8-KMaterial AgreementsFinancial EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Material Agreement (Mar 8, 2018)

Filed March 8, 2018For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) announced on March 8, 2018, through its operating partnership, Essex Portfolio, L.P., the issuance of $300 million in aggregate principal amount of 4.500% Senior Notes due 2048. The net proceeds from this offering, approximately $295.8 million after expenses, are intended to repay existing indebtedness under the company's unsecured line of credit facilities and for general corporate and working capital purposes. The notes are unsecured, senior obligations of the Operating Partnership, guaranteed by Essex Property Trust, Inc., and carry a long-term maturity of 30 years. These notes rank equally with other senior unsecured obligations of the Operating Partnership but are effectively subordinated to any secured debt and to liabilities of its subsidiaries. The issuance represents a strategic move by ESS to refinance existing debt, extending its maturity profile and potentially lowering its weighted average cost of capital. Investors should note the fixed 4.500% interest rate and the extensive covenants outlined in the indenture, which may impact future strategic decisions.

Key Highlights

  • 1Essex Property Trust, Inc. (ESS) operating partnership issued $300 million of 4.500% Senior Notes due 2048.
  • 2Net proceeds of approximately $295.8 million will be used to repay existing line of credit debt and for general corporate purposes.
  • 3The notes are general unsecured senior obligations of the Operating Partnership, guaranteed by the Company.
  • 4The Notes mature on March 15, 2048, with semi-annual interest payments.
  • 5The issuance effectively refinances existing debt and extends the company's debt maturity profile.
  • 6The Indenture includes restrictive covenants regarding mergers, asset sales, and incurring additional indebtedness.

Frequently Asked Questions

The primary purpose of issuing these $300 million senior notes is to repay existing indebtedness under Essex Portfolio, L.P.'s $1.2 billion unsecured line of credit facility and its $35.0 million unsecured working capital line of credit facility. The remaining proceeds will be used for other general corporate and working capital purposes.

The new notes carry a fixed interest rate of 4.500% per annum, payable semi-annually on March 15 and September 15 of each year. The maturity date for these notes is March 15, 2048, meaning they have a 30-year term.

The notes are general unsecured senior obligations of the Operating Partnership and rank equally with all other senior unsecured obligations of the Operating Partnership. However, they are effectively subordinated to any existing or future secured indebtedness and to the liabilities of the Operating Partnership's subsidiaries.

Yes, the Indenture governing the notes contains various restrictive covenants. These include limitations on the Operating Partnership's ability to enter into mergers, consolidate, sell all or substantially all of its assets, and restrictions on incurring additional secured and unsecured indebtedness. Failure to comply with these covenants could lead to an event of default.