Essex Portfolio, L.P., the operating partnership of Essex Property Trust Inc (ESS), a real estate investment trust (:REIT), recently priced a private placement of $300 million worth of senior unsecured notes at an interest rate of 3.625% per annum. These notes are scheduled to mature in August, 2022 and were priced at 98.99% of par value with a yield to maturity of 3.747%.
The debt offering is expected to close on August 15, 2012 with interest payable semi-annually on the 15th day of February and August each year. The first interest payment is due on February 15, 2013.
The net proceeds from the offering are expected to be utilized by the operating partnership to refinance existing senior unsecured debt and for general corporate purposes.
During second quarter 2012, Essex Property repaid $137.7 million in secured mortgage loans with a weighted average interest rate of 5.6% related to eight communities. Subsequent to the end of the quarter, Essex Property increased its five-year $200 million unsecured term loan to $350 million, and reduced its pricing structure from LIBOR + 142.5 basis points to LIBOR + 130 basis points. The strategic efforts were made to further increase liquidity and strengthen its balance sheet.
Based in Palo Alto, California, Essex Property acquires, develops, redevelops and manages apartment communities, primarily in highly desirable, supply-constrained markets. Essex Property currently owns 161 multi-family properties with an additional nine properties in various stages of development.
Essex Property currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We presently have a long-term Neutral recommendation on the stock. One of its competitors, BRE Properties Inc. (BRE), has a Zacks #3 Rank, which translates into a short-term Hold rating.
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