8-KMaterial AgreementsFinancial EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Material Agreement (Feb 11, 2019)

Filed February 11, 2019For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS), through its operating partnership Essex Portfolio, L.P., announced on February 11, 2019, the issuance of $350 million in aggregate principal amount of 4.000% Senior Notes due 2029. The net proceeds, approximately $344.6 million after expenses, are earmarked for repaying existing credit facilities, including a $1.2 billion unsecured line of credit and a $35.0 million working capital line, with any remaining funds allocated for general corporate and working capital purposes. These notes are general unsecured senior obligations of the Operating Partnership, guaranteed by the Company, and will rank equally with other senior unsecured debt. However, they are subordinated to any secured indebtedness. The issuance aims to manage the company's debt structure, potentially lowering borrowing costs or extending debt maturities. Investors should note the covenants within the indenture, which include restrictions on mergers, asset sales, and incurring additional secured or unsecured indebtedness, as well as specific events of default that could lead to accelerated maturity.

Key Highlights

  • 1Essex Portfolio, L.P. issued $350 million of 4.000% Senior Notes due 2029.
  • 2Net proceeds of approximately $344.6 million will be used to repay existing credit facilities and for general corporate purposes.
  • 3The Notes are guaranteed by Essex Property Trust, Inc. and are unsecured senior obligations of the Operating Partnership.
  • 4The Notes effectively rank subordinate to secured indebtedness.
  • 5The indenture includes restrictive covenants regarding mergers, asset sales, and incurring additional debt.
  • 6Key events of default are outlined, which could lead to accelerated maturity of the Notes.
  • 7The notes are redeemable at the Operating Partnership's option prior to December 1, 2028, at a premium based on the Adjusted Treasury Rate plus 25 basis points.

Frequently Asked Questions

The primary purpose is to repay existing indebtedness under the Operating Partnership's $1.2 billion unsecured line of credit facility and its $35.0 million unsecured working capital line of credit. Any remaining proceeds will be used for general corporate and working capital purposes, indicating a debt refinancing strategy.

The new Senior Notes have a coupon rate of 4.000% per annum and mature on March 1, 2029. Interest is payable semi-annually in arrears on March 1 and September 1 each year.

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

Yes, the indenture governing the Notes includes restrictive covenants. These limit the Operating Partnership's ability to consummate a merger, consolidate, or sell substantially all of its assets. They also restrict the ability to incur additional secured and unsecured indebtedness.