8-KOther Events

ESSEX PROPERTY TRUST, INC. 8-K Report, Corporate Update (Mar 13, 2014)

Filed March 13, 2014For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) filed this 8-K on March 13, 2014, to disclose a significant operational step related to its previously announced merger with BRE Properties, Inc. (BRE). Essex has notified BRE of its intention to require the sale of certain BRE assets (the "Disposition Assets") immediately prior to the merger's effective date. These assets are intended to be contributed to new joint ventures, with BRE then selling interests in these ventures to third parties identified by Essex. The joint ventures may also secure mortgage financing, with proceeds distributed to BRE as part of the asset sale. This transaction is directly linked to the merger's financial structure. BRE will likely declare a special distribution to its stockholders, the amount of which is expected to be derived from the net proceeds of the asset sale. Importantly, any amounts distributed as a special dividend will reduce the cash consideration Essex is obligated to pay in the merger. While BRE stockholders are guaranteed to receive an aggregate of $12.33 in cash per share in connection with the merger, the final distribution mix between a special dividend and merger cash consideration is subject to determination and further announcements.

Key Highlights

  • 1Essex has initiated a pre-merger asset sale of certain BRE properties, to be structured into joint ventures.
  • 2The proceeds from the asset sale are expected to be distributed to BRE stockholders as a special dividend.
  • 3The special dividend amount, if declared, will reduce the cash consideration Essex pays in the merger.
  • 4BRE stockholders are guaranteed a total of $12.33 per share in cash from the merger transaction, regardless of the special dividend.
  • 5Essex is providing detailed disclosure on where investors can find additional merger-related information, including filings with the SEC.
  • 6The company includes standard forward-looking statements, warning of potential risks and uncertainties affecting the merger and future performance.

Frequently Asked Questions

The asset sale is part of the merger's financial engineering. Essex is requiring BRE to sell certain assets, which will then be placed into joint ventures. The proceeds from this sale are intended to be distributed to BRE's stockholders as a special dividend, thereby potentially reducing the cash component Essex needs to pay out in the merger itself.

BRE stockholders are guaranteed to receive a total of $12.33 in cash per share in connection with the merger. The asset sale and potential special dividend mean that part of this $12.33 could be paid out as a special distribution before the merger closes, with the remainder paid as cash consideration at closing. The exact split is not yet determined, but the total cash received per share will remain $12.33.

No, the special distribution is not guaranteed. While Essex has notified BRE to proceed with the asset sale with the expectation of a distribution, the final decision to authorize and the amount of the Special Distribution rests with BRE's Board of Directors, in consultation with Essex. Essex and BRE will file additional disclosures if the distribution is authorized.

Investors and security holders are urged to carefully read the definitive joint proxy statement/prospectus filed on February 14, 2014, and other relevant documents filed with the SEC. These can be found on the SEC's website (www.sec.gov), Essex's website (www.essexpropertytrust.com), or BRE's website (www.breproperties.com). Contact information for Investor Relations for both companies is also provided in the filing.