AvalonBay Communities and Equity Residential Announce $52 Billion Multifamily Real Estate Merger

ARLINGTON, Va. & CHICAGO — AvalonBay Communities, Inc. (NYSE: AVB) and Equity Residential (NYSE: EQR) announced a definitive agreement on May 21 to combine in an all-stock merger of equals that would create one of the largest multifamily real estate platforms in the United States with a pro forma equity market capitalization of approximately $52 billion, a total enterprise value of approximately $69 billion, and a portfolio of more than 180,000 rental apartments.

The transaction, which was unanimously approved by the boards of both companies, is structured so that AvalonBay shareholders will receive 2.793 shares of Equity Residential common stock for each share of AvalonBay common stock held. Upon closing, AvalonBay shareholders would own approximately 51.2% of the combined company on a fully diluted basis, with Equity Residential shareholders holding the remaining approximately 48.8%.

The deal is expected to qualify as a tax-free reorganization for U.S. federal income tax purposes and is targeted for completion in the second half of 2026, pending shareholder approval from both companies and other customary closing conditions.

Strategic Rationale: Scale, Synergies, and Balance Sheet Strength

The companies project the merger will generate $175 million in gross synergies and $125 million in net synergies after accounting for real estate tax reassessments. Those efficiencies are expected to come from technology-enabled centralization and the consolidation of operations across two large public real estate investment trusts.

The combined company would carry dual credit ratings of A3/A-, and executives cited approximately $2 billion in annual cash flow and self-funding capacity as a key advantage for future real estate development and acquisition activity. The companies stated that stronger internal and external growth should lead to an enduring cost of capital advantage that facilitates further accretive investment opportunities.

"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," said Benjamin Schall, Chief Executive Officer and President of AvalonBay Communities. "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."

Mark J. Parrell, Equity Residential's President and CEO, said the combined company's investors would 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." Parrell, who has served as CEO of Equity Residential for eight years and at the company for 27 years, will retire upon transaction close.

Real Estate Development Pipeline and Affordable Housing Commitments

The combined entity would enter the market with $4.4 billion of apartments under construction, encompassing 10,800 units across 32 communities. More than 50% of those communities include an affordable or mixed-income component. The companies also disclosed a $4.2 billion development rights pipeline and stated an expectation to meaningfully increase annual new development start activity going forward.

On affordable housing, the combined company said it would build on an existing base of approximately 7,200 affordable apartment units — representing about 30% of its communities — and launch new initiatives including an affordable housing bridge loan facility to provide predevelopment capital to nonprofit developers, expanded nonprofit partnerships, and a naturally occurring affordable housing preservation program.

Operating Platform: Technology, Data, and Centralized Services

Both companies have invested in technology-driven operational models, and the merger's strategic rationale leans heavily on the premise that combining those investments across a larger portfolio will accelerate margin expansion. The companies cited AI, automation, centralized services, and neighborhood-based operations as levers to reduce cost-to-serve and grow net operating income across existing assets.

The combined company would operate under a new name to be announced at closing, with dual headquarters in Arlington, Virginia, and Chicago, Illinois.

Leadership, Governance, and Advisor Lineup

The combined company's Board of Trustees will initially consist of seven existing trustees from Equity Residential and seven existing directors from AvalonBay. Steve Sterrett, currently the lead independent trustee of Equity Residential and a former long-time Chief Financial Officer of Simon Property Group, 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.

Benjamin Schall will serve as President, Chief Executive Officer, and Trustee of the combined company. The full management team is expected to be announced prior to closing and is described as likely to include substantial representation from both organizations.

"This is a transformative event in the apartment industry that will create long-term value for shareholders," said Steve Sterrett, who will serve as Board Chair of the new entity. "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."

The combined company expects to pay an initial annualized dividend of $2.81 per share — equivalent to Equity Residential's existing dividend per share and higher than AvalonBay's current dividend yield. Both companies said they intend to maintain regular quarterly dividend payments through the close of the transaction.

On the advisory side, Goldman Sachs & Co LLC is serving as lead financial advisor to AvalonBay, with J.P. Morgan and Wells Fargo also advising AvalonBay. Goodwin Procter LLP is serving as legal advisor to AvalonBay. Morgan Stanley & Co. LLC and Centerview Partners LLC are serving as lead financial advisors to Equity Residential, with BofA Securities also advising Equity Residential. Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Equity Residential.

Company Profiles at Time of Announcement

As of March 31, 2026, AvalonBay owned or held an ownership interest in 319 apartment communities containing 98,271 apartment homes across 11 states and the District of Columbia, with 25 communities under development and one community under redevelopment. Equity Residential owns and manages 312 properties consisting of 85,211 apartment units, with a primary concentration in major coastal markets and a targeted presence in Atlanta, Austin, Dallas/Ft. Worth, and Denver.

AvalonBay and Equity Residential hosted a joint investor conference call on May 21 at 8:00 a.m. Eastern Time. Supporting materials were posted at www.rentingredefined.com.

Sources

AvalonBay Communities Investor Relations — Merger Press Release, May 21, 2026