Combination Creates the Pre-Eminent West Coast
Multifamily REIT
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.
BRE Properties, Inc.Stephanie Andre, 415-445-6530orEssex
Property Trust, Inc.Barb Pak, 650-494-3700Director of Investor
Relations
Essex Property (NYSE:ESS)
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