TERMS AGREEMENT

Exhibit 1.1

 

EXECUTION COPY

 

BRE PROPERTIES, INC.

(“Company”)

 

Debt Securities

 

TERMS AGREEMENT

 

May 12, 2005            

 

To: The Representative of the Underwriters identified herein

 

Dear Sirs and Mesdames:

 

The undersigned agrees to sell to the several Underwriters named in Schedule A hereto for their respective accounts, and the Underwriters agree, severally but not jointly, to purchase, on and subject to the terms and conditions of the Underwriting Agreement attached hereto (“ Underwriting Agreement ”), the following securities (“ Offered Securities ”) on the following terms:

 

Title of Offered Securities: 4.875% Notes due 2010.

 

Aggregate Principal Amount of Offered Securities: $150,000,000

 

Interest: 4.875% per annum, from May 19, 2005 or from the most recent date to which interest has been paid or duly provided for, payable semiannually in arrears on each May 15 and November 15, commencing November 15, 2005, to holders of record on the preceding May 1 or November 1, as the case may be.

 

Maturity: May 15, 2010.

 

Optional Redemption: The Offered Securities are redeemable at the option of the Company, in whole or in part, at any time, at the make-whole redemption price described in the Officers’ Certificate establishing the terms of the Offered Securities pursuant to the Indenture.

 

Sinking Fund : None.

 

Listing: None.

 

Purchase Price: The purchase price for the Offered Securities to be paid by the several Underwriters shall be 98.994% of the principal amount, plus accrued interest, if any, from May 19, 2005.

 

Expected Reoffering Price: The initial public offering price for the Offered Securities shall be 99.594% of the principal amount, plus accrued interest, if any, from May 19, 2005.

 

Closing Date: 10:00 A.M. (New York Time) on May 19, 2005, at the offices of Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New York 10005.

Method of Payment: Wire transfer in Federal (same day) funds.

 

Securities Remaining under Shelf: Immediately prior to the issuance of the Offered Securities on the Closing Date, securities with an aggregate principal amount of $625,000,000, exclusive of the Offered Securities, were available for issuance under the Registration Statement.

 

Settlement and Trading: Book-Entry Only via DTC.

 

Blackout: Until the Closing Date.

 

Underwriters:

 

The names of the Underwriters and the respective aggregate principal amounts of the Offered Securities to be purchased by each of the Underwriters are set forth opposite their names in Schedule A hereto.

 

Notices to Underwriters:

 

Banc of America Securities LLC

9 West 57 ^th Street

New York, New York 10019

Attention: High Grade Transaction Management

(telecopy no.: 704-264-2522)

 

J.P. Morgan Securities Inc.

270 Park Avenue

New York, New York 10017

Attention: High Grade Syndicate Desk

(telecopy no.: 212-834-6081)

 

The provisions of the Underwriting Agreement are incorporated herein by reference.

 

For purposes of Section 6 of the Underwriting Agreement, the only information furnished to the Company by any Underwriter for use in the Prospectus consists of the following information in the Prospectus furnished on behalf of each Underwriter: (1) the third paragraph under the caption “Underwriting”; (2) the second sentence in the fourth paragraph under the caption “Underwriting”; and (3) the fifth, sixth, seventh and tenth paragraphs under the caption “Underwriting”.

 

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If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.

 

 

The foregoing Terms Agreement is hereby confirmed and     accepted as of the date first above written.
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN SECURITIES INC.
By:		BANC OF AMERICA SECURITIES LLC
By		/s/ Peter J. Carbone
Name:		Peter J. Carbone
Title:		Vice President
Acting on behalf of themselves and as the     Representatives of the several Underwriters.

 

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SCHEDULE A

 

EXECUTION COPY

 

BRE PROPERTIES, INC.

 

Debt Securities

 

UNDERWRITING AGREEMENT

 

1. Introductory. BRE Properties, Inc., a Maryland corporation (“ Company ”), proposes to issue and sell from time to time certain of its unsecured debt securities registered under the registration statement referred to in Section 2(a) (“ Registered Securities ”). The Registered Securities will be issued under an indenture, dated as of June 23, 1997, as amended by a first supplemental indenture dated April 23, 1998 (collectively referred to herein as the “ Indenture ”), between the Company and J.P. Morgan Trust Company, National Association (successor to Chase Manhattan Bank and Trust Company, National Association), as successor trustee (“ Trustee ”), in one or more series, which series may vary as to interest rates, maturities, redemption provisions, selling prices and other terms, with all such terms for any particular series of the Registered Securities being determined at the time of sale. Particular series of the Registered Securities will be sold pursuant to a Terms Agreement referred to in Section 3, for resale in accordance with terms of offering determined at the time of sale.

 

The Registered Securities involved in any such offering are hereinafter referred to as the “ Offered Securities ”. The firm or firms which agree to purchase the Offered Securities are hereinafter referred to as the “ Underwriters ” of such securities, and the representative or representatives of the Underwriters, if any, specified in a Terms Agreement referred to in Section 3 are hereinafter referred to as the “ Representatives ”; provided, however, that if the Terms Agreement does not specify any representative of the Underwriters, the term “Representatives”, as used in this Agreement (other than in Sections 2(b), 5(c) and 6 and the second sentence of Section 3), shall mean the Underwriters.

 

2. Representations and Warranties of the Company . The Company, as of the date of each Terms Agreement referred to in Section 3, and as of the Closing Date (as hereinafter defined), represents and warrants to, and agrees with, each Underwriter that:

 

(a) A registration statement on Form S-3 (No. 333-114076) including a prospectus, relating to the Registered Securities has been filed with the Securities and Exchange Commission (“ Commission ”) and has become effective. Such registration statement, as amended at the time of any Terms Agreement referred to in Section 3, is hereinafter referred to as the “ Registration Statement ”, and the prospectus included in such Registration Statement, as supplemented as contemplated by Section 3 to reflect the terms of the Offered Securities and the terms of the offering thereof, as first filed with the Commission pursuant to and in accordance with Rule 424(b) (“ Rule 424(b) ”) under the Securities Act of 1933, as amended (“ Act ”), including all material incorporated by reference therein, is hereinafter referred to as the “ Prospectus ”. No document has been or will be prepared or distributed in reliance on Rule 434 under the Act.

 

(b) On the effective date of the registration statement relating to the Registered Securities and certain other securities, such registration statement, and on the date of each Terms Agreement referred to in Section 3, the Registration Statement, complied in all material respects to the requirements of the Act, the Trust Indenture Act of 1939 (“ Trust Indenture Act ”) and the rules and regulations of the Commission under the Act and the Trust Indenture Act (“ Rules and Regulations ”), and the Registration Statement did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus does not and, on the date of each Terms Agreement referred to in Section 3, and as of the Closing Date, the Prospectus will not, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein in light of the circumstances under which they were made, not misleading, except that the foregoing representations and warranties do not apply to statements in or omissions from any of such documents based upon written information furnished to the Company by any Underwriter through the Representatives, if any, specifically for use therein.

(c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland; the Company has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement and the Prospectus; the Company is duly qualified as a foreign corporation to transact business and is in good standing in the State of Arizona, the State of California, the State of Colorado, the State of Utah and the State of Washington; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, except where the failure to be so qualified or in good standing would not have a material adverse effect on the condition (financial or other), or the earnings, business, properties or results of operations of the Company and its subsidiaries considered as one enterprise (“ Material Adverse Effect ”).

 

(d) Attached hereto as Annex I is a true and complete list of all subsidiaries of the Company and all other corporations, partnerships, joint ventures, limited liability companies and other entities in which the Company directly or indirectly owns capital stock or any other equity or ownership interest. Annex I accurately sets forth the jurisdiction of organization of, and the Company’s approximate percentage ownership interest in, each such subsidiary and other entity. The Company does not have any subsidiaries other than those listed on Annex I and, except as set forth in Annex I , the Company does not directly or indirectly own any capital stock or other equity or other ownership interests in any corporation, partnership, joint venture, limited liability company or other entity. Annex I also correctly indicates whether each such subsidiary and other entity listed thereon is a corporation, partnership, limited liability company or other type of entity.

 

(e) Each subsidiary of the Company has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its organization, has power and authority to own, lease and operate its property and conduct its business as described in the Registration Statement and the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect; and (A) all of the issued and outstanding shares of capital stock of each such subsidiary that is a corporation have been duly authorized and validly issued, are fully paid and non-assessable and, except as set forth on Annex I , are and, at all times since the date on which such subsidiary was organized, have been owned by the Company, directly or through wholly-owned subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, (B) all of the issued and outstanding limited liability company interests of each such subsidiary that is a limited liability company have been duly authorized and validly issued (under applicable law and the limited liability company agreement of such subsidiary), are fully paid and non-assessable and, except as set forth on Annex I , are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, and (C) all of the issued and outstanding limited and general partnership interests of each such subsidiary that is a partnership have been duly authorized (if applicable) and validly issued and, except as set forth on Annex I , are owned by the Company, directly or through subsidiaries free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.

 

(f) The Company and its subsidiaries own or possess or have obtained all material governmental licenses, permits, consents, orders, approvals and other authorizations necessary to lease or own, as the case may be, and to operate their respective properties and to carry on their respective businesses as contemplated in the Prospectus.

 

(g) The Indenture has been duly authorized by the Company and has been duly qualified under the Trust Indenture Act and, at the Closing Date, will have been duly executed and delivered by the Company and will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditor’s rights generally or by general equitable principles.

 

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(h) The Offered Securities have been duly authorized and, at the Closing Date, will have been duly executed by the Company and, when authenticated in the manner provided for in the Indenture and delivered against payment of the purchase price therefor specified in the Terms Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles, and will be entitled to the benefits of the Indenture.

 

(i) The Offered Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the Prospectus and will be in substantially the respective forms filed or incorporated by reference, as the case may be, as exhibits to the Registration Statement or a document filed by the Company pursuant to the Exchange Act (as hereinafter defined) and incorporated by reference in the Registration Statement.

 

(j) The Offered Securities rank and will rank on a parity with all unsecured indebtedness of the Company (other than subordinated indebtedness of the Company) that is outstanding on the date hereof or that may be incurred hereafter, and senior to all subordinated indebtedness of the Company that is outstanding on the date hereof or that may be incurred hereafter.

 

(k) The Offered Securities and the indebtedness evidenced thereby do not and will not constitute “Funding Debt” (within the meaning of the LLC Agreement (as hereinafter defined)) and no portion of the proceeds from the issuance of the Offered Securities will be applied to make any “Managing Member Loan” (within the meaning of the LLC Agreement).

 

(l) No holders of outstanding shares of capital stock of the Company has any registration rights with respect to such shares which would or could require such shares to be included in the Registration Statement.

 

(m) The Terms Agreement (including the provisions of this Agreement) has been duly authorized, executed and delivered by the Company.

 

(n) The Company and its subsidiaries own or possess or have obtained all material governmental licenses, permits, consents, orders, approvals and other authorizations necessary to lease or own as the case may be and operate their respective properties and to carry on their respective business as contemplated in the Prospectus.

 

(o) The Company and its subsidiaries own, possess or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “ intellectual property rights ”) necessary to conduct the business now operated by them, or presently employed by them.

 

(p) There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries, which is required to be disclosed in the Registration Statement or the Prospectus (other than as disclosed therein) or which might result in any Material Adverse Effect or which might materially and adversely affect the properties or assets of the Company or any of its subsidiaries; and there are no contracts or documents of the Company or any of its subsidiaries which are required to be filed as exhibits to the Registration Statement or any document incorporated or deemed to be incorporated therein by the Act, the Rules and Regulations, the Exchange Act (as hereinafter defined) or the rules and regulations of the Commission thereunder which have not been so filed.

 

(q) The financial statements of the Company included in the Registration Statement and Prospectus in each case, together with the related notes and supporting schedules (if any), present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements and related notes and schedules have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent

 

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basis; and with respect to the pro forma financial statements included in the Registration Statement and Prospectus, the assumptions used in preparing the pro forma financial statements included in the Registration Statement and the Prospectus are reasonable, the related pro forma adjustments have been applied, in accordance with the applicable accounting requirements of the Act and the Rules and Regulations (including, without limitation, Regulation S-X promulgated by the Commission), and such pro forma adjustments have been properly applied to the corresponding historical amounts in the compilation of such statements.

 

(r) Ernst & Young LLP, who certified the financial statements and supporting schedules included in the Registration Statement and the Prospectus, is an independent registered public accounting firm as required by the Act and the Rules and Regulations.

 

(s) Except as disclosed in the Prospectus, since the date of the latest audited financial statements included in the Prospectus there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, earnings, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Prospectus and except for regular quarterly dividends payable on our common stock and our preferred stock, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

 

(t) The Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, will not be required to be registered as an “investment company” as defined in the Investment Company Act of 1940.

 

(u) Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws, certificate of limited partnership, limited partnership agreement, certificate of formation of a limited liability company, limited liability company agreement or other similar organizational certificates, instruments, agreements or documents (collectively, “ Organizational Documents ”), as the case may be; neither the Company nor any of its subsidiaries is in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of its property or assets may be bound, except for such defaults which would not, individually or in the aggregate, have a Material Adverse Effect; and the execution, delivery and performance of the Terms Agreement (including the provisions of this Agreement), the Indenture and the Offered Securities, the consummation of the transactions contemplated herein and therein (including, without limitation, the incurrence of the indebtedness evidenced by the Offered Securities), and compliance by the Company with its obligations hereunder and thereunder, have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any Subject Agreement (as hereinafter defined) or any other contract, indenture, mortgage, loan agreement, note, lease or other instrument, in each case, which is material to the Company and to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the Organizational Documents of the Company or its subsidiaries or any applicable law, administrative regulation or administrative or court decree; and no consent, approval, authorization or order of any court or governmental authority or agency is required for the consummation by the Company of the transactions contemplated by the Terms Agreement (including the provisions of this Agreement), the Indenture or the Offered Securities, except such as have been obtained and made under the Act and the Trust Indenture Act and such as may be required under state securities or Blue Sky laws of any jurisdiction or real estate syndication laws in connection with the purchase and distribution of the Offered Securities by the Underwriters. “ Subject Agreements ” means (i) the Loan Agreement dated as of July 7, 1995 between The Prudential Insurance Company of America and the Company (as successor by merger to Real Estate Investment Trust of California), as amended by the First Amendment to Loan Agreement dated as of April 30, 1996, the Second Amendment to Loan Agreement dated as of November 20, 1996, the Third Amendment to Loan Agreement dated as of February 25, 1997, the Fourth Amendment to Loan Agreement dated as of June 30, 1997 and the Fifth Amendment to

 

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Loan Agreement dated as of May 30, 2003, (ii) the Third Amended and Restated Unsecured Line of Credit Loan Agreement dated December 19, 2000 (the “ Credit Agreement ”) among the Company, Bank of America, N.A. (“ Bank of America ”), Bank One, N.A., Commerzbank AG, Banc of America Securities, LLC and Wachovia Bank, N.A., together with all guarantees entered into by any subsidiaries of the Company in connection therewith, (iii) the Contribution Agreement dated as of September 29, 1997, as amended (the “ Contribution Agreement ”), between the TCR signatories named on Schedule A thereto, the Company and BRE Property Investors LLC, a Delaware limited liability company (the “ Operating Company ”), together with the guarantee entered into by the Company pursuant to the Contribution Agreement, as amended by Amendment No. 1 to the Contribution Agreement dated November 18, 1997; (iv) the Amended and Restated Limited Liability Company Agreement of the Operating Company (the “ LLC Agreement ”); and (v) the Master Credit Facility Agreement dated as of May 2, 2003 by and between the Company and Prudential Multifamily, Inc., as amended by the First Amendment to Master Credit Facility Agreement made as of March 25, 2004. All amendments, supplements and restatements of the Subject Agreements are listed in clauses (i) through (v) of the preceding sentence. Except as otherwise described in the Prospectus or with respect to the Credit Agreement, no subsidiary of the Company is a guarantor of, or is a party to or bound by any instrument or agreement pursuant to which it has guaranteed or may be required to guarantee or cause another subsidiary of the Company to guarantee, any borrowings or other indebtedness of the Company. Except as otherwise described in the Prospectus or with respect to the Credit Agreement, the Company is not a party to or bound by any instrument or agreement pursuant to which it is or may be required to cause any of its subsidiaries to guarantee any borrowings or other indebtedness of the Company.

 

(v) The Company was and is organized to qualify as a “real estate investment trust” under the Internal Revenue Code of 1986, as amended (the “ Code ”); the Company at all times since its organization has elected to be taxed as a “real estate investment trust”; the Company has qualified as a “real estate investment trust” under the Code for its taxable years ended July 31, 1995, its short taxable year ended December 31, 1995, its taxable years ended December 31, 1996, December 31, 1997, December 31, 1998, December 31, 1999, December 31, 2000, December 31, 2001, December 31, 2002, December 31, 2003 and December 31, 2004 and will continue to qualify as a “real estate investment trust” under the Code after consummation of the transactions contemplated by the Prospectus; and the Company’s present and contemplated operations, assets and income will enable the Company to meet the requirements for qualification as a “real estate investment trust” under the Code. The United States Federal Income Tax Returns of the Company for all years of the Company ended on or prior to December 31, 2000 are closed; and the Company has filed United Stated Federal Income Tax Returns for each of its fiscal years through and including the fiscal year ended December 31, 2003. As used in this paragraph (v), the term “Company” includes BankAmerica Realty Investors, a California business trust, and BRE Properties, Inc., a Delaware corporation, which are both predecessors to BRE Properties, Inc., a Maryland corporation.

 

(w) Each entity listed on Annex I , other than BRE/Alliance Services, Inc., a Maryland corporation (“ BRE/Alliance ”), VelocityHSI, Inc., a Delaware corporation (“ Velocity ”) and Home Plan, Inc., a Delaware corporation (“ Home Plan ”), either qualifies as a partnership for federal, state and local income tax purposes or as a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code or qualifies to be disregarded as an entity separate from the Company or one of its subsidiaries for federal, state and local income tax purposes and the securities the Company owns of BRE/Alliance, Velocity or Home Plan will not cause the Company to be treated as owning securities of taxable REIT subsidiaries within the meaning of Section 856(i) of the Code in excess of the permissible limits under Section 856(c)(4) of the Code.

 

(x) The Company is eligible to use a Form S-3 registration statement under the Act. The Company is also eligible to use Form S-3 pursuant to the standards for that Form in effect immediately prior to October 21, 1992. The Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and files reports with the Commission on the Electronic Data Gathering Analysis and Retrieval (EDGAR) system.

 

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(y) The Company has full right, power and authority to enter into the Terms Agreement (including the provisions of this Agreement), the Indenture and the Offered Securities.

 

(z) Except as otherwise disclosed in the Prospectus, (A) the Company and its subsidiaries have good and marketable title in fee simple to all real property and improvements described in the Prospectus as being owned by the Company (none of which is leased by the Company or any of its subsidiaries, as lessee) and have acquired title insurance with respect to each of the properties described in the Prospectus as being owned by the Company or its subsidiaries; (B) all liens, charges, encumbrances, claims or restrictions on or affecting the real property and improvements of the Company or any of its subsidiaries which are required to be disclosed in the Prospectus are disclosed therein; (C) neither the Company nor any of its subsidiaries nor any lessee of any portion of the real property or improvements of the Company or any of its subsidiaries is in default under any of the leases pursuant to which the Company or any of its subsidiaries leases (as lessor) its real property or improvements and the Company knows of no event which, but for the passage of time or the giving of notice, or both, would constitute a default under any of such leases, except such defaults that would not, individually or in the aggregate, have a Material Adverse Effect; (D) no tenant under any of the leases pursuant to which the