Essex To Buy BRE Properties For About $4.3 Bln.

(RTTNews) - Apartment owner Essex Property Trust Inc. (ESS), Thursday said it has agreed to buy BRE Properties Inc. (BRE) for about $4.3 billion, making it the largest publicly-traded real estate investment trust in the U.S. West Coast.

Essex has agreed to pay BRE shareholders 0.2971 newly issued shares of Essex plus $12.33 in cash for each BRE share held. Based on the closing stock price for Essex on Wednesday, the deal values BRE at $56.21 a share. The deal is expected to close in the first quarter.

The combined company will own about 56,000 multifamily units in 239 properties in Southern California, Northern California and Seattle. The company will have a total market capitalization of about $15.4 billion.

For over a year BRE Properties had been exploring its options, including possible sale or merger. The company early this month said it was engaged in talks with Essex, after having made a proposal to acquire BRE.

Upon completion of the merger, the company will retain the Essex name and will continue to trade under the ticker symbol ESS on the New York Stock Exchange. Essex CEO Michael Schall will serve as President and CEO of the combined company, while three directors from the BRE Board will be added to the Essex Board, bringing the total to 13.

Essex equity holders will hold about 63 percent of the combined company, while BRE shareholders will hold about 37 percent.

The deal is subject to customary closing conditions, including approval from Essex and BRE shareholders.

"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 Schall.

Essex anticipates the acquisition to be accretive on a run rate basis to Core Funds from Operation of about $0.05 to $0.08 per share annually.

Essex has obtained committed financing of $1 billion, which is available if needed to fund the cash portion of the purchase price.

BRE is currently trading at $54.80, down $1.11 or 1.99%, with ESS at $144.54, down $3.16 or 2.14%, on the NYSE.