Essex Property Trust, Inc. and BRE Properties Complete $16.2
Billion Merger
Combination Creates the Pre-Eminent West Coast Multifamily
REIT
PALO ALTO, CA and SAN FRANCISCO, CA--(Marketwired - Apr 1, 2014)
- Essex Property Trust, Inc. (NYSE: ESS) and BRE Properties,
Inc. (NYSE: BRE) announced today the completion of the merger of
the two companies, forming a combined company with equity market
capitalization of approximately $11.1 billion and a total market
capitalization of approximately $16.2 billion. The common
stock of the combined company will trade under the symbol ESS on
the New York Stock Exchange.
"We are excited to consummate the merger and move forward to
combine these two great organizations to form the leading West
Coast multifamily REIT," said Michael Schall, President and Chief
Executive Officer of Essex. "The integration effort is
proceeding as planned, which we believe will result in a stronger
platform for sustainable growth, superior service for our
residents, and expanded career opportunities for our
employees. I want to thank the employees of both companies for
their hard work, dedication and support."
"We are pleased that our stockholders have expressed
overwhelming support and approval for this merger," said Constance
B. Moore, Chief Executive Officer of BRE. "The combined
portfolio of Essex and BRE will provide substantial value for our
stockholders through enhanced operations, improvements in the costs
of capital and synergistic opportunities. On behalf of BRE's
Board and management, I want to thank our stockholders for their
invaluable support throughout this process."
Transaction Details Under the terms of the agreement, each share
of BRE common stock has been converted into 0.2971 newly issued
shares of Essex common stock plus $7.18 in cash, without
interest. The cash consideration was adjusted as a result of
the authorization and declaration of a special distribution to the
stockholders of BRE of $5.15 per share of BRE common
stock. Former Essex stockholders hold approximately 63% of the
combined company's common stock, and former BRE stockholders hold
approximately 37% of the combined company's common stock.
On March 31, 2014, BRE formed three new joint ventures with two
separate third-party institutional joint venture partners and
contributed 17 BRE properties with an aggregate estimated value of
approximately $888 million to the joint ventures. As a result
of the contribution of the properties to the joint ventures and the
merger, Essex Portfolio, L.P. and its subsidiaries now hold a 50%
interest in each of the joint ventures. Additionally, BRE received
proceeds from approximately $475 million in mortgage financings of
the properties contributed to the joint ventures. As a result
of the closing of these joint ventures, BRE authorized the payment
of the special distribution described above. The special
distribution will be paid on or about April 9, 2014 to BRE
stockholders of record as of the close of business on March 31,
2014.
Leadership and Organization
Irving F. Lyons, III, former Chairman of the Board of BRE, and
Thomas E. Robinson and Thomas P Sullivan, former directors of BRE,
have joined Essex's Board of Directors in connection with the
merger. George Marcus will serve as Chairman of the Board of
the combined company. Michael Schall, Essex's President and
Chief Executive Officer, will serve as President and Chief
Executive Officer of the combined company.
Anticipated Synergies and Accretion Annual synergies are
expected to be in an amount sufficient to offset the expected
increase in property taxes due to Proposition 13. The combined
company is expected to benefit from the elimination of duplicative
costs associated with supporting a public company platform and
leveraging of Essex's platform and systems. The savings are
expected to be realized upon the full integration, which is
expected within an 18-month period following the closing of the
merger.
Essex anticipates the transaction to be accretive on a run rate
basis to Core Funds from Operation (FFO) on a per diluted share
basis of approximately $0.05-$0.08 annually.
Advisors UBS Investment Bank acted as lead financial advisor to
Essex. Citigroup acted as financial advisor to Essex. Goodwin
Procter LLP acted as legal advisor to Essex.
Wells Fargo Securities acted as exclusive financial advisor and
Latham & Watkins LLP acted as legal advisor to BRE.
About Essex Property Trust Essex Property Trust, Inc., an
S&P 500 company, is a fully integrated real estate investment
trust (REIT) that acquires, develops, redevelops, and manages
apartment communities located in highly desirable,
supply-constrained markets. As of April 1, 2014, after giving
effect to the merger, Essex has ownership interests in 233
multifamily properties with an additional 15 properties in various
stages of development. Additional information about Essex can be
found on the Company's web site at www.essexpropertytrust.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: This press release may include
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements which are based on current expectations, estimates and
projections about the industry and markets in which Essex operate
and beliefs of and assumptions made by Essex management, involve
uncertainties that could significantly affect the financial results
of Essex. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such
forward-looking statements, which generally are not historical in
nature. Such forward-looking statements include, but are not
limited to, statements about the anticipated benefits of the
business combination transaction involving Essex, including future
financial and operating results (such as FFO), and the combined
company's plans, objectives, expectations and intentions. All
statements that address operating performance, events or
developments that we expect or anticipate will occur in the future
-- including statements relating to expected synergies, improved
liquidity and balance sheet strength -- are forward-looking
statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Although we believe the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, we can give no assurance that our
expectations will be attained and therefore, actual outcomes and
results may differ materially from what is expressed or forecasted
in such forward-looking statements. Some of the factors that may
affect outcomes and results include, but are not limited to: (i)
national, regional and local economic climates, (ii) changes in
financial markets and interest rates, or to the business or
financial condition of either company or business (iii) changes in
market demand for rental apartment homes and competitive pricing,
(iv) risks associated with acquisitions, including the integration
of the combined companies' businesses, (v) maintenance of real
estate investment trust ("REIT") status, (vi) availability of
financing and capital, (vii) risks associated with achieving
expected revenue synergies or cost savings, (viii) risks associated
with the companies' ability to consummate the merger on the terms
described or at all and the timing of the closing of the merger,
and (ix) those additional risks and factors discussed in reports
filed with the Securities and Exchange Commission ("SEC") by Essex
from time to time, including those discussed under the heading
"Risk Factors" in its most recently filed reports on Forms 10-K and
10-Q. Essex does not undertake any duty to update any
forward-looking statements appearing in this press
release.
Contact
Information Barb Pak Director of Investor Relations (650)
494-3700