AvalonBay Communities and Equity Residential are nearing a merger, according to Bloomberg, a combination that would bring together two of the largest apartment-focused real estate investment trusts in the country.
The deal, if completed, would create a mega-REIT with a portfolio spanning major metropolitan markets across the United States. Both companies have long been dominant players in the multifamily housing sector, owning and operating large concentrations of apartment buildings in high-demand urban and suburban areas.
AvalonBay Communities and Equity Residential are two of the biggest publicly traded apartment landlords in the United States. Both are REITs, meaning they own income-producing real estate and typically pay dividends from rental income.
There is also fresh news: The Wall Street Journal reported today that AvalonBay and Equity Residential are near a deal to combine, potentially creating a rental-apartment giant with more than 180,000 units nationwide. The reported structure would give AvalonBay shareholders 2.793 Equity Residential shares for each AvalonBay share, with AvalonBay holders owning just over 51% of the combined company.
Equity Residential similarly concentrates its holdings in high-barrier coastal markets where apartment demand has remained strong despite broader economic uncertainty.
Equity Residential, ticker EQR, is also an S&P 500 apartment REIT. It owns and manages 312 rental properties with 85,211 apartment units across major U.S. metro areas. The company says its portfolio is concentrated in coastal markets, with added exposure to growth metros including Atlanta, Austin, Dallas/Fort Worth, and Denver.
AvalonBay is known for properties in markets including the Mid-Atlantic, New England, and Pacific Coast regions. Bloomberg has previously reported on AvalonBay's Park Loggia property, a high-profile development at 15 West 61st Street in New York, which the company acquired for $300 million near the peak of Manhattan's luxury sales market. The site was originally intended for luxury rentals before AvalonBay shifted course and converted it to condominiums.
AvalonBay is often thought of as more development-oriented. It has a strong record of building and redeveloping apartment communities, not just buying existing ones.
Equity Residential is more of a large-scale owner/operator of apartment properties in dense, high-rent metro areas. Its brand is strongly tied to urban coastal apartments.
No terms of the deal were disclosed in the report, and it is not clear whether an agreement has been formally signed. Bloomberg described the companies as said to be nearing the tie-up, indicating talks are advanced but not yet concluded.
