Essex Transitioning From One Fund to Next

PALO ALTO, CA-Essex Property Trust has closed on $160 million of an expected $250 million in equity for its second value-add apartment fund. The news comes one month after the locally based apartment REIT announced the hiring of Credit Suisse First Boston “to evaluate strategic alternatives” for its inaugural fund.Using 65% leverage, Essex Apartment value Fund II expects to acquire $700 million worth of properties mainly in San Francisco and Seattle, markets that have hit bottom and are poised for recovery. Its inaugural apartment fund, Essex Apartment Value Fund LP, was organized in 2001 and now owns 17 properties concentrated in Southern California that have an estimated combined value of approximately $640 million. As with its first apartment fund, Essex will have a 20% minimum combined interest in Fund II as a general partner and limited partner, and be compensated for its asset management, property management, development and redevelopment services. There also are incentive payments to be had if the fund exceeds certain financial return benchmarks. Fund II will be Essex’s exclusive investment vehicle for new investments until October 2006. The objective of this fund is the same as the first, to add value through rental growth and real estate appreciation.