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US: Multifamily landlords AvalonBay Communities and Equity Residential have announced they are to merge, creating one of the largest real estate companies in the US.
The new company will have an equity market capitalisation of approximately US$52 billion and a total enterprise value of approximately $69 billion, with more than 180,000 rental apartments.
Benjamin Schall, chief executive officer and president of AvalonBay Communities, said: “This combination creates a new and fundamentally stronger company with differentiated capabilities that will drive structurally superior cash flow generation, earnings and dividend growth, and value for shareholders. As one of the country’s leading developers of new apartments across our regions, we will directly increase the supply of both market rate and affordable housing. Drawing on the foundational strengths and industry-leading teams across both of our organizations, our ambition is to redefine leadership in rental housing for the benefit of residents, associates, and shareholders.”
“We are excited to partner with AvalonBay to continue Equity Residential’s history of relentlessly seeking opportunities to create value for shareholders,” added Mark J. Parrell, Equity Residential’s president and CEO. “The combined company’s investors will benefit from accelerated growth from increased investment in operational innovation; a larger, self-funded development platform; and the variety of other value creation opportunities that world class scale affords. This, together with our similar cultures that prioritize exceeding the expectations of our employees and residents, positions the combined company to create exceptional value for its shareholders, customers and employees.”
“This is a transformative event in the apartment industry that will create long-term value for shareholders. By combining the two premier companies in the sector, we create a company with the size and scale to be a leading operator in the space as well as a major creator of new rental housing,” said Steve Sterrett, Board Chair of the new entity and former long-time Chief Financial Officer of Simon Property Group. “Having spent decades helping build and lead one of the country’s great real estate companies, I have a deep appreciation for what it takes to create enduring value in this industry, and I think the future prospects of this enterprise are tremendous.”
The rationale for the merger is to “combine investments in AI, automation, and centralised services, coupled with increased portfolio scale, to drive margin expansion and enhance the resident experience”.
The new entity has $4.4 billion of assets under construction (10,800 apartments) across 32 communities, including more than 50 per cent with an affordable or mixed-income component.
Benjamin Schall will serve as president, CEO and trustee of the combined company. Mark J. Parrell will retire at the transaction close, having built Equity Residential into one of the country’s premier apartment companies.
The board of trustees will initially consist of seven existing trustees of Equity Residential and seven existing directors of AvalonBay. Steve Sterrett, current lead independent trustee of Equity Residential, will serve as chairman. David Neithercut, current non-executive chair of Equity Residential, and Tim Naughton, current non-executive chairman of AvalonBay, will each serve as trustees of the combined company.
The full management team will be announced prior to closing and is expected to include substantial representation from both companies.
The combined company will have dual headquarters in Arlington, Virginia, and Chicago, Illinois.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of AvalonBay and Equity Residential, AvalonBay shareholders will receive 2.793 shares of Equity Residential common stock for each share of AvalonBay common stock owned. Upon closing, AvalonBay shareholders will own approximately 51.2 per cent and Equity Residential shareholders will own approximately 48.8 per cent of the combined company on a fully diluted basis.
The transaction is expected to be completed in the second half of 2026, subject to shareholder approval.
Highlights:
- Multifamily landlords AvalonBay Communities and Equity Residential have announced they are to merge, creating one of the largest real estate companies in the US
- The new company will have an equity market capitalisation of approximately US$52 billion and a total enterprise value of approximately $69 billion, with more than 180,000 rental apartments
- The new entity has $4.4 billion of assets under construction (10,800 apartments) across 32 communities
- Benjamin Schall, chief executive officer and president of AvalonBay Communities, will serve as president, CEO and trustee of the combined company
