8-KOther EventsExhibits & Filings

ESSEX PROPERTY TRUST, INC. 8-K Report, Corporate Update (Sep 24, 2021)

Filed September 24, 2021For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) has entered into a new Equity Distribution Agreement, replacing a previous one from 2018. This new agreement allows the company to sell shares of its common stock worth up to $900 million through a syndicate of agents. The sales can occur through "at the market" offerings, including ordinary brokerage transactions on the NYSE or other exchanges, as well as privately negotiated transactions. The company will pay commissions not exceeding 2.0% per share sold. Furthermore, the agreement includes provisions for forward sale agreements with designated "Forward Purchasers." In these arrangements, the company may sell shares to the Forward Purchasers, who then borrow and sell those shares into the market via the agents to hedge their positions. The company will receive proceeds from these forward sales at a later settlement date, with the option for cash or net share settlement in some instances. The net proceeds from any share sales and forward sale settlements are intended for acquiring, developing, or redeveloping properties, primarily apartment communities, as well as for general corporate purposes and debt repayment.

Key Highlights

  • 1Essex Property Trust (ESS) entered into a new Equity Distribution Agreement allowing for the sale of up to $900 million in common stock.
  • 2The agreement replaces a prior equity distribution agreement dated September 28, 2018.
  • 3Sales can be conducted through "at the market" offerings or privately negotiated transactions.
  • 4Commissions paid to agents will not exceed 2.0% of the gross sales price per share.
  • 5The agreement incorporates forward sale agreements, enabling the company to raise capital at a future settlement date.
  • 6Proceeds are earmarked for property acquisition, development, redevelopment, investments, and general corporate purposes, including debt repayment.
  • 7The company has filed an effective shelf registration statement and a prospectus supplement related to these potential stock offerings.

Frequently Asked Questions

The primary purpose is to provide Essex Property Trust with a flexible mechanism to raise up to $900 million in capital by selling its common stock over time. The proceeds are intended for strategic initiatives such as acquiring, developing, or redeveloping apartment communities, making other investments, and for general corporate needs including debt repayment.

Shares can be sold in several ways: through "at the market" offerings (like ordinary brokerage transactions on the NYSE or other exchanges), privately negotiated transactions, or potentially through forward sale agreements with designated Forward Purchasers. The agents involved will act as sales agents, principals, or "Forward Sellers" in specific capacities.

A forward sale agreement involves the company selling shares to a "Forward Purchaser" at an agreed-upon price for future settlement. The Forward Purchaser may then sell borrowed shares into the market. The company ultimately receives cash proceeds at settlement, though settlement can be physical (cash), cash-settled, or net share-settled, influencing whether the company receives cash or potentially owes cash/shares.

Essex Property Trust will pay commissions to the agents. These commissions will be at a mutually agreed rate that will not exceed 2.0% of the gross sales price per share when the agents act as sales agents or "Forward Sellers." For forward sales, the commission is effectively a reduction in the initial forward sale price.