AvalonBay Equity Residential merger clears shareholder vote, creating Vivmark Residential, a $53 billion apartment REIT closing August 17.
Shareholders of AvalonBay Communities and Equity Residential have cleared the way for one of the largest apartment landlord deals in years. The AvalonBay Equity Residential merger, structured as a merger of equals between the two real estate investment trusts, won overwhelming approval this week and is scheduled to close on August 17.
In Brief
- More than 99% of votes cast at both companies' special meetings approved the merger.
- Those votes represented roughly 90% of each REIT's outstanding common stock as of the record date.
- Each AvalonBay share converts into 2.793 shares of Equity Residential common stock.
- The combined firm will be named Vivmark Residential and begin trading as VMRK on August 18.
- Vivmark will own more than 180,000 rental apartments, with over 10,000 more under construction.
What the Vote Actually Approved
At AvalonBay's special meeting, shareholders signed off on the terms needed to complete the tie up with Equity Residential. Over at Equity Residential, investors separately approved issuing new common shares to AvalonBay stockholders as merger consideration. Both votes cleared with support north of 99%, according to a joint release from the companies, closing out one of the final procedural hurdles before the deal can be finalized.
A New Name and a New Scale
Once the merger closes, the combined company drops both legacy names in favor of Vivmark Residential, a rebrand the firms first announced on July 30. Trading under the ticker VMRK begins August 18. Financially, Vivmark is expected to carry a pro forma equity market capitalization near $53 billion and an enterprise value around $71 billion, figures that came in slightly above earlier estimates.
Scale is really the point of this deal. With more than 180,000 apartment units in its portfolio, Vivmark would top the National Multifamily Housing Council's latest ranking of the largest apartment owners, pushing Greystar into second place. The company will run from two headquarters, one in Arlington, Virginia, and another in Chicago.
Who Runs the Combined Company
Benjamin Schall, AvalonBay's current president and CEO, takes the same titles at Vivmark and adds a trustee seat. Mark Parrell, who has spent three decades at Equity Residential, is stepping down as CEO once the merger closes. AvalonBay's leadership team ends up holding five of the seven top management posts, giving it outsized influence over how capital gets allocated across the enlarged portfolio. The two Equity Residential executives who land senior roles will oversee property operations and legal matters.
Governance is being split more evenly than management. The new board of trustees starts with seven directors from AvalonBay and seven from Equity Residential. Steve Sterrett, currently Equity Residential's lead independent trustee, will chair the combined board, a nod to balancing power even as AvalonBay's executives take the larger share of day to day control heading into next month's closing.
Frequently Asked Questions
What is equity holders?
Equity holders are individuals or entities that own shares of a company's stock, giving them a proportional claim on its assets, earnings and, in cases like this merger, the right to receive shares in a newly combined entity.
Can you buy another house with your equity?
Homeowners can often borrow against the equity built up in their property, through tools like a home equity loan or line of credit, to help fund the purchase of another house, though qualification depends on lender terms and how much equity is available.
