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Essex Property (ESS) Prices $150M of 2.650% Senior Notes

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Essex Property Trust, Inc. (ESS - Free Report) priced a public offering of 2.650% senior unsecured notes maturing on Mar 15, 2032, with aggregate principal amount of $150 million.  

The notes have been priced at 105.660% of par value, plus any accrued interest from Feb 11, 2020, to, but excluding, the date of delivery of the senior obligation, with a reoffer yield of 2.093%. Conditional on the satisfaction of certain closing norms, the notes offering is anticipated to close on Jun 19, 2020.

The debt will accrue semiannual interest at a rate of 2.650% per annum on Mar 15 and Sep 15, with the first interest payment scheduled on Sep 15, 2020. The notes will be treated as a single series, with the previously-offered 2.650% senior notes due 2032, with aggregate principal amount of $500 million.

The company intends to use the net proceeds to repay outstanding borrowings under its $1.2-billion unsecured credit facility as well as for other general corporate and working capital needs.

Essex Property’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are a strategic fit.

The company maintains a solid balance sheet and enjoys financial flexibility. It exited first-quarter 2020 with cash and cash equivalents, including restricted cash, of $282.3 million, up from the $81.1 million recorded at the end of 2019.

Moreover, as of May 4, the REIT had $885 million in undrawn capacity in its unsecured credit facilities and the available liquidity surpassed $1 billion for the company. Moreover, the company’s unencumbered net operating income (NOI) to total NOI stood at 90% in first-quarter 2020. This high percentage of such assets has likely enabled it to enjoy accessibility to secured and unsecured debt markets at attractive pricing.

However, the coronavirus pandemic has been wreaking havoc, affecting the demand for rental apartments in the prime leasing season. Moreover, amid this situation, the rent-paying capability of tenants is likely to get maimed. Amid this, Essex Property adopted a number of measures, including halting evictions and creating payment plans for its tenants affected by the pandemic. Moreover, the company began offering lease renewals, without rental escalations to all residents. Such activities are likely to impact the top line in the near term.

Moreover, shares of this Zacks Rank #3 (Hold) company have lost 19.4% over the past year compared with the industry’s decline of 10.1%.

 


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Alexander Baldwin Holdings, Inc.’s (ALEX - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

City Office REIT, Inc.’s (CIO - Free Report) FFO per share estimate for the ongoing year has been unchanged at $1.11 over the past 30 days. The company currently sports a Zacks Rank of 1.

Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimate for 2020 has been unchanged at 68 cents over the past month. It currently carries a Zacks Rank of 2 (Buy).

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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