BRE Properties Inc. (NYSE: BRE), which is set to merge with Essex Property Trust Inc. (NYSE: ESS) during the first quarter of 2014, disclosed a special dividend of $5.15 per share of common stock to its shareholders. The move comes as part of its merger agreement and is conditioned upon the closing of the asset sale.
As per the merger agreement, a notice has been delivered by Essex to BRE according to which certain interests in assets of BRE and its subsidiaries need to be sold by BRE and purchased by specific parties selected by Essex particularly on the business day earlier than the effective time of the merger.
Based on the amount of proceeds received by BRE in relation to the assets sale, the company needs to make a distribution of the proceeds to its stockholders. Therefore, this conditional special dividend has been authorized by BRE's board and 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. Notably, the cash part of the deal to be paid by Essex to BRE shareholders for this merger would fall due to this special dividend distribution.
As a matter of fact, the merger of BRE with Essex Property would create the leading public owner of multifamily properties in the attractive West Coast markets. With a solid management team at Essex and a significant geographic overlap, we believe that this combined entity can 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 #2 (Buy). Investors interested in the residential real estate investment trust (REIT) industry may also consider UDR Inc. (NYSE: UDR) and Associated Estates Realty Corporation (NYSE: AEC). Both these stocks have the same rank as BRE Properties.
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