8-KMaterial AgreementsFinancial EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Material Agreement (Apr 16, 2014)

Filed April 16, 2014For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS), through its operating partnership Essex Portfolio, L.P., has issued $400 million in aggregate principal amount of 3.875% Senior Notes due 2024. The net proceeds, approximately $394 million after expenses, are earmarked to repay existing credit line indebtedness and for general corporate purposes, which may include property acquisitions and development. This move enhances the company's liquidity and potentially repositions its debt structure. The issuance was conducted under Rule 144A and Regulation S, catering to qualified institutional buyers and non-U.S. persons, with provisions for registering the notes within 90-180 days to allow for broader resale. The company has also entered into a registration rights agreement to facilitate this process, with penalties of additional interest (up to 0.50% annually) if registration deadlines are missed. Investors should note that these notes are unsecured and subordinate to secured debt and liabilities of significant subsidiaries.

Key Highlights

  • 1Essex Portfolio, L.P. issued $400 million of 3.875% Senior Notes due 2024.
  • 2Net proceeds of approximately $394 million will be used to repay existing credit line debt and for general corporate purposes.
  • 3The notes are general unsecured senior obligations of the Operating Partnership, guaranteed by Essex Property Trust, Inc.
  • 4The issuance was made to qualified institutional buyers in reliance on Rule 144A and Regulation S exemptions from registration.
  • 5A Registration Rights Agreement mandates commercially reasonable efforts to register the notes within 90-180 days, with potential for additional interest if deadlines are missed.
  • 6The notes are effectively subordinated to secured indebtedness and liabilities of subsidiaries.
  • 7The notes include covenants restricting mergers, asset sales, and incurring additional secured debt.

Frequently Asked Questions

The primary purpose is to repay existing indebtedness under the Operating Partnership's $1 billion unsecured line of credit and its $25 million unsecured working capital line of credit. Remaining proceeds will be used for general corporate and working capital purposes, which may include acquiring, developing, or redeveloping apartment communities.

The new notes are general unsecured senior obligations of Essex Portfolio, L.P. While they rank equally with other senior unsecured obligations of the Operating Partnership, they are effectively subordinated to any secured indebtedness of the Operating Partnership and to the liabilities of its subsidiaries.

The Registration Rights Agreement requires Essex to use commercially reasonable efforts to file a registration statement with the SEC within 90 days and have it declared effective within 180 days. This process allows the notes to be exchanged for SEC-registered notes, which can then be resold more broadly. Failure to meet these deadlines may result in additional interest payments on the notes.

The Indenture governing the notes contains restrictive covenants. These include limitations on the Operating Partnership's ability to engage in mergers, consolidate, or sell substantially all of its assets, as well as restrictions on incurring additional secured and unsecured indebtedness.