In order to boost its liquidity position,
Essex Property Trust, Inc.
) disclosed the pricing of 3.875% senior unsecured notes worth
$400 million. In particular, the company's operating arm, Essex
Portfolio, L.P., has priced a private placement of these notes at
99.234% of par value. The offering will close on Apr 15, 2014,
upon fulfillment of customary closing conditions.
The notes, having a yield to maturity of 3.968%, will mature
on May 1, 2024. The interest on the notes is payable semi
annually on May 1 and Nov 1, with the first payment starting on
Nov 1, 2014. This residential real estate investment trust (REIT)
expects to use the reaped proceeds from the offering for
refinancing existing senior unsecured facilities and other
For Essex Property, whose cash position stood at $53.8 million
as of Dec 31, 2013, the transaction is a strategic fit as it will
strengthen its balance sheet. This will, in turn, pave way for
making accretive investments going forward.
Notably, earlier this month, Essex Property successfully
accomplished the $16.2 billion merger with BRE Properties. This
led to the creation of a premium West Coast pure play multifamily
REIT with an equity market capitalization of about $11.1 billion.
With a solid property base, significant geographic overlap and
strong management team at Essex, this combined entity is believed
to efficiently leverage on the attractive market fundamentals,
synergies and reward shareholders accordingly.
Essex Property is scheduled to release its first-quarter 2014
results on May 7, after the market closes. The Zacks Consensus
Estimate for funds from operations (FFO) for the quarter is
pegged at $2.00, representing year-over-year growth of 7%.
Essex Property currently has a Zacks Rank #3 (Hold).
Investors interested in the residential REIT industry may also
Associated Estates Realty Corporation
Preferred Apartment Communities, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
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