EQUITY RESIDENTIAL (NYSE:EQR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On June 6, 2019, Equity Residential (the Company) and its operating partnership, ERP Operating Limited Partnership (the Operating Partnership), entered into a Distribution Agreement (a Distribution Agreement) with each of JPMorgan Chase Bank, National Association, London Branch, J.P. Morgan Securities LLC, Barclays Bank PLC, Barclays Capital Inc., Bank of America, N.A., BofA Securities, Inc., The Bank of New York Mellon, BNY Mellon Capital Markets, LLC, Morgan Stanley & Co. LLC, MUFG Securities EMEA plc, MUFG Securities Americas Inc., The Bank of Nova Scotia, Scotia Capital (USA) Inc., UBS AG, London Branch, and UBS Securities LLC, acting in their respective capacity as Agents (as described below), as Forward Sellers (as described below) and/or as Forward Purchasers (as described below), as applicable, with respect to the issuance and sale of up to 13,000,000 common shares of beneficial interest, par value $0.01 per share, of the Company (the Shares) from time to time in at the market offerings or certain other transactions (the ATM Program). The Company refers to these entities, when acting in their capacity as sales agents, individually as an Agent and collectively as Agents. The Company refers to these entities, when acting as agents for Forward Purchasers (as described below), individually as a Forward Seller and collectively as Forward Sellers. The 13,000,000 Shares consist of 13,000,000 Shares that remain unsold under the prospectus supplement dated June 29, 2016 to the prospectus dated June 28, 2016, which expired upon the filing of the automatic shelf registration statement discussed below.
The Distribution Agreement provides that, in addition to the issuance and sale of the Shares through the Agents, the Company also may enter into forward sale agreements under separate master forward sale confirmation agreements (each, a Master Forward Sale Confirmation) and related supplemental confirmations between the Company and a Forward Seller or its affiliate. The Company refers to these entities, when acting in this capacity, individually as a Forward Purchaser and collectively as Forward Purchasers. In connection with each particular forward sale agreement, the relevant Forward Purchaser will borrow from third parties and, through the relevant Forward Seller, sell a number of Shares equal to the number of Shares underlying the particular forward sale agreement.
The Company will not initially receive any proceeds from the sale of borrowed Shares by a Forward Seller. The Company expects to fully physically settle each particular forward sale agreement with the relevant Forward Purchaser on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of Shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. However, the Company may also elect to cash settle or net share settle a particular forward sale agreement, in which case the Company may not receive any proceeds from the issuance of Shares, and the Company will instead receive or pay cash (in the case of cash settlement) or receive or deliver Shares (in the case of net share settlement).
The Distribution Agreement provides that each Agent will receive from the Company a commission that will not exceed, but may be lower than, 2.0% of the gross sales price of all Shares sold through it as Agent under the Distribution Agreement. In connection with each forward sale, the Company will pay the relevant Forward Seller, in the form of a reduced initial forward sale price under the related forward sale agreement with the related Forward Purchaser, commissions at a mutually agreed rate that shall not be more than 2.0% of the gross sales price of all borrowed Shares sold by it as a Forward Seller.