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PALO ALTO, CA-Locally based apartment REIT Essex Property Trust has sold one million shares of its Series F Cumulative Redeemable Preferred Stock at $24.664 apiece in order to cover the upcoming redemption of the Series C Preferred Units of Essex Portfolio LP, of which Essex is the general partner.

The Series F Preferred Stock, which was sold to Lend Lease Rosen Real Estate Securities, LLC, as agent for its clients, will pay quarterly distributions at the rate of about 7.8% per year and will be redeemable by the company on or after Sept. 23, 2008. The Series C Units become redeemable on Nov. 24, 2003, at a price per unit of $50.00 plus accumulated and unpaid distributions, at the rate of about 9.1% per year.

In the meantime, Essex says it will use the estimated $24 million in net proceeds to repay existing indebtedness under its $185 million line of credit, which matures in May 2004. As of Sept. 23, Essex had $147.7 million outstanding under the line of credit, which bore interest at a rate of approximately 2.5% per year. Essex says that when it redeems the Series C Units, it “may use funds drawn from this line of credit or possibly from other sources.”

“This transaction may well be the first of several preferred unit redemption transactions that could occur within the next year,” says Essex CFO Michael Schall. “These transactions, if and when completed, have the potential to significantly lower the company’s cost of equity capital.”

Essex acquires, develops, redevelops, and manages multifamily residential properties on the West Coast. It currently has ownership interests in 117 multifamily properties totaling 25,095 units, with another 1,300 units under development. The company’s share price stood at $63.51 at close of trading on Wednesday, off $0.24 on the day. The company’s 52-week-high share price is $64.98.

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