8-KOther EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Corporate Update (Oct 1, 2018)

Filed October 1, 2018For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) has entered into an Equity Distribution Agreement with multiple agents, authorizing the potential sale of up to $900 million of its common stock. This agreement allows for "at-the-market" offerings, privately negotiated transactions, and sales directly to the agents acting as principal. The flexibility in sales methods, including direct stock issuance and forward sale agreements, provides ESS with significant capital raising capacity to support its growth strategies. The primary intention behind this facility is to fund the acquisition, development, or redevelopment of properties, predominantly apartment communities, as well as for other investments and general corporate purposes, including debt repayment. While the company may not receive immediate proceeds from shares sold by forward purchasers, it anticipates receiving net cash proceeds upon settlement of forward sale agreements. This strategic move positions ESS to opportunistically deploy capital in its key West Coast markets.

Key Highlights

  • 1Essex Property Trust (ESS) has established an Equity Distribution Agreement to raise up to $900 million in gross sales proceeds from the offering and sale of its common stock.
  • 2The agreement allows for flexible sales mechanisms, including 'at-the-market' offerings, privately negotiated transactions, and direct sales to agents acting as principal.
  • 3Forward sale agreements are contemplated, where agents will borrow and sell shares to hedge their positions, with ESS potentially receiving proceeds upon settlement.
  • 4Commissions to agents will not exceed 2.0% of the gross sales price per share, potentially lower, and can be paid as a reduction to forward sale prices.
  • 5Proceeds from these offerings are intended for property acquisitions, development, redevelopment (primarily apartment communities), other investments, and general corporate purposes, including debt repayment.
  • 6The company has an effective shelf registration statement and a prospectus supplement in place for these offerings.
  • 7ESS has engaged a syndicate of prominent financial institutions as agents and forward purchasers.

Frequently Asked Questions

The primary purpose of this agreement is to provide Essex Property Trust with a flexible and substantial channel to raise capital, up to $900 million, to fund its strategic initiatives. These include acquiring, developing, or redeveloping properties (primarily apartment communities), making other investments, and for general corporate purposes like repaying debt.

The company can raise capital through several methods: direct sales of its common stock to the agents acting as principal, 'at-the-market' offerings executed through the agents as sales agents, or privately negotiated transactions. The agreement also includes provisions for forward sale agreements, which involve agents potentially borrowing and selling shares on behalf of forward purchasers.

For direct sales and 'at-the-market' offerings, proceeds are generally received as sales occur. For forward sale agreements, Essex Property Trust expects to receive net cash proceeds upon settlement of these agreements on specified dates, typically at maturity. However, the company may opt for cash or net share settlement, which could affect the amount or timing of cash proceeds received.

Essex Property Trust will pay commissions to the agents for sales made under the agreement. These commissions will not exceed 2.0% of the gross sales price per share. In the case of forward sale agreements, the commission may be paid as a reduction to the initial forward sale price.