AvalonBay Communities and Equity Residential are weighing a deal that would significantly alter the multifamily and rental landscape.
The real estate investment trusts held exploratory talks about a merger, Bloomberg reported. Should the two combine, it would mark one of the biggest real estate deals in the nation’s history.
Discussions are in the early stages, according to people familiar with the matter. A potential deal could attract antitrust scrutiny, considering the size and market shares of the combined firms.
Neither company responded to requests for comment from the publication.
Virginia-based AvalonBay’s portfolio spans more than 300 properties and 100,000 units across 11 states. Last month, the firm received approval to redevelop Eaves Mountain View, its largest complex in the Silicon Valley city, by 323 units, bringing the total residences at the property from 402 to 725.
Chicago-based Equity Residential, founded by the late Sam Zell, also has a portfolio of more than 300 properties and roughly 85,000 units across six states. Last month, Mark Parrell’s firm proposed adding 350 units at its Vista Del Lago apartment complex in Mission Viejo, Orange County.
Both companies are leaders among multifamily REITs in market capitalization, coming in around $25 billion each. But neither has been immune to stock struggles as slow rent growth has hit the broader sector.
AvalonBay’s stock has fallen roughly 11 percent over a 12-month period, though it jumped 2.2 percent after the close of regular trading on Wednesday. The company reported its first quarter earnings this week, posting a 1.6 percent gain year-over-year in operating revenues to $704 million and a more modest 0.2 percent rise year-over-year in net operating income, which came in at $480 million. Its portfolio was 96.1 percent occupied.
Equity Residential, meanwhile, has seen its stock dip by 5.9 percent over the same 12-month period, experiencing a 1.2 percent gain in after hours dealing on Wednesday. The firm also saw a year-over-year increase in revenue in the first quarter, but a drop-off in net income. Its portfolio was 96.3 percent occupied.
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