8-KMaterial AgreementsFinancial EventsRegulation FD+1

EQUITY RESIDENTIAL 8-K Report, Material Agreement (Jan 15, 2013)

Filed January 15, 2013For Securities:EQR

Summary

Equity Residential (EQR), through its operating partnership ERP Operating Limited Partnership, announced on January 11, 2013, significant updates to its credit facilities. The company has entered into a new $2.5 billion unsecured revolving credit agreement that replaces its previous facility, extending the maturity date to April 2, 2018. This new facility also includes an option to increase borrowings by an additional $500 million. Additionally, a new $750 million senior unsecured term loan facility was established, which is currently undrawn and would fund in a single borrowing if utilized, with a maturity date of January 11, 2015, subject to a one-year extension option. These new credit arrangements provide EQR with enhanced financial flexibility and a strengthened liquidity position. The company has replaced a previously announced bridge loan commitment from Morgan Stanley with these more favorable facilities. The terms indicate that EQR, as the general partner, remains a guarantor for the operating partnership's obligations, underscoring the interconnectedness of their financial commitments. Investors can view these developments as a positive step towards maintaining robust financial health and supporting future operational and strategic initiatives.

Key Highlights

  • 1ERP Operating Limited Partnership secured a new $2.5 billion unsecured revolving credit facility maturing on April 2, 2018, replacing its prior facility.
  • 2The new revolving credit facility offers an option to increase available borrowings by an additional $500 million.
  • 3A new $750 million senior unsecured term loan facility was entered into, currently undrawn.
  • 4Equity Residential (EQR) is a guarantor for the operating partnership's obligations under both new credit facilities.
  • 5The new credit facilities replace a previously announced $2.5 billion bridge loan commitment from Morgan Stanley.
  • 6Interest rates on the new facilities are based on LIBOR plus a spread, dependent on the credit rating of the Operating Partnership's long-term debt.
  • 7The term loan facility, if drawn, matures on January 11, 2015, with a potential one-year extension.

Frequently Asked Questions

The primary purpose of these new credit facilities is to enhance the financial flexibility and liquidity of Equity Residential and its operating partnership, ERP Operating Limited Partnership. The new revolving credit facility extends the maturity date and provides a significant borrowing capacity, while the term loan facility offers a source of funds for potential future needs.

Equity Residential (EQR), as the sole general partner of ERP Operating Limited Partnership, acts as a guarantor for the operating partnership's obligations under both the new revolving credit facility and the term loan facility. This ensures EQR's commitment to the debt obligations of its operating subsidiary.

These new facilities effectively replace ERP Operating Limited Partnership's then-existing revolving credit facility and a previously announced bridge loan commitment. This indicates a refinancing and restructuring of the company's short-to-medium term debt obligations, potentially on more favorable terms or with longer maturities.

The revolving credit facility has an annual facility fee of 15 basis points, based on the credit rating of the Operating Partnership's long-term debt. The interest rates on borrowings under both facilities are tied to LIBOR plus a spread, which varies depending on the credit rating, with the revolving facility currently at 105 basis points and the term loan facility at 120 basis points.