By Kenneth Lim
Boston, Aug. 17 - Equity Residential on Wednesday priced an upsized $600 million of 20-year exchangeable senior notes cheaper than talked, at a reoffer price of 98.75 with a coupon of 3.85% and an initial exchange premium of 28.04%.
The notes will be issued by Equity Residential's subsidiary, ERP Operating LP, and exchangeable into common stock of Equity Residential.
The notes were originally reoffered at 99.25 apiece. Price talk guided for a coupon of 3.6% to 3.85% and an initial exchange premium of 28% to 30%.
The size of the original deal was $500 million. The greenshoe for a further $50 million remains.
Merrill Lynch was the bookrunner of the registered off-the-shelf offering.
The notes are non-callable for the first five years, with puts in years five, 10 and 15.
There is a contingent exchange hurdle at 130% of the exchange price.
The notes have dividend and takeover protection.
Equity Residential said it will use the proceeds of the deal to pay down its outstanding revolving credit facilities. Equity Residential is a Chicago-based real estate investment trust that develops and operates apartment properties in the United States.
| Issuer: | ERP Operating LP
|
| Issue: | Exchangeable senior notes
|
| Exchange property: | Equity Residential common stock
|
| Bookrunner: | Merrill Lynch
|
| Amount: | $600 million
|
| Greenshoe: | $50 million
|
| Maturity: | Aug. 15, 2026
|
| Coupon: | 3.85%
|
| Price: | Par, reoffered at 98.75
|
| Yield: | 3.85%
|
| Exchange premium: | 28.04%
|
| Exchange price: | $61.00
|
| Exchange ratio: | 16.3934
|
| Contingent exchange: | 130%
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable five years
|
| Puts: | Years five, 10, 15
|
| Price talk: | 3.6%-3.85%, up 28%-30%, reoffer at 99.25
|
| Pricing date: | Aug. 16 after the close
|
| Distribution: | Registered
|
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