XML 33 R17.htm IDEA: XBRL DOCUMENT v3.24.3
Significant Transactions During the Nine Months Ended September 30, 2024 and Subsequent Events
 9 Months Ended
Sep. 30, 2024
Significant Transactions [Abstract]  
Significant Transactions During the Nine Months Ended September 30, 2024 and Subsequent Events Significant Transactions During the Nine Months Ended September 30, 2024 and Subsequent Events
Significant Transactions

Acquisitions

In September 2024, the Company acquired its joint venture partner's 50% common equity interest in Century Towers, a 376-unit apartment home community located in San Jose, CA, for a total purchase price of $173.5 million on a gross basis. As part of the acquisition, the Company issued 81,737 OP Units at an agreed upon price of $305 per unit. Concurrent with the acquisition, the Company repaid $110.5 million of debt encumbering the property and was fully redeemed on a preferred equity investment affiliated with the partnership. As a result of the acquisition, the Company realized a gain on remeasurement of co-investment of $29.4 million.

In July 2024, the Company acquired its joint venture partner's 49.9% common equity interest in Patina at Midtown, a 269-unit apartment home community located in San Jose, CA, for a total purchase price of $117.0 million on a gross basis. Concurrent with the acquisition, the Company repaid $95.0 million of debt encumbering the property and was fully redeemed on a preferred equity investment affiliated with the partnership. As a result of the acquisition, the Company realized a gain on remeasurement of co-investment of $2.2 million.

In May 2024, the Company acquired ARLO Mountain View, a 164-unit apartment home community located in Mountain View, CA, for a total contract price of $101.1 million.

In April 2024, the Company accepted the third party sponsor's common equity interest affiliated with its $14.7 million preferred equity investment in a stabilized community comprising 75 apartment homes located in Sunnyvale, CA. Concurrent with the closing, the Company repaid $32.1 million in debt that encumbered the property and consolidated the community on the Company’s financial statements at a $46.6 million valuation.

In March 2024, the Company acquired its joint venture partner, BEXAEW LLC's ("BEXAEW") 49.9% interest in four apartment communities, consisting of 1,480 apartment homes, valued at $505.0 million on a gross basis. Concurrent with the acquisition, the Company repaid $219.9 million of debt encumbering the properties and consolidated the communities. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $138.3 million. Additionally, the Company recognized $1.5 million in promote income as a result of the transaction, which is included in equity income from co-investments on the condensed consolidated statements of income and comprehensive income.

Real Estate Assets Held for Sale

As of September 30, 2024, the Company had one community totaling 697 apartment homes that qualified as held for sale.

Preferred Equity Investments

In May 2024, the Company received cash of $10.3 million for the partial redemption of a preferred equity investment in a joint venture that holds property located in Washington. The remaining balance has a preferred return of 12.0% with an extended maturity date of June 2029.

Notes Receivable

In July 2024, the Company received cash of $40.1 million for the repayment of a mezzanine loan that was due in November 2024, for a property located in Southern California.

In March 2024, the Company committed to fund a $53.6 million related party bridge loan to BEX II, LLC ("BEX II"), a co-investment, in connection with the payoff of a mortgage related to one of BEX II's properties located in Southern California. The note receivable was fully funded in April 2024. It accrued interest at the Secured Overnight Financing Rate ("SOFR") plus 1.50% and was scheduled to mature in September 2024. In September 2024, the maturity date was extended to October 2024 and was subsequently settled in conjunction with the purchase of BEX II portfolio in October. See Subsequent Events section below and Note 6, Related Party Transactions, for additional details.
Senior Unsecured Debt

In March 2024, the Operating Partnership issued $350.0 million of senior unsecured notes due on April 1, 2034 with a coupon rate of 5.500% per annum (the "2034 Notes"), which are payable on April 1 and October 1 of each year, beginning on October 1, 2024. The 2034 Notes were offered to investors at a price of 99.752% of the principal amount. The 2034 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. In May 2024, the Company repaid its $400.0 million unsecured notes, due May 1, 2024, at maturity. In August 2024, the Operating Partnership issued an additional $200.0 million of the 2034 Notes at a price of 102.871% of the principal amount, plus accrued interest from and including March 2024, up to, but excluding, the settlement date of August 21, 2024, with an effective yield of 5.110% per annum. These additional notes have substantially identical terms of the 2034 Notes issued in March 2024.

Subsequent events

Subsequent to quarter end, the Company sold its 81.5% interest in Hillsdale Garden Apartments, a 697-unit apartment home community located in San Mateo, CA for a total contract price of $252.4 million on a gross basis.

Subsequent to quarter end, the Company acquired its joint venture partner’s 49.9% interest in the BEX II portfolio, comprising of four communities totaling 871 apartment homes, for a total contract price of $337.5 million on a gross basis. Concurrent with the closing, the Company assumed $95.0 million of secured mortgages associated with the portfolio and consolidated the communities

Subsequent to quarter end, the Company received cash proceeds of $55.8 million from the full redemption of a preferred equity investment and partial repayment of a mezzanine loan.