ERE.UN European Residetial Real Estate Investment Trust

European Residential Real Estate Investment Trust ("ERES" or the "REIT") (TSX: ERE.UN) announced today its results for the three months ended March 31, 2023.

ERES’s unaudited condensed consolidated interim financial statements and management's discussion and analysis ("MD&A") for the three months ended March 31, 2023 can be found at www.eresreit.com or under ERES's profile at www.sedar.com.

FIRST QUARTER SNAPSHOT

• Growth in Occupied Average Monthly Rents ("AMR") of 6% from the prior year period on both the total and same property portfolio

• Increase in Net Operating Income ("NOI") of 9% compared to the prior year period, with 5% growth on the same property portfolio

• Strong occupancy level for residential properties at 99%, consistent with the prior year period

• Significant €25 million improvement in liquidity through increased capacity on the Revolving Credit Facility

SIGNIFICANT EVENTS AND HIGHLIGHTS

Business Update

• On January 24, 2023 the REIT amended and renewed its existing revolving credit facility, providing up to €125 million for a three-year period ending on January 26, 2026, as well as an accordion feature to increase the limit a further €25 million upon satisfaction of conditions set out in the agreement and consent of applicable lenders.
• On March 31, 2023, pursuant to the departure of Phillip Burns, Mark Kenney assumed the role of Chief Executive Officer and trustee. Mr. Kenney is currently also the Chief Executive Officer and President of CAPREIT.

Outperforming Operating Metrics

• Strong operating results continued into 2023, fuelled by strong rental growth. Same property portfolio Occupied AMR, increased by 5.9%, from €949 as at March 31, 2022, to €1,005 as at March 31, 2023, demonstrating the REIT's continued achievement of rental growth in excess of its target range.
• Turnover was 3.9% for the three months ended March 31, 2023, with rental uplift on turnover remaining strong at 20.7%, compared to rental uplift of 20.7% on turnover of 2.6% for the three months ended March 31, 2022.
• Occupancy for the residential properties remained high and stable at 98.7% as at March 31, 2023, relatively consistent with occupancy of 98.6% as at March 31, 2022 and at the high end of the REIT's target range. Moreover, 71.4% of residential vacancies are attributable to suites undergoing renovation upon turnover, which should provide for further rental uplifts once the suites are leased.
• NOI increased by 9.4% for the three months ended March 31, 2023, primarily driven by the aforementioned higher monthly rents, further supported by the REIT's extensive protection from inflation.

Financial Performance

• Funds From Operations ("FFO") per Unit decreased by 4.8% to €0.040 for the three months ended March 31, 2023, compared to €0.042 in the prior year period, primarily driven by increase in interest and other financing costs and current income tax expense, partially offset by the positive impact of increased same property NOI contribution.
• Adjusted Funds From Operations ("AFFO") per Unit decreased by 5.4% to €0.035 for the three months ended March 31, 2023, compared to €0.037 in the three months ended March 31, 2022.

Strong Financial Position with Ample Liquidity

• Overall, liquidity improved during the quarter due to the amendment of the Revolving Credit Facility increasing the limit by €25.0 million, with immediately available liquidity of €43.1 million as at March 31, 2023, excluding acquisition capacity on the Pipeline Agreement or alternative promissory note arrangements with CAPREIT.
• Debt metrics are conservative, with an adjusted debt to gross book value ratio at 54.3%, and interest and debt service coverage ratios of 3.5x and 2.9x, respectively.
• The REIT's financial position is additionally supported by its well-staggered mortgage profile, with an approximate three-year weighted average term to maturity and a weighted average effective interest rate of 1.77%.

"This past quarter wraps up four solid years of growth and peer-leading operational performance by our European platform, which was commendably achieved despite a challenging backdrop,” commented Mark Kenney, Chief Executive Officer. “I am thrilled to now be leading ERES forward, as we continue to build upon its strong track record established to date."

"The tight Dutch market continues to drive robust rent growth in tandem with near-full occupancies, with the majority of our vacancy intentionally offline for value-add improvements,” added Jenny Chou, Chief Financial Officer. “Although our financial performance was flatter this quarter as we absorb the higher interest rates we've encountered in the past year, we remain operationally and financially sound. Having fortified our liquidity position this quarter with increased capacity on our credit facility, we are well-positioned for the future."

OPERATING METRICS CONTINUE TO STRENGTHEN

Rental Rates
Total Portfolio	Suite Count		Occupied AMR/ABR1			Occupancy %
As at March 31,	2023	2022	2023	2022	AMR	2023	2022
			€	€	% Change
Residential Properties	6,900	6,791	1,002	949	5.6	98.7	98.6
Commercial Properties2			19.2	18.0	6.7	99.5	99.0

1 Average In-Place Base Rent ("ABR").2 Represents 450,911 square feet of commercial gross leasable area.

Same Property Portfolio	Suite Count1	Occupied AMR/ABR			Occupancy %
As at March 31,		2023	2022	AMR	2023	2022
		€	€	% Change
Residential Properties	6,790	1,005	949	5.9	98.7	98.6
Commercial Properties2		19.2	18.0	6.7	99.5	99.0

1 Excludes one suite disposition and five residential properties (110 suites) acquired, which were not continuously owned by the REIT since March 31, 2022.2 Represents 450,911 square feet of commercial gross leasable area.

For residential properties, Occupied AMR increased by 5.6%, while Occupied AMR for the same property portfolio, increased by 5.9% compared to the prior year period. The increases were mainly driven by increased rents on annual indexation, turnover and conversion of regulated suites to liberalized suites. The REIT's achievement of growth in rental revenues significantly in excess of its target range of 3% to 4% demonstrates its ability to consistently operate in a complex and fluid regulatory regime.

Suite Turnovers
For the Three Months Ended March 31,	2023		2022
	Change in Monthly Rent	Turnovers2	Change in Monthly Rent	Turnovers2
	%	%	%	%
Regulated suites turnover1	4.5	0.3	0.6	0.3
Liberalized suites turnover1	16.7	3.1	18.4	1.9
Regulated suites converted to liberalized suites1	59.5	0.4	55.1	0.3
Weighted average turnovers1	20.7	3.9	20.7	2.6
Weighted average turnovers excluding service charge income	19.9	3.9	21.1	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 residential suites held during the period.

Suite turnover in the residential suite portfolio during the three months ended March 31, 2023 resulted in monthly rent increasing by approximately 20.7%, the same percentage change as the prior period. Rental uplifts were higher on conversions, at 59.5% for the current quarter, compared to 55.1% for the three months ended March 31, 2022.

Suite Renewals

Lease renewals generally occur on July 1st for residential suites. Other than the household income adjustment previously mentioned, maximum rent indexation on July 1, 2022 for Regulated Suites was set at the Dutch government's determined inflation rate of 2.3%. For the period July 1, 2023 to June 30, 2024, the indexation of all Regulated Units is set at wage inflation of 3.1%. Annual rental increases due to indexation for Liberalized Suites are also capped, as per the previously enacted Dutch government legislation, effective for an initial period of three years from May 1, 2021 up to and including April 30, 2024. For the period from January 1, 2023 to January 1, 2024, the rental cap limits indexation for Liberalized Suites to the annual wage development figure + 1.0%, resulting in a maximum indexation of 4.1% based on the annual wage development figure of 3.1%.

Accordingly, for rental increases due to indexation beginning on July 1, 2023, the REIT served tenant notices to 6,659 suites, representing 97% of the residential portfolio, across which the average rental increase due to indexation is 4.0%.

There were no lease renewals in the REIT’s commercial portfolio during the three months ended March 31, 2023 and March 31, 2022.

Total Portfolio Performance
For the Three Months Ended March 31,		2023			2022
Operating Revenues (000s)	€	23,380		€	21,254
NOI (000s)	€	17,850		€	16,322
NOI Margin1		76.3	%		76.8	%
Weighted Average Number of Suites		6,900			6,577

1 Excluding service charge income and expense, the total portfolio NOI margin for the three months ended March 31, 2023 was 82.0% (three months ended March 31, 2022 — 82.6%).

Operating revenues increased by 10.0% for the three months ended March 31, 2023 compared to the prior year period, primarily due to accretive acquisitions and an increase in monthly rents on the same property portfolio, as described above.

NOI increased by 9.4% for the three months ended March 31, 2023, versus the same period last year, likewise driven by contribution from acquisitions since the prior year period and higher monthly rents on same property portfolio. For the three months ended March 31, 2023, the NOI margin on the total portfolio, including service charges, decreased slightly to 76.3% compared to 76.8% for the same period last year, with an increase in repairs and maintenance ("R&M") costs and advertising expenses, negatively impacting margins, partially offset by reduced onsite costs. Excluding recoverable service charges, NOI margin on the total portfolio for the three months ended March 31, 2023 decreased to 82.0% from 82.6% in the same period last year. Service charge expenses are fully recoverable from tenants via service charge income and therefore have a nil net impact on NOI.

Same Property Portfolio Performance
For the Three Months Ended March 31,		2023			2022
Operating Revenues (000s)	€	22,272		€	21,121
NOI (000s)	€	17,055		€	16,212
NOI Margin1		76.6	%		76.8	%
Same Property Number of Suites2		6,544			6,544

1 Excluding service charge income and expense, the same property portfolio NOI margin for the three months ended March 31, 2023 was 82.1% (three months ended March 31, 2022 — 82.6%).2 Includes all properties owned by the REIT continuously since December 31, 2021, and therefore does not take into account the impact of acquisitions or dispositions completed during 2022 or 2023.

The increases in same property NOI contribution by 5.2% for the three months ended March 31, 2023 compared to the prior year period, were primarily driven by higher operating revenues from increased monthly rents. Same Property NOI margin decreased to 76.6% for the three months ended March 31, 2023, compared to 76.8% in the same period last year, primarily due to higher R&M and advertising expenses, partially offset by reduced onsite costs. Excluding service charges, same property NOI margin decreased to 82.1% for the three months ended March 31, 2023, compared to 82.6% in the comparable prior year period.

The REIT is focused on continuing to further improve NOI and NOI margin through a combination of rental growth and cost control, and investment in capital programs to enhance the quality and value of its portfolio. In addition, the REIT notes that its property operating costs are largely insulated from inflation, as tenants are responsible for all of their own energy and other utility costs, the REIT incurs no wage costs, and property management fees are a fixed percentage of operating revenues. This further preserves the REIT's property operating costs and, combined with its strong growth in rental revenues, improves its normalized NOI margin.Financial Performance

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 certain capital expenditures, leasing costs and tenant improvements. FFO and AFFO as presented are in accordance with the recommendations of the Real Property Association of Canada ("REALpac") as published in January 2023, with the exception of certain adjustments made to the REALpac defined FFO, which in the current period relate to (i) acquisition research costs, (ii) mortgage refinancing costs and (iii) senior management termination and retirement costs. 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 income (loss) to FFO is as follows:
(€ Thousands, except per Unit amounts)
For the Three Months Ended March 31,		2023			2022
Net loss and comprehensive loss for the period	€	(106,348	)	€	(31,729	)
Adjustments:
Net movement in fair value of investment properties		124,726			(32,039	)
Net movement in fair value of Class B LP Units		16,786			65,789
Fair value adjustments of Unit Option liabilities		(141	)		1,091
Interest expense on Class B LP Units		4,261			4,025
Deferred income taxes		(31,927	)		11,651
Foreign exchange (gain) loss1		(1,215	)		1,697
Net movement in derivative financial instruments		3,028			(10,722	)
Senior management termination and retirement costs2		74			—
Acquisition research costs		—			11
FFO	€	9,244		€	9,774
FFO per Unit – diluted3	€	0.040		€	0.042
Total distributions declared	€	6,974		€	6,559
FFO payout ratio		75.4	%		67.1	%

1 Relates to foreign exchange movements recognized on remeasurement of Unit Option liabilities as well as on remeasurement of the REIT's US Dollar draw on the Revolving Credit Facility as part of effective hedge.2 For the three months ended March 31, 2023, includes €59 of accelerated vesting of previously granted Unit Options and €15 in associated legal fees (three months ended March 31, 2022 - Nil)3 Includes Class B LP Units.

The table below illustrates a reconciliation of the REIT's FFO and AFFO:
(€ Thousands, except per Unit amounts)
For the Three Months Ended March 31,		2023			2022
FFO	€	9,244		€	9,774
Adjustments:
Non-discretionary capital expenditure reserve1		(919	)		(1,055	)
Leasing cost reserve2		(139	)		(130	)
AFFO	€	8,186		€	8,589
AFFO per Unit – diluted3	€	0.035		€	0.037
Total distributions declared	€	6,974		€	6,559
AFFO payout ratio		85.2	%		76.4	%

1 Non-discretionary capital expenditure reserve has been calculated based on the normalized annual 2023 forecast which equates to approximately €533 per weighted average number of residential suites during the period (2022 — normalized annual 2022 forecast of €626 per weighted average number of residential suites). The adjustments are based on the reserve amount as the REIT considers this to be more normalized on a long-term basis and therefore more relevant.2 Leasing cost reserve is based on annualized 10-year forecast of external leasing costs on the commercial properties.3 Includes Class B LP Units.

The decrease in FFO and AFFO per Unit for the three months ended March 31, 2023 is primarily due to increase in interest and other financing costs and current income tax expense, partially offset by the positive impact of increased same property NOI.

Net Asset Value

NAV represents total Unitholders' equity per the REIT's consolidated statements of financial position, adjusted to exclude certain amounts in order to provide what management considers to be a key measure of the intrinsic value of the REIT on an ongoing basis. Management believes that this measure reflects the residual value of the REIT to its Unitholders on an ongoing basis and 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. 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 Net Asset Value ("NAV") is as follows:
(€ Thousands, except per Unit amounts)
As at	March 31, 2023			December 31, 2022
Unitholders' equity	€	441,643		€	550,147
Class B LP Units		313,639			296,853
Unit-based compensation financial liabilities		730			554
Net deferred income tax liability1		42,620			74,543
Net derivative financial asset2		(22,117	)		(22,931	)
NAV	€	776,515		€	899,166
NAV per Unit – diluted3	€	3.34		€	3.87
NAV per Unit – diluted (in C$)3,4	C$	4.91		C$	5.61

1 Represents deferred income tax liability of €48,975 net of deferred income tax asset of €6,355 (December 31, 2022 — deferred income tax liability of €77,474 net of deferred income tax asset of €2,931).2 Represents non-current derivative financial assets of €22,117 (December 31, 2022 — non-current derivative financial assets of €23,771 and, net of current derivative financial liabilities of €840). 3 Includes Class B LP Units and the dilutive impact of unexercised Unit Options, calculated based on the treasury method. 4 Based on the foreign exchange rate of 1.4719 on March 31, 2023 (foreign exchange rate of 1.4498 on December 31, 2022).

Other Financial Highlights
For the Three Months Ended March 31,	2023	2022
Weighted Average Number of Units – Diluted (000s)1	232,438	231,661

        

As at		March 31, 2023		December 31, 2022
Closing Price of REIT Units2	€	2.21	€	2.09
Closing Price of REIT Units (in C$)	C$	3.25	C$	3.03
Market Capitalization (millions)1, 2	€	513	€	486
Market Capitalization (millions in C$)1	C$	756	C$	704

1 Includes Class B LP Units.2 Based on the foreign exchange rate of 1.4719 on March 31, 2023 (foreign exchange rate of 1.4498 on December 31, 2022).

FINANCIAL POSITION REMAINS FIRM

As at	March 31, 2023			December 31, 2022
Ratio of Adjusted Debt to Gross Book Value1		54.3	%		51.0	%
Weighted Average Mortgage Effective Interest Rate4		1.77	%		1.77	%
Weighted Average Mortgage Term (years)		3.2			3.4
Debt Service Coverage Ratio (times)1,2		2.9x			3.1x
Interest Coverage Ratio (times)1,2		3.5x			3.8x
Available Liquidity (000s)3	€	43,101		€	21,386

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 cash and cash equivalents of €7.2 million and unused credit facility capacity of €36.0 million as at March 31, 2023 (cash and cash equivalents of €10.9 million and unused credit facility capacity of €10.5 million as at December 31, 2022). 4 Includes impact of deferred financing costs, fair value adjustment and interest rate swaps.

ERES's liquidity and leverage improved during the quarter, primarily driven by the amended revolving credit facility agreement, additionally supported by the REIT's staggered mortgage profile with approximately three-year weighted average term to maturity and a weighted average effective interest rate of 1.77%. The REIT has immediately available liquidity of €43 million as at March 31, 2023, excluding acquisition capacity on the Pipeline Agreement or alternative promissory note arrangements with CAPREIT, reinforced by conservative debt metrics, including an adjusted debt to gross book value ratio within its target range at 54.3%.

Management aims to maintain an optimal degree of debt to gross book value ("GBV") 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 fourth amended and restated declaration of trust dated April 28, 2020 (the "Declaration of Trust") and the amended and renewed credit agreement dated January 24, 2023, between the REIT and three Canadian chartered banks, providing access to up to €125.0 million with an accordion feature to increase the limit a further €25.0 million upon satisfaction of conditions set out in the agreement and the consent of applicable lenders (the "Revolving Credit Facility").

The REIT manages its overall liquidity risk by maintaining sufficient available credit facilities and available cash on hand to fund its ongoing operational and capital commitments and distributions to Unitholders, and to provide future growth in its business.

DISTRIBUTIONS

During the three months ended March 31, 2023, the REIT declared monthly distributions of €0.01 per Unit (equivalent to €0.12 per Unit annualized). Such distributions are paid to Unitholders of record on each record date, on or about the 15th day of the month following the record date. The REIT intends to continue to make regular monthly distributions, subject to the discretion of its Board of Trustees.

CONFERENCE CALL

A conference call hosted by Mark Kenney, Chief Executive Officer and Jenny Chou, Chief Financial Officer, will be held on Thursday, May 11, 2023 at 9:00 am EST. The telephone numbers for the conference call are Canadian Toll Free: (833) 950-0062 / International: +1 (929) 526-1599. The Passcode for the call is 119808.

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 1 year after the webcast at the same link.

The slide presentation to accompany 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 initial focus on investing in high-quality, multi-residential real estate properties in the Netherlands. As at March 31, 2023, ERES owns a portfolio of 158 multi-residential properties, comprised of approximately 6,900 suites and ancillary retail space located in the Netherlands, and owns one office property in Germany and one office property in Belgium.

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 unaudited condensed consolidated interim financial statements and the notes thereto for the three months ended March 31, 2023, are prepared in accordance with International Financial Reporting 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 Interim Financial Statements and MD&A for the three months ended March 31, 2023, which are available on the REIT's website at www.eresreit.com and on SEDAR at www.sedar.com. 

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 of the ability of the REIT to earn revenue, generate sustainable economic earnings, and to evaluate its 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 or the sustainability of distributions. 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 three months ended March 31, 2023.

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 Total Debt Adjusted for 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 and for evaluating the need to raise funds for further expansion.

A reconciliation from total debt is as follows:

(€ Thousands)
As at	March 31, 2023			December 31, 2022
Mortgages payable1	€	875,042		€	875,615
Bank indebtedness2		88,676			89,259
Promissory note		25,650			25,650
Total Debt	€	989,368		€	990,524
Fair value adjustment on mortgages payable		(1,115	)		(1,215	)
Total Debt Adjusted for Declaration of Trust	€	988,253		€	989,309
Ratio of Adjusted Debt to Gross Book Value3		54.3	%		51.0	%

1 Represents non-current and current mortgages payable of €779,241 and €95,801, respectively (December 31, 2022 — €813,733 and €61,882, respectively).2 Comparative figure was re-arranged to conform with current period presentation.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.

Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value

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, amortization expense, depreciation expense, impairment, adjustments to fair value and other adjustments as permitted in the REIT's Revolving Credit Facility. Management believes 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 income (loss) to EBITDAFV is as follows:

(€ Thousands)
For the Three Months Ended,	Q1 23			Q4 22			Q3 22			Q2 22			Q1 22			Q4 21			Q3 21			Q2 21
Net income (loss) and comprehensive income (loss)	€	(106,348)		€	(48,790)		€	70,000		€	126,935		€	(31,729)		€	45,204		€	58,616		€	27,991
Adjustments:
Net movement in fair value of investment properties		124,726			93,599			8,099			9,790			(32,039	)		(86,748	)		(76,908	)		(34,908	)
Net movement in fair value of Class B LP Units		16,786			(15,443	)		(65,136	)		(133,499	)		65,789			22,352			2,868			2,668
Fair value adjustments of Unit Option liabilities		(141	)		(1	)		(682	)		(2,258	)		1,091			129			200			(161	)
Net movement in derivative financial instruments		3,028			(2,496	)		(10,385	)		(10,649	)		(10,722	)		(987	)		(1,264	)		(1,117	)
Impairment of goodwill		—			—			—			10,541			—			—			—			—
Foreign exchange (gain) loss		(1,215	)		1,148			2,696			5,003			1,697			285			1,541			935
Interest expense on Class B LP Units		4,261			4,261			4,261			4,262			4,025			3,907			3,908			3,907
Interest on mortgages payable		3,777			3,832			3,862			3,186			3,046			2,899			2,830			2,810
Interest on bank indebtedness		797			576			262			167			150			143			203			110
Interest on promissory notes		234			197			97			256			50			15			—			—
Amortization		173			130			149			207			231			90			234			143
Income tax (recovery) expense		(30,718	)		(21,926	)		2,371			540			12,302			25,715			20,526			9,948
EBITDAFV	€	15,360		€	15,087		€	15,594		€	14,481		€	13,891		€	13,004		€	12,754		€	12,326
Cash taxes		1,209			1,018			983			875			651			1,088			741			601
EBITDAFV after cash taxes	€	14,151		€	14,069		€	14,611		€	13,606		€	13,240		€	11,916		€	12,013		€	11,725
Principal repayments1	€	549		€	548		€	548		€	547		€	547		€	546		€	546		€	545

1 For use in Debt Service Coverage Ratio calculation.

Debt Service Coverage Ratio

The Debt Service Coverage Ratio is defined as EBITDAFV less cash taxes, divided by the sum of interest expense (including on mortgages payable, bank indebtedness and promissory notes) and all regularly scheduled principal payments 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		March 31, 2023		December 31, 2022
EBITDAFV after cash taxes1	€	56,437	€	55,526
Debt service payments1,2	€	19,435	€	17,871
Debt Service Coverage Ratio (times)		2.9x		3.1x

1 For the trailing 12 months ended.2 Includes principal repayments as well as interest on mortgages payable, bank indebtedness and promissory notes, and excludes interest expense on Class B LP Units.

Interest Coverage Ratio

The Interest Coverage Ratio is defined as EBITDAFV divided by interest expense (including on mortgages payable, bank indebtedness 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		March 31, 2023		December 31, 2022
EBITDAFV1	€	60,522	€	59,053
Interest expense1,2	€	17,243	€	15,681
Interest Coverage Ratio (times)		3.5x		3.8x

1 For the trailing 12 months ended.2 Includes interest on mortgages payable, bank indebtedness and promissory notes, and excludes interest expense on Class B LP Units.

Forward-Looking Information

Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect ERES’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”, “intent”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plans”, “predict”, “estimate”, “forward”, “potential”, “could”, “likely”, “approximately”, “scheduled”, “forecast”, “variation” or “continue”, or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although ERES believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect. Accordingly, readers should not place undue reliance on forward-looking statements.

Except as specifically required by applicable Canadian securities law, ERES 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 ERES’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