Equity Office Properties Trust (EOP: NYSE), the nation’s largest office real-estate investment trust, is issuing $300 of exchangeable debt through its EOP Operating Limited Partnership in a private placement, the trust said. Underwriters have the option of issuing an additional $75 million worth of notes over the next 30-days, should investor demand warrant.

The notes are exchangeable into common shares of Equity Office Properties Trust initially at $34 a share, which is an approximate a 15% premium over EOP’s current share price of $29 7/16. The notes are non-callable for four years and mature November 15, 2008. Investors are being given a play on EOP’s distribution growth as interest on the notes will be the greater of either 7.25% annually or the product of two times EOP’s cash distribution to common shareholders for the most recent fiscal quarter.

Proceeds will be used to pay down EOP’s revolving credit facilities.

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