PALO ALTO, CA-The merger of Essex Property Trust Inc. and BRE Properties—first the basis of rumors, then increasingly a certainty as the REITs entered negotiations—is coming to pass, with the two companies announcing jointly on Thursday morning that they would combine to create the only publicly traded pure play multifamily REIT on the West Coast. The combined company is expected to have a total market capitalization of approximately $15.4 billion. 

Under the terms of the agreement, each BRE common share will be converted into 0.2971 newly issued shares of Essex common stock plus $12.33 in cash. Based on Essex’s closing stock price Wednesday afternoon, the transaction is valued at $56.21 per share.

“For over a year, BRE’s board and management team have been evaluating alternatives to maximize shareholder value,” says Constance B. Moore, BRE’s CEO. She says the merger will will create “a must-own sharpshooter REIT focused on West Coast apartments,” and calls it “a great outcome for our company.”

Moore’s counterpart at Essex, CEO and president Michael Schall, says the combination results in “a stronger platform for sustainable growth and value creation. 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.”

The combined company will own approximately 56,000 multifamily units in 239 properties across Southern California, Northern California and Seattle. Subject to closing conditions, the merger is expected to be finalized in the first quarter of 2014.

A Goodwin Procter team provided legal counsel to Essex, while UBS Investment Bank acted as the REIT’s lead financial advisor and provided 50% of the committed bridge financing. Citigroup acted as financial advisor and as administrative agent of the bridge facility. On the BRE side, Wells Fargo Securities acted as exclusive financial advisor and Latham & Watkins LLP acted as legal advisor.