ERP OPERATING LIMITED PARTNERSHIP (an Illinois limited partnership) $1,000,000,000 4.625% Notes due December 15, 2021 TERMS AGREEMENT
Exhibit 1.1
ERP OPERATING LIMITED PARTNERSHIP
(an Illinois limited partnership)
$1,000,000,000 4.625% Notes due December 15, 2021
TERMS AGREEMENT
Dated: December 7, 2011
| To: | ERP Operating Limited Partnership |
| c/o Equity Residential |
| Two North Riverside Plaza |
| Chicago, Illinois 60606 |
| Attention: Mark Parrell |
Ladies and Gentlemen:
We (the “Representatives”) understand that ERP Operating Limited Partnership, an Illinois limited partnership (“ERP”), proposes to issue and sell $1,000,000,000 aggregate principal amount of 4.625% Notes due December 15, 2021 (the “Underwritten Securities”). Subject to the terms and conditions set forth or incorporated by reference herein, the Underwriters named below (the “Underwriters”) severally, and not jointly, agree to purchase the respective amounts of the Underwritten Securities set forth below opposite their respective names, at the purchase price set forth below.
| Underwriter | Principal Amount of Underwritten Securities | |||
| Morgan Stanley & Co. LLC | $ | 400,000,000 | ||
| Merrill Lynch, Pierce, Fenner & Smith Incorporated | $ | 200,000,000 | ||
| Barclays Capital Inc. | $ | 200,000,000 | ||
| Deutsche Bank Securities Inc. | $ | 100,000,000 | ||
| RBC Capital Markets, LLC | $ | 100,000,000 | ||
| Total | $ | 1,000,000,000 | ||
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The Underwritten Securities shall have the following terms:
| Title: | 4.625% Notes due December 15, 2021 | |
| Principal Amount to be Issued: | $1,000,000,000 | |
| Currency: | U.S. Dollars | |
| Expected Ratings: | Baa1 by Moody’s Investors Service, Inc. BBB+ by Standard & Poor’s Ratings Services BBB+ by Fitch Ratings Services | |
| Form: | Registered book-entry form | |
| Price to Public: | 99.619% of the principal amount | |
| Purchase Price: | 98.969% of the principal amount | |
| Stated Maturity Date: | December 15, 2021 | |
| Interest Rate: | 4.625% per annum | |
| Interest Payment Date: | Interest on the Underwritten Securities will be payable semi-annually in arrears, on June 15 and December 15 of each year, beginning June 15, 2012. | |
| Record Dates: | The close of business on the June 1 and December 1 preceding the applicable Interest Payment Date | |
| Redemption: | Prior to September 15, 2021, ERP may redeem the Underwritten Securities, at any time, in whole or, from time to time, in part, at the election of ERP, at a redemption price equal to the sum of (i) the principal amount of the Underwritten Securities being redeemed plus accrued interest thereon to the redemption date and (ii) the Make-Whole Amount (as defined in the Prospectus, including the Reinvestment Rate set forth below), if any, with respect to the Underwritten Securities. On or after September 15, 2021, ERP may redeem the Underwritten Securities, at any time, in whole, or, from time to time, in part, at the election of ERP at a redemption price equal to 100% of the principal amount of the Underwritten Securities being redeemed plus accrued interest thereon to the redemption date. Notice of any optional redemption of any Underwritten Securities will be given to holders at their addresses, as shown in the security register, not more than 60 nor less than 30 days prior to the date fixed for redemption. The notice of redemption will specify, among other items, the redemption price and the principal amount of the Underwritten Securities held by such persons to be redeemed. | |
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| Reinvestment Rate: | “Reinvestment Rate” means 0.40% plus the yield under the heading “Week Ending” published in the most recent Statistical Release (as defined in the Prospectus) under the caption “Treasury Constant Maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity, as of the payment date of the principal being redeemed or paid. If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For the purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used. | |
| Sinking Fund Requirements: | None | |
| Listing: | None | |
| Delayed Contracts: | Not authorized | |
| Restrictive Covenants: | The covenants set forth in the Indenture, dated as of October 1, 1994, between ERP and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.) (as successor in trust to J.P. Morgan Trust Company, National Association, as successor in trust to Bank One Trust Company, NA, as successor in trust to The First National Bank of Chicago) (the “Trustee”), as amended by the First Supplemental Indenture, dated as of September 9, 2004, between ERP and the Trustee, by the Second Supplemental Indenture, dated as of August 23, 2006, between ERP and the Trustee, by the Third Supplemental Indenture, dated as of June 4, 2007, between ERP and the Trustee, and by the Fourth Supplemental Indenture between ERP and the Trustee, to be dated as of the Settlement Date, between ERP and the Trustee (as so amended and as may be further amended and supplemented from time to time, the “Indenture”). | |
| Settlement Date, Time and Place: | Delivery of documents on December 12, 2011, at 10:00 a.m. New York City time at the offices of Hogan Lovells US LLP, 555 Thirteenth Street, N.W., Washington, D.C. 20004; delivery of funds on December 12, 2011, in accordance with DTC procedures for the Underwritten Securities | |
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All the provisions contained in the document attached as Annex A hereto entitled “ERP Operating Limited Partnership—Debt Securities—Standard Underwriting Provisions” dated December 7, 2011 (the “Standard Underwriting Provisions”) are hereby incorporated by reference in their entirety herein and shall be deemed to be a part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Terms defined in such document are used herein as therein defined.
For purposes of this transaction, the term “Time of Sale” as used in the Standard Underwriting Provisions and this Terms Agreement shall mean 4:40 p.m. on the date hereof.
The Time of Sale Information for this transaction shall constitute the following: (1) any scheduled Issuer Free Writing Prospectuses attached as Annex B hereto, (2) the Preliminary Prospectus Supplement dated December 7, 2011, together with the Base Prospectus and (3) any filing under the 1934 Act which is deemed incorporated by reference in the Registration Statement, the Preliminary Prospectus Supplement or the Base Prospectus.
This Agreement supersedes all prior agreements and understandings (whether written or oral) between ERP and the several Underwriters, or any of them, with respect to the offer and sale of the Underwritten Securities.
[SIGNATURE PAGE APPEARS NEXT]
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Please accept this offer no later than 6:00 p.m. (New York City time) on December 7, 2011, by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us.
| Very truly yours,
MORGAN STANLEY & CO. LLC | ||||
| By: | /s/ Yurij Slyz | |||
| Name: | Yurij Slyz | |||
| Title: | Executive Director | |||
| MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED | ||||
| By: | /s/ Richard D. Williams IV | |||
| Name: | Richard D. Williams IV | |||
| Title: | Managing Director | |||
| BARCLAYS CAPITAL INC. | ||||
| By: | /s/ Pamela Kendall | |||
| Name: | Pamela Kendall | |||
| Title: | Director | |||
| Acting on behalf of themselves and the other named Underwriters | ||||
| Accepted:
ERP OPERATING LIMITED PARTNERSHIP | ||||||
| By: | EQUITY RESIDENTIAL, not individually but as General Partner | |||||
| By: | /s/ Mark J. Parrell | |||||
| Name: | Mark J. Parrell | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
Annex A
ERP Operating Limited Partnership
Debt Securities
Standard Underwriting Provisions
Annex B
Issuer Free Writing Prospectus
PRICING TERM SHEET
| 4.625% Notes due December 15, 2021 | ||
| Issuer: | ERP Operating Limited Partnership | |
| Security: | 4.625% Notes due December 15, 2021 | |
| Anticipated Ratings: | Baa1 by Moody’s Investors Service, Inc. BBB+ by Standard & Poor’s Ratings Services BBB+ by Fitch Ratings Services | |
| Principal Amount Offered: | $1,000,000,000 | |
| Trade Date: | December 7, 2011 | |
| Settlement Date: | December 12, 2011 (T+3) | |
| Maturity Date: | December 15, 2021 | |
| Coupon: | 4.625% | |
| Interest Payment Dates: | Payable semiannually on June 15 and December 15, commencing June 15, 2012 | |
| Price to Public: | 99.619% | |
| Benchmark Treasury: | 2.000% due November 15, 2021 | |
| Benchmark Treasury Yield: | 2.023% | |
| Spread to Benchmark Treasury: | +265 bp | |
| Re-Offer Yield: | 4.673% | |
| Make-Whole Call: | Treasury rate plus 40 basis points | |
| Optional Redemption: | Issuer may redeem at any time in whole or, from time to time in part, at a redemption price equal to the sum of (i) the principal amount being redeemed plus accrued interest thereon to the redemption date and (ii) the Make-Whole Amount (as described in the Prospectus), if any; provided, that if the notes are redeemed on or after September 15, 2021, the redemption price will not include the Make-Whole Amount. | |
| Net Proceeds: | $989,690,000 | |
| Day Count Convention: | 30 / 360 | |
| Denominations: | $1,000 and integral multiples of $1,000 in excess thereof | |
| CUSIP / ISIN: | 26884A AZ6 / US26884AAZ66 | |
| Joint Book-Running Managers: | Morgan Stanley & Co. LLC Merrill Lynch, Pierce, Fenner & Smith Incorporated Barclays Capital Inc. | |
| Co-Managers: | Deutsche Bank Securities Inc. RBC Capital Markets, LLC | |
Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (SEC) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering.
You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Morgan Stanley & Co. LLC toll free at ###-###-#### , by calling Merrill Lynch, Pierce, Fenner & Smith Incorporated toll free at ###-###-####, or by calling Barclays Capital Inc. toll free at ###-###-####.
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