CHICAGO & ARLINGTON, Va., May 21 — Equity Residential (NYSE: EQR) and AvalonBay Communities, Inc. (NYSE: AVB) today announced a definitive agreement to combine in an all-stock merger of equals creating one of the country’s leading real estate companies with the differentiated scale, capabilities, and balance sheet strength to expand margins, accelerate growth, and redefine leadership in rental housing. The new company will have a pro forma equity market capitalization of approximately $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,” said 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.”
Strategic Rationale
Leading Operating Platform
- Tech‑Enabled Efficiency: Combined investments in AI, automation, and centralized services, coupled with increased portfolio scale, to drive margin expansion and enhance the resident experience
- Data‑Driven Insights: Unmatched scale to create a rich data ecosystem to optimize operational and portfolio allocation decisions
- Proximity Benefits: Further unlocks neighborhood-based operations and centralized services, reducing cost‑to‑serve and increasing Net Operating Income
- Resident-Centered Operations: Locally based professional teams who live and work in the markets they serve — delivering responsive, high-quality service backed by the resources and technology of a scaled organization
Leading Development Platform
- Embedded Growth: Currently $4.4 billion under construction (10,800 apartments) across 32 communities, including over 50% with an affordable or mixed-income component
- Accelerated Growth Engine: $4.2 billion development rights pipeline with expectation to meaningfully increase annual new development start activity
- Community Impact: Each new development provides needed housing, supports local jobs and suppliers, and expands the property tax base for essential public services and infrastructure
Leading Capital Allocator
- Fortress Balance Sheet: Dual A3/A‑ credit ratings and robust cash flow provide superior capital markets access and flexibility to pursue accretive investment opportunities
- Self‑Funded Growth: Enhanced self‑funding capacity drives earnings growth and increases housing supply
- Strategic Deployment: Disciplined capital allocation to highest risk-adjusted returns spanning development, acquisitions, and strategic investments
Leadership and Governance
The Board of Trustees will initially consist of 7 existing trustees of Equity Residential and 7 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.
Benjamin Schall, President and Chief Executive Officer of AvalonBay, will serve as President and Chief Executive Officer and Trustee of the combined company. Mark J. Parrell, who has served as Chief Executive Officer of Equity Residential for eight years and at the company for 27 years, will retire at the transaction close, having built Equity Residential into one of the country’s premier apartment companies.
The full management team will be announced prior to closing and is expected to include substantial representation from both companies. Long-standing mutual respect between the two organizations creates a strong foundation for successful integration. Deep bench strength across both companies provides for succession planning and the ability to connect key talent with the most important strategic initiatives.
The combined company will have dual headquarters in Arlington, VA and Chicago, IL and intends to have a meaningful and ongoing presence in both locations. The company will operate under a new name to be announced at closing.
Transaction Details
Under the terms of the agreement, which has been unanimously approved by the Board of Directors of AvalonBay and the Board of Trustees of 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% and Equity Residential shareholders will own approximately 48.8% 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 by both AvalonBay and Equity Residential and satisfaction of other customary closing conditions.
The transaction is expected to qualify as a tax-free reorganization for U.S. federal income tax purposes.
Dividend
The combined company expects to deliver an attractive current yield to investors through the payment of an initial expected 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 intend to maintain regular quarterly dividend payments through completion of the transaction.
Commitment to Residents and Communities
The combined company will own, develop, and professionally manage its communities directly, with local teams delivering a consistently high-quality experience for residents. Both companies have invested with the intention of owning communities for the long term, with ongoing reinvestment in existing properties, responsive local management, and a track record of partnership with local governments, nonprofit organizations, and community stakeholders.
Continued Commitment to Affordable Housing
The combined company will build on its existing affordable and mixed-income housing presence, currently included in 30% of its communities — representing about 7,200 affordable apartment units — and a strong track record of partnership with local and regional affordable housing developers, investors, and operators. New initiatives the combined company will pursue include an affordable housing bridge loan facility to provide predevelopment capital to nonprofit developers, expanded partnerships with nonprofit developers, and a naturally occurring affordable housing (NOAH) preservation program designed to protect long-term affordability.
Advisors
Goldman Sachs & Co LLC is serving as lead financial advisor to AvalonBay and Goodwin Procter LLP is serving as legal advisor to AvalonBay. J.P. Morgan and Wells Fargo are also serving as financial advisors to AvalonBay.
Morgan Stanley & Co. LLC and Centerview Partners LLC are serving as lead financial advisors to Equity Residential and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Equity Residential. BofA Securities is also serving as a financial advisor to Equity Residential.