8-KMaterial AgreementsFinancial EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Material Agreement (Apr 10, 2017)

Filed April 10, 2017For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS), through its operating partnership Essex Portfolio, L.P., announced on April 10, 2017, the issuance of $350 million in aggregate principal amount of 3.625% Senior Notes due 2027. The net proceeds, approximately $345.4 million after expenses, are intended to be used for repaying existing credit facilities, specifically the $1.0 billion unsecured line of credit and the $25.0 million unsecured working capital line of credit, with any remaining funds allocated for general corporate and working capital purposes. This debt issuance strengthens the company's balance sheet by refinancing existing debt and provides flexibility for ongoing operations and potential future investments. The notes are unsecured senior obligations of the Operating Partnership, guaranteed by the Company, and carry standard covenants related to mergers, asset sales, and incurring additional indebtedness. Investors should note the notes are subordinated to secured indebtedness and liabilities of subsidiaries.

Key Highlights

  • 1Essex Portfolio, L.P. issued $350 million of 3.625% Senior Notes due 2027.
  • 2Net proceeds from the offering are approximately $345.4 million.
  • 3Proceeds will be used to repay existing unsecured credit facilities, including a $1.0 billion line of credit.
  • 4The notes are general unsecured senior obligations of the Operating Partnership.
  • 5Essex Property Trust, Inc. provides a full and unconditional guarantee for the notes.
  • 6The Indenture includes restrictive covenants on mergers, asset sales, and additional debt.
  • 7Notes are effectively subordinated to secured indebtedness and subsidiary liabilities.

Frequently Asked Questions

The primary purpose is to refinance existing debt. The proceeds will be used to repay outstanding balances under Essex Portfolio, L.P.'s $1.0 billion unsecured line of credit and its $25.0 million unsecured working capital line of credit, thereby optimizing the company's capital structure.

These notes are unsecured senior obligations of Essex Portfolio, L.P. However, they are effectively subordinated to any secured indebtedness of the Operating Partnership and to the liabilities and preferred equity of its subsidiaries.

The notes have a principal amount of $350 million, a coupon rate of 3.625% per annum, and mature on May 1, 2027. Interest is payable semi-annually on May 1 and November 1. The notes can be redeemed by the Operating Partnership at its option prior to February 1, 2027, under specific conditions based on the Adjusted Treasury Rate plus 25 basis points, or at par on or after February 1, 2027.

The Indenture contains restrictive covenants that limit the Operating Partnership's ability to engage in significant transactions such as mergers, consolidations, or sales of substantially all of its assets. It also imposes limitations on the incurrence of additional secured and unsecured indebtedness.