8-KFinancial EventsOther EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Financial Obligation (Apr 1, 2011)

Filed April 1, 2011For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) announced on March 31, 2011, through its operating partnership, Essex Portfolio, L.P., the private placement sale of $150 million in 4.36% Senior Guaranteed Notes due March 31, 2016. These notes are unsecured obligations of the operating partnership and are fully and unconditionally guaranteed by Essex and various subsidiaries, indicating a strong commitment from the parent entity to this debt issuance. The offering matures in five years and carries a fixed interest rate, providing a degree of certainty for future interest expenses. This financing activity represents a direct financial obligation for Essex, impacting its balance sheet and leverage profile. Investors should note the details surrounding default provisions and prepayment options, including the "Make-Whole Amount" clause, which could influence the effective cost of debt if prepaid. The issuance was conducted via a private placement, suggesting a more targeted approach to raising capital, likely from institutional investors.

Key Highlights

  • 1Essex's operating partnership issued $150 million in 4.36% Senior Guaranteed Notes maturing on March 31, 2016.
  • 2The notes were sold through a private placement.
  • 3The notes carry a fixed interest rate of 4.36% for their five-year term.
  • 4Essex Property Trust, Inc. provides full and unconditional guarantees for the notes, alongside various subsidiaries.
  • 5The notes are unsecured obligations of the operating partnership.
  • 6The filing details terms related to default events, including cross-defaults with other indebtedness.
  • 7The operating partnership has the option to prepay the notes, subject to a 'Make-Whole Amount' provision.

Frequently Asked Questions

The filing does not explicitly state the purpose of the debt issuance. However, such financing is typically used for general corporate purposes, such as funding property acquisitions, development projects, or refinancing existing debt.

The 'Make-Whole Amount' is a feature that protects the note purchasers. If Essex prepays the notes early, they must pay not only the principal and accrued interest but also an additional amount representing the value lost by the investors due to the early repayment, calculated as the discounted future interest payments that would have been received. This can make early prepayment more costly for Essex.

No, the filing states that the notes were sold in a 'private placement,' which means they were not offered to the general public and are likely not publicly traded on a stock exchange.

As the guarantor, Essex is directly responsible for the repayment of these notes. This increases Essex's overall financial leverage and debt obligations. Investors should consider this additional debt when evaluating the company's financial health and risk profile.