8-KMaterial AgreementsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Material Agreement (Dec 12, 2013)

Filed December 12, 2013For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) filed an 8-K on December 12, 2013, detailing significant amendments to its operating partnership's (EPLP) Limited Partnership Agreement. The primary focus of these changes is the introduction of a new class of partnership interests called LTIP Units. These LTIP Units are designed to replace the Series Z-1 Incentive Units and will be used in the Company's equity compensation programs. This strategic shift aims to provide flexibility in how the company rewards its employees and management through equity-based incentives. Beyond the introduction of LTIP Units, the amendments also introduce several other key changes beneficial to the company's operational structure and long-term strategy. Notably, EPLP will now have a perpetual term, removing the previous 30-year limitation. Additionally, the conversion rights for existing EPLP common unit holders to exchange their units for ESS common stock have been made perpetual. The agreement also allows EPLP to issue partnership units for past or future services and revises or eliminates certain limited partner notice and informational rights, streamlining the partnership's governance and administrative processes.

Key Highlights

  • 1Introduction of LTIP Units to be used for equity compensation, replacing Series Z-1 Incentive Units.
  • 2Establishment of a perpetual term for the operating partnership, EPLP, removing a previous 30-year time limit.
  • 3Elimination of the 30-year time limit for existing EPLP common unit holders to convert their units into ESS common stock.
  • 4Authorization for EPLP to issue partnership units for both past and future services rendered.
  • 5Revision or elimination of certain limited partner notice and informational rights, streamlining governance.
  • 6The amendments are part of the Third Amended and Restated Agreement of Limited Partnership of EPLP, effective December 10, 2013.

Frequently Asked Questions

LTIP Units are a new class of partnership interests established in EPLP's Third Amended and Restated Agreement of Limited Partnership. They are intended to be used by Essex Property Trust and EPLP in their equity compensation programs, serving as a replacement for the Series Z-1 Incentive Units. This change offers a flexible mechanism for equity-based awards to employees and management.

The establishment of a perpetual term for EPLP removes a previous 30-year time limit that was tied to the company's initial public offering in 1994. This change provides greater long-term certainty and operational flexibility for the partnership and the company, removing a potential future constraint on its business structure.

Existing holders of EPLP common units will no longer face a 30-year deadline to exercise their right to convert their units into common stock of Essex Property Trust. This provides them with ongoing flexibility and opportunity to convert their holdings into ESS shares without a time restriction.

The amendments revise or eliminate a number of limited partners' notice and informational rights. While this streamlines governance for the company, investors should review the full Partnership Agreement to understand the specific impact on the rights previously held by limited partners.