AvalonBay Communities and Equity Residential announced a $69 billion merger that will create the nation’s largest apartment owner with more than 180,000 units, surpassing Greystar Real Estate Partners’ 119,000 units. The combined company expects to cut $175 million in costs within 18 months of closing later this year. Benjamin Schall, currently AvalonBay’s CEO, will lead the merged entity, while Equity Residential CEO Mark Parrell plans to retire. The firms hold more than 20,000 homes in various stages of development and planning.
Both companies have seen stock returns lag behind other apartment REITs for years as their market capitalizations fell below the actual value of their properties. Developers face squeezed margins from rising material, labor, and insurance costs while apartment rents remain flat or declining. Roughly 480,000 apartments will come online this year, with about 450,000 more annually in the years ahead, according to Yardi Matrix. The merged firm aims to rely less on debt by using more of its own revenue to finance projects, provide its own property insurance, and deploy artificial intelligence to reduce costs.
AvalonBay and Equity Residential primarily own higher-end apartments in coastal cities including New York, Boston, and Los Angeles, with minimal Sunbelt presence. Both have offered concessions such as months of free rent to fill vacancies despite their focus on markets outside the oversupplied Sunbelt and Mountain West regions. The number of public apartment REITs has shrunk from more than 20 in the 1990s to about a dozen today. Blackstone took AIR Communities private in 2024, while Independence Realty Trust and Steadfast Apartment REIT completed a $7 billion merger in 2021.
Morgan Properties co-CEO Jonathan Morgan described the sector as being in “grow-or-die mode,” with landlords across all sizes seeking scale to survive weak pricing power. Green Street Advisors analysts said the merger should improve the companies’ valuation and cost of capital versus peers but cautioned against expecting dramatic change. The new company will still own a relatively small share of the overall market and is not expected to gain significant pricing power, though analysts are monitoring whether the deal attracts antitrust scrutiny. Investor reaction has been cautiously optimistic, with neither stock surging on the announcement.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.