8-KMaterial AgreementsFinancial EventsExhibits & Filings

EQUITY RESIDENTIAL 8-K Report, Material Agreement (Jan 9, 2012)

Filed January 9, 2012For Securities:EQR

Summary

On January 6, 2012, Equity Residential's operating partnership, ERP Operating Limited Partnership (the "Operating Partnership"), announced significant updates to its credit facilities. The company amended its existing $1.25 billion unsecured revolving credit agreement to increase the total borrowing capacity by $500 million, bringing the new total to $1.75 billion. This amendment provides enhanced financial flexibility for ongoing operations and potential investments. Furthermore, the Operating Partnership, through its subsidiary EQR-Enterprise Holdings, LLC, secured a new $500 million senior unsecured term loan facility. While currently undrawn, this facility offers additional capital access with a maturity date of January 4, 2013, and potential for extensions. Notably, the company also terminated a previously announced $1.0 billion bridge loan commitment from Morgan Stanley, indicating that these new credit arrangements sufficiently address its capital needs.

Key Highlights

  • 1Increased revolving credit facility by $500 million to $1.75 billion, enhancing liquidity.
  • 2Secured a new $500 million senior unsecured term loan facility.
  • 3The term loan facility is currently undrawn and matures on January 4, 2013, with extension options.
  • 4The interest rate on the term loan is LIBOR plus a spread dependent on credit rating (currently 125 basis points).
  • 5Term loan facility does not require principal amortization and allows early repayment without penalty.
  • 6Both new and amended credit facilities have the same covenants as the previous revolving credit agreement.
  • 7Terminated a $1.0 billion bridge loan commitment from Morgan Stanley.

Frequently Asked Questions

The primary purpose of the amendment was to increase the available borrowing capacity under the existing revolving credit agreement by $500 million, bringing the total to $1.75 billion. This provides the company with greater financial flexibility.

A new $500 million senior unsecured term loan facility was established. It is currently undrawn, can be fully drawn in a single borrowing, and terminates if not drawn by July 4, 2012. If drawn, it matures on January 4, 2013, with potential one-year extension options. The interest rate is LIBOR plus a spread (currently 125 basis points), and it does not require amortization, allowing for early repayment without penalty.

The termination of the $1.0 billion bridge loan commitment from Morgan Stanley suggests that the newly amended revolving credit facility and the new term loan facility provided sufficient and perhaps more favorable access to capital for the company's needs, making the bridge loan unnecessary.

No, the filing states that the covenants contained in the new term loan facility are the same as those contained in the Revolving Credit Agreement. Therefore, no new or more restrictive covenants appear to have been introduced by these credit arrangements.