Summary
On August 15, 2012, Essex Property Trust, Inc. (ESS) announced through its operating partnership, Essex Portfolio, L.P., the issuance of $300 million in aggregate principal amount of senior unsecured notes due August 15, 2022. These notes carry a coupon of 3.625% and were issued at a slight discount to par, specifically 98.99% of the principal amount. The company's operating partnership is the obligor, but ESS provides a full and unconditional guarantee. This debt issuance diversifies its capital structure and provides funding for its operations and growth. From an investor's perspective, these notes represent a general unsecured senior obligation of the operating partnership, ranking equally with other senior unsecured debt. However, they are effectively subordinated to any secured debt of the operating partnership and to the liabilities of its subsidiaries. The relatively long maturity of 10 years suggests a strategic move to lock in favorable long-term rates. The redemption provisions allow the operating partnership flexibility, with specific call protection nearing maturity. Investors should note the defined events of default, which include standard provisions like missed interest or principal payments, breaches of covenants, and cross-defaults with significant indebtedness of the operating partnership, the company, or substantial subsidiaries.
Key Highlights
- 1Essex Property Trust's operating partnership issued $300 million in aggregate principal amount of Senior Notes due 2022.
- 2The Notes bear a fixed interest rate of 3.625% per annum, payable semi-annually.
- 3The issuance was priced at 98.99% of the principal amount, indicating a slight discount.
- 4Essex Property Trust, Inc. fully and unconditionally guarantees the obligations under the Notes.
- 5The Notes are general unsecured senior obligations of the operating partnership, subordinated to secured debt and subsidiary liabilities.
- 6The Notes are redeemable at the operating partnership's option, with specific terms and call protection near maturity.
- 7Events of default are outlined, including failure to pay interest or principal, covenant breaches, and cross-defaults on significant indebtedness.