Shareholders of AvalonBay Communities and Equity Residential overwhelmingly approved the two apartment REITs’ merger of equals on Aug. 12, clearing the last major hurdle before the combined company, to be named Vivmark Residential, begins trading Aug. 18. The deal is expected to close Aug. 17.
At special shareholder meetings held the same day, more than 99% of the votes cast at each company approved the deal, according to a joint filing with the Securities and Exchange Commission. Those “yes” votes represented roughly 90% of each company’s outstanding shares as of the record date β an unusually lopsided result for a merger of this size.
Under the terms shareholders approved, each share of AvalonBay common stock will convert into 2.793 shares of Equity Residential common stock. The surviving entity, which AvalonBay and Equity Residential announced would be named Vivmark Residential in July, will trade on the New York Stock Exchange under the ticker VMRK starting Aug. 18.
The combination brings together two of the largest publicly traded apartment landlords in the country. AvalonBay owns and manages 322 communities totaling 99,072 apartment units across 11 states and the District of Columbia, concentrated in coastal gateway markets. Equity Residential operates 312 properties with 85,520 units in major metros including New York, Boston, Washington, Seattle and Southern California. Combined, the merged company will control more than 184,000 apartments.
The all-stock merger of equals was first announced in May, with the companies unveiling leadership plans in June and the combined brand name in July. AvalonBay CEO Benjamin Schall is set to lead the merged company, while Equity Residential CEO Mark Parrell is expected to retire once the deal closes, according to the companies’ earlier disclosures.
The transaction still requires the satisfaction or waiver of customary closing conditions before it becomes final, the companies said, but Monday’s shareholder votes remove the last major point of uncertainty. The registration statement covering the share exchange was declared effective in July, and proxy materials went out to shareholders shortly after.
For the apartment sector, the merger consolidates ownership in high-barrier, high-rent coastal markets at a moment when multifamily investors are also weighing softer rent growth in parts of the Sun Belt against continued strength in the Northeast and California. A combined Vivmark Residential will have an outsized ability to set the tone in markets where both predecessor companies already competed head-to-head for renters and acquisition targets, including the New York, Boston, San Francisco Bay Area, and Southern California markets.
Investor and media contacts for the deal are being handled jointly by the two companies, with Marty McKenna representing Equity Residential and Matt Grover representing AvalonBay on investor questions, according to the SEC filing.
The AvalonBay-Equity Residential tie-up lands amid a broader wave of REIT consolidation this year. H&R REIT agreed in a separate deal to split apart in a $6.7 billion transaction with GO Residential REIT and Blackstone, part of a pattern of public apartment landlords using scale-driven mergers and portfolio splits to reposition for a market where rent growth has diverged sharply by region. Unlike that transaction, the AvalonBay-Equity Residential deal is structured as a true merger of equals, with no premium paid to either side’s shareholders and governance split roughly along the lines of each company’s relative size.
What it means: The overwhelming vote β with roughly 90% of each company’s outstanding shares cast in favor β signals investors saw few red flags in a deal that will reshape the ownership map of coastal apartment markets. Barring an unexpected complication before Aug. 17, Vivmark Residential will begin life as one of the largest owner-operators of apartments in the country, with the scale to influence rent-setting practices, acquisition pricing and development decisions in the markets where it is most concentrated. What remains to be seen β and what RealtyWire will be watching in the weeks after closing β is how quickly the combined company moves on integration, including any asset sales in overlapping submarkets and executive-team changes beyond the CEO transition already disclosed.
