8-KMaterial AgreementsFinancial EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Material Agreement (Aug 7, 2019)

Filed August 7, 2019For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS), through its operating partnership Essex Portfolio, L.P., announced the issuance of $400 million in aggregate principal amount of 3.000% Senior Notes due 2030 on August 7, 2019. The net proceeds, approximately $391.6 million after expenses, are earmarked for strategic debt management. Specifically, the company intends to use these funds to prepay higher-interest secured mortgage notes maturing in September 2020 (at a 5.69% rate), reduce outstanding balances on its unsecured credit facilities, and for general corporate purposes. This debt issuance represents a proactive move by Essex to refinance existing debt at a significantly lower interest rate, thereby improving its interest expense profile and strengthening its balance sheet. The new senior notes are general unsecured senior obligations of the Operating Partnership, guaranteed by the Company, and are set to mature in January 2030.

Key Highlights

  • 1Essex Portfolio, L.P. issued $400 million of 3.000% Senior Notes due 2030.
  • 2Net proceeds from the offering are approximately $391.6 million.
  • 3Funds will be used to prepay $290 million of secured mortgage notes with a 5.69% interest rate, maturing in September 2020.
  • 4Proceeds will also repay outstanding balances on unsecured credit facilities and for general corporate purposes.
  • 5The new notes are unsecured senior obligations, guaranteed by Essex Property Trust, Inc.
  • 6The notes bear a fixed interest rate of 3.000% per annum, payable semi-annually.
  • 7The indenture includes restrictive covenants related to mergers, asset sales, and incurring additional indebtedness.

Frequently Asked Questions

The primary purpose of this debt issuance is to refinance existing, higher-interest debt. Specifically, Essex intends to use the proceeds to prepay approximately $290 million of secured mortgage notes that carry a 5.69% interest rate and are due in September 2020, thereby reducing the company's overall interest expense.

The new Senior Notes have a fixed interest rate of 3.000% per annum and mature on January 15, 2030.

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

The Indenture contains restrictive covenants that limit the Operating Partnership's ability to engage in mergers, consolidate, sell substantially all of its assets, and incur additional secured and unsecured indebtedness. These covenants are designed to protect the noteholders.