8-KMaterial AgreementsFinancial EventsExhibits & Filings

EQUITY RESIDENTIAL 8-K Report, Material Agreement (May 10, 2007)

Filed May 10, 2007For Securities:EQR

Summary

Equity Residential, through its operating partnership ERP Operating Limited Partnership, has secured a new $500 million unsecured revolving credit facility. This facility, established on May 7, 2007, provides significant liquidity and is guaranteed by Equity Residential and a subsidiary, Lexford Properties, L.P. The credit agreement with major financial institutions including Bank of America, N.A., JPMorgan Chase Bank, N.A., and Deutsche Bank AG, N.A., is set to mature on May 5, 2008. This new credit line is a key development for investors, demonstrating the company's ability to access capital markets effectively. The terms, including the interest rate tied to LIBOR plus a spread and various fees, indicate a standard but important financing arrangement that will support Equity Residential's operational and strategic needs. Investors should note the maturity date and the structure of the agreement as they evaluate the company's financial flexibility.

Key Highlights

  • 1ERP Operating Limited Partnership entered into a new $500 million unsecured revolving credit agreement on May 7, 2007.
  • 2Equity Residential and Lexford Properties, L.P. are guarantors for the operating partnership's obligations under the credit facility.
  • 3The credit facility has a maturity date of May 5, 2008.
  • 4Interest rates are based on LIBOR plus a spread, which is contingent on the Operating Partnership's long-term debt credit rating, currently set at 32.5 basis points.
  • 5An unused fee of 32.5 basis points per annum applies to outstanding balances below $100 million until December 14, 2007.
  • 6A facility fee of 10 basis points per annum will be charged commencing December 15, 2007.
  • 7A 10 basis point fee on the committed amount is payable if the credit facility is not terminated by December 14, 2007.

Frequently Asked Questions

The $500 million unsecured revolving credit facility is intended to provide ERP Operating Limited Partnership, and by extension Equity Residential, with financial flexibility and liquidity to support its operations, potential acquisitions, or other strategic initiatives.

The credit facility matures on May 5, 2008. Interest is calculated as LIBOR plus a spread (currently 32.5 basis points), which adjusts based on the credit rating of the Operating Partnership's long-term debt. Fees include an unused fee (32.5 basis points on balances below $100 million until December 14, 2007) and a facility fee (10 basis points annually from December 15, 2007).

The credit facility involves Bank of America, N.A. as the administrative agent and a lender, JPMorgan Chase Bank, N.A. as the syndication agent and a lender, and Deutsche Bank AG, New York Branch as the documentation agent and a lender.

The guaranties from Equity Residential and its subsidiary Lexford Properties, L.P. indicate that these entities are providing a backstop for the Operating Partnership's obligations under the credit agreement. This strengthens the credit facility for the lenders and demonstrates commitment from the parent company.