BRE Gets Shareholders' Nod for Merger - Analyst Blog

BRE Properties Inc. BRE has finally received the nod from its shareholders for its merger with Essex Property Trust Inc. ESS. BRE Properties is now a step closer to the proposed merger that is expected to close on Apr 1, 2014. The deal got the approval from the boards of both companies prior to the penning of the agreement.

In particular, around 79% of outstanding shares of BRE common stock have voted in response to this proposed merger, of which 99.3% voted in favor of the deal.

As per the terms, shareholders of BRE Properties would receive 0.2971 shares of Essex common stock and $12.33 in cash, without interest, subject to adjustment, for each BRE share they hold.

However, BRE declared a conditional special dividend of $5.15, which is payable to BRE stockholders of record as of the close of business on the final business day prior to the effective time of the merger. As a result, the cash part of the deal to be paid by Essex to BRE for this merger would fall to $7.18, without interest.

Notably, the special dividend is subject to the closure of sale of certain interests in assets of BRE to specific parties selected by Essex, anticipated to take place on the business day earlier than the effective time of the merger.

We are positive on BRE Properties for this cash-and-stock deal with Essex Property, under which BRE Properties will combine with Essex, creating the only publicly traded West Coast pure play multifamily REIT. We believe that with a solid management team at Essex and a significant geographic overlap, the combined entity will be well poised to enjoy a strong property base in the region and effectively leverage on the attractive market fundamentals, operating efficiencies and reward shareholders accordingly.

BRE Properties has a Zacks Rank #3 (Hold). Investors interested in the residential real estate investment trust (REIT) industry may also consider UDR Inc. UDR and Associated Estates Realty Corporation AEC. Both these stocks have the same rank as BRE Properties.