Essex Property Trust, Inc. (ESS) recently announced that the Company and its operating partnership, Essex Portfolio, L.P., entered into a purchase agreement to issue $200 million of senior unsecured notes with a 9-year term. The funding amount will be scheduled in three parts — $100 million, $50 million and $50 million on April 30, 2012, June 29, 2012 and August 30, 2012 respectively. Interest of 4.27%, 4.30 % and 4.37 % will be paid on a semi-annual basis on these funding charges.
The company intends to use the net proceeds from this offering to repay a portion of its outstanding debt of $425 million under its unsecured line of credit and for other general corporate purposes. This offering will enable the company to attain financial flexibility, as well as seize investment opportunities and acquisitions, which enhance the top-line growth to a great extent.
Essex Property reported 4Q11 funds from operations (FFO) of $55.5 million or $1.55 per share compared with $43.0 million or $1.31 per share in 4Q10. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to the net income.
Based in Palo Alto, California, Essex Property acquires, develops, redevelops, and manages multi-family residential properties in selected West Coast markets. Essex currently has ownership interests in 160 apartment communities with 5 communities under construction.
Essex Property currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, BRE Properties Inc. (BRE) has a Zacks #3 Rank.
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