(May 21): AvalonBay Communities Inc and Equity Residential agreed to merge in an all-stock transaction that will unite two of the biggest apartment real estate investment trusts with a combined market value of more than US$50 billion.
Under the terms of the transaction, AvalonBay shareholders will receive 2.793 shares of Equity Residential common stock for each of their shares, leaving AvalonBay holders owning about 51.2% of the combined company, according to a statement on Thursday that confirmed an earlier Bloomberg News report.
“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,” AvalonBay chief executive officer Benjamin Schall said in the statement.
Schall will take up the CEO role at the combined firm and current Equity Residential CEO Mark Parrell will retire. The merged firm will operate dual headquarters in Arlington, Virginia and Chicago, Illinois and take on a new name at closing.
Buildings on Park Avenue near the private credit plaza district in New York on March 24, 2026.
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The companies said in the announcement that the combination will expand margins by scaling operations across a larger portfolio of units and will generate US$175 million in gross synergies. Together, the merged entity will become one of the leading creators of new rental properties in the US, with US$4.4 billion — or 10,800 apartments — under construction, according to the statement.
Apartment landlords have been grappling with sluggish rent growth in recent years, as a Covid-era building boom created a glut of new supply. Arlington, Virginia-based AvalonBay has a portfolio of around 100,000 units across more than 300 apartment complexes in 11 states, including New York and California, according to filings.
Equity Residential owns and manages in excess of 300 rental properties consisting of more than 85,000 apartment units, its website shows. The Chicago-based REIT operates across six states, including Texas and Georgia, and also has a strong presence in New York and California.
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AvalonBay has a market value of about US$26 billion and Equity Residential’s is US$24.8 billion. The combined firms will have an enterprise value of roughly US$69 billion, according to the statement.
Bloomberg News reported in April the two real estate investment trusts, which are among the biggest apartment developers in the US, were in exploratory talks over what would be one of the largest real estate deals ever.
Goldman Sachs Group Inc served as AvalonBay’s lead financial adviser, while JPMorgan Chase & Co and Wells Fargo & Co also advised the company. Morgan Stanley and Centerview Partners were lead advisers for Equity Residential, with additional work from BofA Securities.
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