Essex Property Trust, Inc. and BRE Properties announced a merger that will create the only publicly traded West Coast pure play multifamily REIT.
The combined company is expected to have a pro forma equity market capitalization of approximately $10.4 billion and a total market capitalization of approximately $15.4 billion.
Under the terms of the agreement, each BRE common share will be converted into 0.2971 newly issued shares of Essex common stock plus $12.33 in cash. Based on the closing stock price for Essex on December 18, 2013, this transaction is valued at $56.21 per BRE share.
Essex has obtained committed financing of $1 billion which is available if needed to fund the cash portion of the purchase price.
The company is exploring several alternatives to fund the cash needs of the transaction including asset sales, joint ventures or new financing.
The merger is subject to customary closing conditions, including receipt of approval of Essex and BRE shareholders. The parties currently expect the transaction to close during the first quarter of 2014.
“The combination of Essex and BRE creates a stronger platform for sustainable growth and value creation going forward. The combined company will be the largest and only publicly traded pure play apartment REIT on the West Coast which we believe will provide a greater competitive advantage in our markets,” said Michael Schall, Essex’s president and CEO.
“For over a year, BRE’s board and management team have been evaluating alternatives to maximize shareholder value. We are pleased to have reached this agreement with Essex, which we believe will deliver significant value to all of our stakeholders,” said Constance B. Moore, chief executive officer of BRE. “This transaction will create a must-own sharpshooter REIT focused on West Coast apartments.”
