Attached files
| file | filename |
|---|---|
| 8-K - ESSEX PROPERTY TRUST INC 8-K 12-19-2013 - ESSEX PROPERTY TRUST, INC. | form8k.htm |
| EX-99.1 - EXHIBIT 99.1 - ESSEX PROPERTY TRUST, INC. | ex99_1.htm |
Exhibit 99.2
Combination Creates Leading West Coast Multifamily REIT
FORWARD-LOOKING STATEMENTS
SAFE HARBOR STATEMENT UNDER THE PRIVATE LITIGATION REFORM ACT OF 1995:
This presentation 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 and BRE operate
and beliefs of and assumptions made by Essex management and BRE management, involve uncertainties that could
significantly affect the financial results of Essex or BRE or the combined company. 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 and BRE,
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 and BRE from time to time, including those discussed under the heading
“Risk Factors” in their respective most recently filed reports on Forms 10-K and 10-Q. Neither Essex nor BRE undertakes any
duty to update any forward-looking statements appearing in this presentation.
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 and BRE operate
and beliefs of and assumptions made by Essex management and BRE management, involve uncertainties that could
significantly affect the financial results of Essex or BRE or the combined company. 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 and BRE,
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 and BRE from time to time, including those discussed under the heading
“Risk Factors” in their respective most recently filed reports on Forms 10-K and 10-Q. Neither Essex nor BRE undertakes any
duty to update any forward-looking statements appearing in this presentation.
2
§ Q1 2014
§ Subject to customary closing conditions including ESS and BRE shareholder approval
§ Each BRE share to be converted into 0.2971 shares of ESS stock plus $12.33 in cash
§ ESS has obtained committed financing of $1 billion which is available if needed to
fund the cash portion of the purchase price
§ ESS is exploring several alternatives to fund the cash needs in the transaction
including asset sales, joint ventures or new financing
§ Pro forma ownership 63% ESS / 37% BRE
TRANSACTION OVERVIEW
Overview &
Financing
Financing
Expected Close
Management
Team & Board
§ Michael Schall will be President and Chief Executive Officer of the combined company
§ Three directors from the BRE Board will be added to ESS’s Board of Directors, bringing
the total to 13 members
§ ESS will maintain its quarterly dividend at an annual run rate of $4.84 per share
Dividend
Synergies
§ Expected annual synergies to offset Prop 13 taxes
§ The synergies relate to G&A savings and property level operations
Financial Impact
§ Expected to be NAV Neutral/Core FFO Accretive by approximately $0.05-$0.08 per
share
3
§ Creates the leading publicly traded multifamily REIT in highly attractive West
Coast markets
§ Platform poised to achieve greater level of acquisitions and value enhancing
developments
§ Combination of best-in-class management teams and best practice sharing
TRANSACTION BENEFITS
4
Leading West
Coast
Multifamily
Platform
Coast
Multifamily
Platform
Cost of Capital
Improvement
Improvement
§ Larger scale enhances capital market opportunities
§ Improved liquidity in both equity and debt markets
§ Lower cost of capital over long term
Enhanced
Operations and
Synergistic
Opportunities
Operations and
Synergistic
Opportunities
§ Highly complementary footprints and strategies provide opportunity
for meaningful synergies
§ Builds upon scale of local and regional management operations
§ Savings from reduced public company costs and overhead
Essex and BRE Properties - Creates the Leading West Coast Multifamily REIT
OVERVIEW STATISTICS
5
|
|
ESS
|
BRE
|
COMBINED
|
|
Company Inception
|
1971
|
1970
|
Q1 2014
|
|
Equity Market Cap 1
|
$6.0 billion
|
$4.4 billion
|
$10.4 billion
|
|
Total Market Cap 1
|
$9.1 billion
|
$6.3 billion
|
$15.4 billion
|
|
Debt / Total Market Cap 1
|
32.0%
|
29.3%
|
30.9%
|
|
Units 2
|
34,416
|
21,648
|
56,064
|
|
Properties 2
|
163
|
76
|
239
|
|
Financial Occupancy 3
|
95.7%
|
94.4%
|
95.1%
|
|
Average Rent / Unit 4
|
$1,616
|
$1,734
|
$1,668
|
Source: Public filings
1) As of 12/18/2013; Reflects simple addition of ESS and BRE excluding transaction adjustments
2) Unit and property counts as of 9/30/2013; Include units held in joint ventures
3) Average same-property financial occupancy for the quarter ended 9/30/2013; combined represents weighted average by total same-property revenue
4) Average same-property rent per unit for the quarter ended 9/30/2013; combined represents weighted average by total same-property units
BENEFITS OF SCALE
6
The combined company would be the 3rd largest multifamily REIT by total market cap
and the 13th largest REIT by equity market cap in the RMZ
and the 13th largest REIT by equity market cap in the RMZ
Source: Public filings and SNL
1) As of 12/18/2013
PREMIER LEADER IN
WEST COAST MARKETS
8
|
% of Total Same-
Property NOI
|
99%
|
38%
|
100%
|
42%
|
98%
|
41%
|
24%
|
11%
|
Source: Public filings
WEST COAST STRENGTH
West Coast Markets have historically had above average rent growth vs. other regions
Source: Axiometrics
Pro Forma Capital Structure of ESS and BRE Combined 1
PRO FORMA COMBINED CAPITAL
STRUCTURE PROFILE 1
Secured vs. Unsecured Debt
Fixed Rate vs. Floating Rate Debt
Source: Public filings
1) As of 12/18/2013; Assumes ESS forms a $1 billion joint venture to replace the bridge loan with
leverage of 50-60%. ESS is assumed to have a 50% ownership in the venture.
leverage of 50-60%. ESS is assumed to have a 50% ownership in the venture.
2) Includes noncontrolling interest
STRONG CREDIT PROFILE
13
|
Select Balance Sheet Ratios1
|
ESS
|
BRE
|
Pro Forma
Combined2
|
|
Secured Debt / Undepreciated Book
|
23.7%
|
15.8%
|
17% - 19%
|
|
Total Debt / Undepreciated Book
|
46.4%
|
40.8%
|
40% - 42%
|
|
Debt to EBITDA
|
6.9X
|
6.8X
|
7.7X - 7.9X
|
|
Fixed Charge Coverage
|
3.0X
|
2.9X
|
2.7X - 2.9X
|
|
Credit Ratings (Fitch/Moody’s/S&P)
|
BBB+/Baa2/BBB
|
BBB+/Baa2/BBB
|
|
1) As of September 30, 2013
2) Assumes ESS forms a $1 billion joint venture to replace the bridge loan with leverage of 50-60%. ESS is assumed to have a 50% ownership in the venture.
Combined Maturity Schedule
|
% of Debt
Maturing |
0.4%
|
2.0%
|
1.4%
|
8.7%
|
14.3%
|
7.4%
|
13.7%
|
17.2%
|
12.7%
|
6.2%
|
12.1%
|
3.9%
|
WELL LADDERED DEBT
MATURITY PROFILE
14
Source: Public filings
COMBINATION WITH BRE CREATES…
15
ü Leading West Coast Multifamily REIT
ü Increased Scale and Liquidity
ü Significant Opportunities to Realize Synergies
ü Cost of Capital Benefits
ü Core FFO Accretion1
ü Management Team with a Track Record of Delivering Superior Total
Shareholder Returns
Shareholder Returns
1) Core FFO excludes acquisition costs and non-routine items.
ADDITIONAL INFORMATION ABOUT
THIS TRANSACTION
16
In connection with the proposed transaction, Essex Property Trust, Inc. (“Essex”) expects to file with the SEC a registration statement on
Form S-4 that will include a joint proxy statement of Essex and BRE Properties (“BRE”) that also constitutes a prospectus of Essex. Essex
and BRE also plan to file other relevant documents with the SEC regarding the proposed transaction. INVESTORS ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the joint proxy
statement/prospectus (if and when it becomes available) and other relevant documents filed by Essex and BRE with the SEC at the SEC’s
website at www.sec.gov. Copies of the documents filed by Essex with the SEC will be available free of charge on Essex’s website at
www.essexpropertytrust.com or by contacting Essex Investor Relations at 650-494-3700. Copies of the documents filed by BRE with the
SEC will be available free of charge on BRE’s website at www.breproperties.com or by contacting BRE Investor Relations at
Form S-4 that will include a joint proxy statement of Essex and BRE Properties (“BRE”) that also constitutes a prospectus of Essex. Essex
and BRE also plan to file other relevant documents with the SEC regarding the proposed transaction. INVESTORS ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the joint proxy
statement/prospectus (if and when it becomes available) and other relevant documents filed by Essex and BRE with the SEC at the SEC’s
website at www.sec.gov. Copies of the documents filed by Essex with the SEC will be available free of charge on Essex’s website at
www.essexpropertytrust.com or by contacting Essex Investor Relations at 650-494-3700. Copies of the documents filed by BRE with the
SEC will be available free of charge on BRE’s website at www.breproperties.com or by contacting BRE Investor Relations at
415-445-3745.
Essex and BRE and their respective directors and executive officers and other members of management and employees may be deemed
to be participants in the solicitation of proxies in respect of the proposed transaction. You can find information about Essex’s executive
officers and directors in Essex’s definitive proxy statement filed with the SEC on April 1, 2013. You can find information about BRE’s
executive officers and directors in BRE’s definitive proxy statement filed with the SEC on March 11, 2013. Additional information
regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant
documents filed with the SEC if and when they become available. You may obtain free copies of these documents from Essex or BRE
using the sources indicated above.
to be participants in the solicitation of proxies in respect of the proposed transaction. You can find information about Essex’s executive
officers and directors in Essex’s definitive proxy statement filed with the SEC on April 1, 2013. You can find information about BRE’s
executive officers and directors in BRE’s definitive proxy statement filed with the SEC on March 11, 2013. Additional information
regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant
documents filed with the SEC if and when they become available. You may obtain free copies of these documents from Essex or BRE
using the sources indicated above.
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the
securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as amended.