Two of the largest multifamily real estate investment trusts (REITs) are merging to create the nation’s preeminent real estate company. AvalonBay Communities and Equity Residential announced Thursday the definitive agreement to combine in an all-stock merger of equals.
This mega merger aims to create a stronger company with the differentiated scale, capabilities, and balance sheet strength to expand margins, accelerate growth, and redefine leadership in multifamily housing.
Both REITs rank in the top 10 of the National Multifamily Housing Council’s top apartment owners of 2026. AvalonBay, at No. 4, owned 87,501 units as of Jan. 1, while Equity Residential, at No. 6, owned 85,190 units.
With over 180,000 rental apartments, the new company will have a pro forma equity market capitalization of approximately $52 billion and an enterprise value of approximately $69 billion.
“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 AvalonBay CEO and president Benjamin Schall. “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.”
Schall will serve as president and CEO as well as trustee of the merged company, while Equity Residential CEO Mark J. Parrell, who has been at the REIT for nearly three decades, will retire at transaction close. The board will initially consist of seven existing Equity Residential trustees and seven existing directors of AvalonBay. In addition, current non-executive chairs David Neithercut, Equity Residential, and Tim Naughton, AvalonBay, will serve as trustees of the combined company, which will have dual headquarters in Arlington, Virginia, and Chicago.
The full management team will be announced prior to closing, which is anticipated to be completed in the second half of 2026 subject to shareholder approval by both AvalonBay and Equity Residential. Substantial representation is expected from both REITs to create a strong foundation for successful integration.
“We are excited to partner with AvalonBay to continue Equity Residential’s history of relentlessly seeking opportunities to create value for shareholders,” noted Parrell. “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.”
According to the REITs, the merger will enhance the resident experience and expand margins by scaling operational innovations across the larger portfolio and driving incremental net operating income across existing assets and higher returns on new assets. This includes combined investments in artificial intelligence, automation, and centralization as well as the scale to create a richer data ecosystem.
The REITs have a combined $2 billion of annual cash flow and self-funding capacity to deploy across multiple channels of growth, using its operational scale and customer insights to allocate to the strongest risk-adjusted returns.
The new company also commits to expanding housing supply with a pledge to affordable housing through new and expanded initiatives. The REITs have $4.4 billion under construction—10,800 apartments—across 32 communities, including over half with an affordable or mixed-income component. In addition, new initiatives will include an affordable housing bridge loan facility to provide predevelopment capital to nonprofit developers, expanded partnerships with nonprofits, and a naturally occurring affordable housing preservation program to ensure long-term affordability.
“This is a transformative event in the apartment industry that will create long-term value for shareholders. By combining 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,” added Steve Sterrett, board chair of the new company and former 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 the industry, and I think the future prospects of this enterprise are tremendous.”
The new company anticipates delivering an attractive initial annualized dividend of $2.81 per share, equivalent to Equity Residential’s existing dividend per share and higher than AvalonBay’s dividend yield.