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BRE Confirms Purchase Offer from Essex

ESS SRC IRT

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BRE Properties Inc. finally confirmed that it has received a non-binding offer from Essex Property Trust, Inc. (ESS - Snapshot Report) to purchase BRE Properties in a cash-and-stock deal valued at $4.48 billion. Discussions are underway and both companies have agreed to an exclusivity period.

As per the offer, shareholders of BRE Properties would receive 0.2971 shares of Essex common stock and $12.33 in cash for each BRE share they hold. If the deal materializes, it will essentially lead to the creation of a large West Coast apartment real estate investment trust (REITs) that can enjoy a solid property base and effectively leverage on this attractive market and reward shareholders accordingly.

As a matter of fact, San Francisco-based BRE Properties is involved in developing, acquiring and managing communities predominantly in the chief metropolitan markets of Southern and Northern California and Seattle. On the other hand, Essex Property is engaged in multifamily residential properties in select West Coast markets.

The acquisition of BRE Properties would essentially enhance Essex’s portfolio. On the other hand, a comparatively weak performance by BRE Properties in recent years, even with a solid property base in the attractive growth markets, sets the ground for its sale. We believe any move that maximizes shareholder value is welcome and look forward to the market to see what the future beholds.

Notably, with this news doing the rounds in the market last week following a Bloomberg report, the investment firm Land & Buildings Investment Management LLC insisted BRE Properties to consider this sale proposal.

Both BRE Properties and Essex Property currently hold a Zacks Rank #3 (Hold). Moreover, investors interested in the apartment REIT industry may consider stocks like Independence Realty Trust, Inc. (IRT - Snapshot Report) and Spirit Realty Capital, Inc. (SRC - Snapshot Report). Both these stocks carry a Zacks Rank #2 (Buy).

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