AvalonBay, Equity Residential announce merger, creating real estate behemoth

Arlington County-based AvalonBay Communities and Chicago-based rival Equity Residential plan an all-stock merger with an enterprise value of about $69 billion, the real estate companies announced Thursday.

The two companies are among the largest U.S. apartment real estate investment trusts (REITs). If completed, the merger could reshape the U.S. apartment market, as the combined companies would control more than 180,000 apartment units nationwide. The new company would also be a leading creator of new rental housing, with 10,800 apartments under construction.

“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 President and CEO Benjamin Schall said in a statement. “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.”

The boards of both companies unanimously approved the terms of the agreement. According to a news release, AvalonBay shareholders will receive 2.793 shares of Equity Residential common stock for each share owned. Upon closing, AvalonBay shareholders will own about 51.2% of the combined company, while Equity Residential shareholders will own about 48.8%.

The deal is expected to generate $175 million of gross synergies at 18 months after closing through reduced overhead costs and property management expenses.

In an investor presentation, the companies showed that they have a 95% regional overlap of where rental properties are located, which could improve margins through neighborhood-based operations and centralized services.

Schall will lead the combined company. Equity Residential President and CEO Mark J. Parrell will retire when the transaction closes.

Operating under a new name to be announced later, the combined company will maintain dual headquarters in Arlington and Chicago.

The board for the new entity will initially consist of seven trustees of Equity Residential and seven AvalonBay directors. Steve Sterrett, current lead independent trustee of Equity Residential, will serve as chairman.

The transaction is expected to be completed in the second half of 2026, subject to shareholder approval and other closing conditions.

The combined company will expand on existing affordable and mixed-income housing stock, according to the news release. Leaders of the combined company plan to create an affordable housing bridge loan facility to provide predevelopment capital to nonprofit developers, expand partnerships with nonprofit developers and create an affordable housing preservation program.

A spokesperson for AvalonBay directed Virginia Business to the company’s news release when asked about whether the merger will result in layoffs.

AvalonBay and Equity Residential shares were trading for $183.56 and $65.36, respectively, at 11:20 a.m. Thursday.

On AvalonBay’s April 28 first quarter earnings call, Schall reported a positive quarter, including lower expenses and higher development net operating income. He noted that the company anticipates $47 million in development net operating income this year and an increase to $120 million in 2027.

Equity Residential owns and manages 312 rental properties totaling about 85,200 apartment units across major U.S. metro areas, with a primary focus on coastal markets and a growing presence in places such as Atlanta; Denver; Austin, Texas; and the Dallas-Fort Worth metro area. The company reported approximately $3.09 billion in revenue in 2025 and about $20.7 billion in total assets as of Dec. 31, 2025.

The two companies previously partnered in 2013 to acquire Archstone from Lehman Brothers in a deal valued at approximately $16 billion.