV") represents total Unitholders' equity per the REIT's consolidated balance sheets, adjusted to include or exclude certain amounts in order to provide what management considers to be a key measure of the residual value of the REIT to its Unitholders as at the reporting date. NAV is therefore used by management on both an aggregate and per Unit basis to evaluate the net asset value attributable to Unitholders, and changes thereon based on the execution of the REIT's strategy. While NAV is calculated based on items included in the consolidated financial statements or supporting notes, NAV itself is not a standardized financial measure under IFRS and may not be comparable to similarly termed financial measures disclosed by other real estate investment trusts or companies in similar or different industries. Please refer to the "Basis of Presentation and Non-IFRS Measures" section within this press release for further information.
| A reconciliation of Unitholders' equity to NAV is as follows: | |||||
| (€ Thousands, except per Unit amounts) | |||||
| As at | December 31, 2025 | December 31, 2024 | |||
| Unitholders' equity | € | 104,224 | € | 261,024 | |
| Class B LP Units | 103,263 | 219,512 | |||
| Unit-based compensation financial liabilities | 1 | 623 | |||
| Net deferred income tax liability1 | 2,498 | 11,025 | |||
| Net derivative financial asset2 | — | (5,925 | ) | ||
| NAV | € | 209,986 | € | 486,259 | |
| NAV per Unit – diluted3 | € | 0.89 | € | 2.07 | |
| NAV per Unit – diluted (in C$)3,4 | C$ | 1.44 |
C$ | 3.09 | |
1 Represents deferred income tax liabilities of €2,498 as at December 31, 2025 (December 31, 2024 — deferred income tax liabilities of €18,925 net of deferred income tax assets of €7,900) and excludes €14,028 of additional potential income tax liability which could be triggered upon the disposal of specific assets. This incremental liability has not been recognized as it qualifies for the initial recognition exemption under IAS 12, Income Taxes.
2 Represents non-current derivative financial assets of nil as at December 31, 2025 (December 31, 2024 — non-current and current derivative financial assets of €5,904 and €21, respectively).
3 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.
4 Based on the foreign exchange rate of 1.6094 on December 31, 2025 (foreign exchange rate of 1.4929 on December 31, 2024).
Other Financial Highlights
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| Weighted Average Number of Units – Diluted (000s)1 | 235,147 | 234,616 | 235,023 | 234,260 |
| As at | December 31, 2025 | December 31, 2024 | ||
| Closing Price of REIT Units3, 4 | € | 0.73 | € | 2.55 |
| Closing Price of REIT Units (in C$)4 | C$ | 1.17 |
C$ | 3.80 |
| Market Capitalization (millions)2, 3, 4 | € | 171 | € | 597 |
| Market Capitalization (millions in C$)2, 4 | C$ | 275 |
C$ | 891 |
1 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.
2 Includes Class B LP Units.
3 Based on the foreign exchange rate of 1.6094 on December 31, 2025 (foreign exchange rate of 1.4929 on December 31, 2024).
4 The December 31, 2024 closing price of REIT Units and market capitalization did not reflect the €1.00 per Unit special distribution paid on the same date with the ex-distribution date of January 2, 2025.
FINANCIAL POSITION AND LIQUIDITY
| As at | December 31, 2025 | December 31, 2024 | ||||
| Ratio of Adjusted Debt to Gross Book Value1 | 30.5 | % | 39.7 | % | ||
| Debt Service Coverage Ratio (times)1,2 | 3.4x | 2.6x | ||||
| Interest Coverage Ratio (times)1,2 | 3.9x | 3.2x | ||||
| Weighted Average Mortgage Effective Interest Rate3 | 2.91 | % | 2.27 | % | ||
| Weighted Average Mortgage Term (years) | 1.7 | 2.5 | ||||
| Available Liquidity (000s)4 | € | 36,706 | € | 132,770 | ||
1 Please refer to the "Basis of Presentation and Non-IFRS Measures" section of this press release for further information.
2 Based on trailing four quarters.
3 Includes impact of deferred financing costs, fair value adjustment and interest rate swaps where applicable.
4 Includes cash and cash equivalents of €16.7 million and unused revolving credit facility capacity of €20.0 million as at December 31, 2025 (cash and cash equivalents of €7.8 million and unused revolving credit facility capacity of €125.0 million as at December 31, 2024).
As at December 31, 2025, ERES's available liquidity decreased to €36.7 million, compared to €132.8 million as at the prior year end, due to the amendment to the REIT's Revolving Credit Facility agreement, which reduced the availability from €125.0 million to €20.0 million to better align with the liquidity needs of the REIT and save on standby fees. As at December 31, 2025, the REIT's mortgage profile had a weighted average term to maturity of 1.7 years and fixed interest payment terms for all of its mortgages at a weighted average effective interest rate of 2.91%. This is further reinforced by compliant debt coverage metrics, with debt and interest service coverage ratios of 3.4x and 3.9x, respectively, and adjusted debt to gross book value ratio well within its target range at 30.5%.
Management aims to maintain an optimal degree of debt to gross book value of the REIT’s assets, depending on a number of factors at any given time. Capital adequacy is monitored against investment and debt restrictions contained in the REIT’s sixth amended and restated declaration of trust dated January 7, 2025 (the "Declaration of Trust") and the amended and restated credit agreement dated June 23, 2025 between the REIT and one Canadian chartered bank, providing access to up to €20.0 million with an accordion feature to increase the limit a further €25.0 million upon satisfaction of conditions set out in the agreement (the "Revolving Credit Facility").
The REIT manages its overall liquidity risk by maintaining sufficient available credit facility and available cash on hand to fund its ongoing operational and capital commitments.
DISTRIBUTIONS
During the year ended December 31, 2025 and up to the month of August 2025, the REIT declared monthly distributions of €0.005 per Unit, which were paid to Unitholders of record on each record date, on or about the 15th day of the month following the record date (year ended December 31, 2024 — €0.010 per Unit per month). As a result of its closed dispositions in 2025, the REIT declared a special distribution of €0.90 per Unit (year ended December 31, 2024 — €1.00 per Unit special distribution), payable to the Unitholders of record on September 22, 2025, with payment on September 25, 2025. The REIT also terminated its regular monthly cash distributions effective September 2025, and the final regular monthly distribution was for the month of August 2025, with payment in September 2025.
The REIT had a Distribution Reinvestment Plan ("DRIP"), which allowed holders of REIT Units or Class B LP Units ("Eligible Unitholders") to choose to have all or a portion of the REIT's cash monthly distributions automatically reinvested in additional REIT Units. This DRIP was terminated on January 16, 2025 and as a result, the DRIP is not available for the REIT's monthly distributions paid on and after January 16, 2025.
CONFERENCE CALL
A conference call hosted by Mark Kenney, Chief Executive Officer and Jenny Chou, Chief Financial Officer, will be held on Thursday, February 12, 2026 at 9:00 am EST. The telephone numbers for the conference call are: Canadian Toll Free: +1 (833) 950-0062 / International Toll: +1 (929) 526-1599. The conference call access code is 286165.
The call will also be webcast live and accessible through the ERES website at www.eresreit.com — click on "Investor Info" and follow the link at the top of the page. A replay of the webcast will be available for one year after the webcast at the same link.
The slide presentation to accompany senior management's comments during the conference call will be available on the ERES website an hour and a half prior to the conference call.
ABOUT EUROPEAN RESIDENTIAL REAL ESTATE INVESTMENT TRUST
ERES is an unincorporated, open-ended real estate investment trust. ERES's REIT Units are listed on the TSX under the symbol ERE.UN. ERES is Canada’s only European-focused multi-residential REIT, with a current portfolio of high-quality, multi-residential real estate properties in the Netherlands. As at December 31, 2025, ERES owned 1,029 residential suites, including 410 suites classified as assets held for sale, and ancillary retail space located in the Netherlands, with a total fair value of approximately €310.1 million, including approximately €87.9 million of assets held for sale.
ERES’s registered and principal business office is located at 11 Church Street, Suite 401, Toronto, Ontario M5E 1W1.
For more information please visit our website at www.eresreit.com.
BASIS OF PRESENTATION AND NON-IFRS MEASURES
Unless otherwise stated, all amounts included in this press release are in thousands of Euros ("€"), the functional currency of the REIT. The REIT's audited consolidated annual financial statements and the notes thereto for the year ended December 31, 2025, are prepared in accordance with IFRS Accounting Standards ("IFRS"). Financial information included within this press release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the REIT's audited consolidated annual financial statements and MD&A for the year ended December 31, 2025, which are available on the REIT's website at www.eresreit.com and on SEDAR+ at www.sedarplus.ca.
Consistent with the REIT's management framework, management uses certain financial measures to assess the REIT's financial performance, which are not in accordance with IFRS ("Non-IFRS Measures"). Since these Non-IFRS Measures are not recognized under IFRS, they may not be comparable to similar measures reported by other issuers. The REIT presents Non-IFRS Measures because management believes Non-IFRS Measures are relevant measures to evaluate the REIT's performance and financial condition. The Non-IFRS Measures should not be construed as alternatives to the REIT's financial position, net income or cash flows from operating activities determined in accordance with IFRS as indicators of the REIT’s performance. For full definitions of these measures, please refer to "Non-IFRS Measures" in Section I and Section IV of the REIT's MD&A for the year ended December 31, 2025.
Where not otherwise disclosed, reconciliations for certain Non-IFRS Measures included within this press release are provided below.
Adjusted Debt and Adjusted Debt Ratio
The REIT's Declaration of Trust requires compliance with certain financial covenants, including the Ratio of Adjusted Debt to Gross Book Value. Management uses Adjusted Total Debt as defined by Declaration of Trust and the Ratio of Adjusted Debt to Gross Book Value as indicators in assessing if the debt level maintained is sufficient to provide adequate cash flows for distributions.
A reconciliation from total debt is as follows:
| (€ Thousands) | ||||||
| As at | December 31, 2025 | December 31, 2024 | ||||
| Mortgages payable1 | € | 100,308 | € | 344,181 | ||
| Revolving Credit Facility2 | (24 | ) | (290 | ) | ||
| Total Debt | € | 100,284 | € | 343,891 | ||
| Fair value adjustment on mortgages payable | — | (92 | ) | |||
| Adjusted Total Debt as Defined by Declaration of Trust | € | 100,284 | € | 343,799 | ||
| Gross Book Value3 | € | 329,096 | € | 865,374 | ||
| Ratio of Adjusted Debt to Gross Book Value | 30.5 | % | 39.7 | % | ||
1 Represents non-current mortgages payable of €100,308 as at December 31, 2025 (December 31, 2024 — non-current and current mortgages payable of €310,682 and €33,499, respectively).
2 Negative balance represents unamortized deferred loan costs.
3 Gross Book Value is defined by the REIT's Declaration of Trust as the gross book value of the REIT's assets as per the REIT's financial statements, determined on a fair value basis for investment properties and assets held for sale.
Adjusted Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value
Adjusted Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value ("EBITDAFV") is calculated as prescribed in the REIT's Revolving Credit Facility for the purpose of determining the REIT's Debt Service Coverage Ratio and Interest Coverage Ratio, and is defined as net income (loss) attributable to Unitholders, reversing, where applicable, income taxes, interest expense, depreciation expense, amortization expense, impairment, adjustments to fair value, transaction costs, costs associated with repayment of mortgages and other adjustments as permitted in the REIT's Revolving Credit Facility. Management believes Adjusted EBITDAFV is useful in assessing the REIT's ability to service its debt, finance capital expenditures and provide for distributions to its Unitholders.
A reconciliation of net (loss) income and comprehensive (loss) income to Adjusted EBITDAFV is as follows:
| (€ Thousands) | ||||||||||||||||
| For the Three Months Ended | Q4 25 | Q3 25 | Q2 25 | Q1 25 | Q4 24 | Q3 24 | Q2 24 | Q1 24 | ||||||||
| Net (loss) income and comprehensive (loss) income | €(15,366) | €(10,057) | €(7,918) | €(37,168) | € (52,390) | € (52,126) | € 17,407 | € 22,821 | ||||||||
| Adjustments: | ||||||||||||||||
| Net movement in fair value of investment properties and assets held for sale | 1,957 | 1,314 | 19,318 | 20,022 | (13,873 | ) | (39,352 | ) | (11,107 | ) | 2,310 | |||||
| Net movement in fair value of Class B LP Units | 11,091 | (129,317 | ) | (8,953 | ) | 10,930 | (86,511 | ) | 80,240 | (5,506 | ) | (19,265 | ) | |||
| Fair value adjustments of Unit-based compensation liabilities | 654 | 390 | (99 | ) | (295 | ) | 362 | 203 | (226 | ) | 1,178 | |||||
| Net loss (gain) on derivative financial instruments | — | 580 | 856 | (65 | ) | 3,088 | 4,480 | 198 | (638 | ) | ||||||
| Foreign exchange loss (gain) | 17 | 34 | (8 | ) | (26 | ) | — | — | 228 | 214 | ||||||
| Interest expense on Class B LP Units | — | 129,257 | 2,130 | 2,131 | 146,302 | 4,261 | 4,261 | 4,261 | ||||||||
| Interest on mortgages payable | 708 | 1,391 | 1,555 | 1,681 | 3,301 | 4,373 | 4,832 | 4,558 | ||||||||
| Interest on Revolving Credit Facility | 25 | 48 | 151 | 253 | 528 | 734 | 1,210 | 1,335 | ||||||||
| Amortization | 45 | 44 | 263 | 173 | 621 | 176 | 138 | 144 | ||||||||
| Transaction costs and other adjustments | 3,353 | 5,351 | 724 | 1,194 | 2,567 | 1,547 | 380 | 125 | ||||||||
| Costs associated with repayment of mortgages | 4 | 326 | 23 | 354 | 1,306 | 1,206 | — | — | ||||||||
| Income tax expense (recovery) | 694 | 6,179 | (1,121 | ) | 7,664 | 8,796 | 10,481 | 5,253 | 1,308 | |||||||
| Adjusted EBITDAFV | €3,182 | €5,540 | €6,921 | €6,848 | € 14,097 | € 16,223 | € 17,068 | € 18,351 | ||||||||
| Cash taxes | (509 | ) | (5,576 | ) | (917 | ) | (4,737 | ) | (4,400 | ) | (1,756 | ) | (2,436 | ) | (1,978 | ) |
| Tax related to dispositions and tax authority audits | 135 | 4,816 | 132 | 3,788 | 3,124 | 277 | 731 | 389 | ||||||||
| Adjusted EBITDAFV less cash taxes | €2,808 | €4,780 | €6,136 | €5,899 | € 12,821 | € 14,744 | € 15,363 | € 16,762 | ||||||||
Debt Service Coverage Ratio
The Debt Service Coverage Ratio is defined as Adjusted EBITDAFV less cash taxes, divided by the sum of interest expense (including on mortgages payable, Revolving Credit Facility and promissory notes) and all regularly scheduled principal amortization repayments made with respect to indebtedness during the period (other than any balloon, bullet or similar principal payable at maturity or which repays such indebtedness in full). The Debt Service Coverage Ratio is calculated as prescribed in the REIT's Revolving Credit Facility, and is based on the trailing four quarters. Management believes the Debt Service Coverage Ratio is useful in determining the ability of the REIT to service the principal and interest requirements of its outstanding debt.
| (€ Thousands) | ||||
| As at | December 31, 2025 | December 31, 2024 | ||
| Principal amortization repayments1 | € | — |
€ | 1,776 |
| Interest on mortgages payable1 | 5,335 | 17,064 | ||
| Interest on Revolving Credit Facility1 | 477 | 3,807 | ||
| Debt service payments | € | 5,812 | € | 22,647 |
| Adjusted EBITDAFV less cash taxes1 | € | 19,623 | € | 59,690 |
| Debt Service Coverage Ratio (times) | 3.4x | 2.6x | ||
1 For the trailing 12 months ended.
Interest Coverage Ratio
The Interest Coverage Ratio is defined as Adjusted EBITDAFV divided by interest expense (including on mortgages payable, Revolving Credit Facility and promissory notes). The Interest Coverage Ratio is calculated as prescribed in the REIT's Revolving Credit Facility, and is based on the trailing four quarters. Management believes the Interest Coverage Ratio is useful in determining the REIT's ability to service the interest requirements of its outstanding debt.
| (€ Thousands) | ||||
| As at | December 31, 2025 | December 31, 2024 | ||
| Interest on mortgages payable1 | € | 5,335 | € | 17,064 |
| Interest on Revolving Credit Facility1 | 477 | 3,807 | ||
| Interest expense | € | 5,812 | € | 20,871 |
| Adjusted EBITDAFV1 | € | 22,491 | € | 65,739 |
| Interest Coverage Ratio (times) | 3.9x | 3.2x | ||
1 For the trailing 12 months ended.
FORWARD-LOOKING DISCLAIMER
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect the REIT’s current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “consider”, “should”, "plan", “predict”, “forward”, “potential”, “could”, "would", "should", "might", “likely”, “approximately”, “scheduled”, “forecast”, “variation”, "project", "budget" or “continue”, or similar expressions suggesting future outcomes or events. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. Although the forward-looking statements contained in this press release are based on assumptions and information that are available to management as of the date on which the statements are made in this press release, including current market conditions and management's assessment of disposition and other opportunities that are or may become available to the REIT, which are subject to change, management believes these statements have been prepared on a reasonable basis, reflecting the REIT's best estimates and judgement. However, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in this press release. Accordingly, readers should not place undue reliance on forward-looking statements. For a detailed discussion of risks and uncertainties affecting the REIT, refer to Risks and Uncertainties in Section VI of the MD&A contained in the REIT's 2025 Annual Report.
Except as specifically required by applicable Canadian securities law, the REIT does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this press release.
For further information:
| Mark Kenney | Jenny Chou | |
| Chief Executive Officer | Chief Financial Officer | |
| Email: m.kenney@capreit.net | Email: j.chou@capreit.net |
Category: Earnings
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