Essex Prices Notes to Boost Liquidity - Analyst Blog
April 09 2014 - 9:30AM
Zacks
In order to boost its liquidity
position, Essex Property Trust, Inc. (ESS)
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 corporate needs.
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 consider Associated
Estates Realty Corporation (AEC), Preferred
Apartment Communities, Inc. (APTS) and UDR
Inc. (UDR). All these stocks carry a Zacks Rank #2
(Buy).
Note: 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.
ASSOC ESTATES (AEC): Free Stock Analysis Report
PREFERRED APTMT (APTS): Free Stock Analysis Report
ESSEX PPTY TR (ESS): Free Stock Analysis Report
UDR INC (UDR): Free Stock Analysis Report
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