US apartment giants AvalonBay Communities and Equity Residential have agreed to combine in an all-stock merger of equals. The transaction will create a dominant multifamily housing platform with a pro forma equity market value of roughly $52 billion (£41.5 billion) and a total enterprise value of around $69 billion.

The unified business will control a vast portfolio of more than 180,000 rental apartments. Bosses expect the transaction to yield $175 million in gross synergies, which drops to $125 million in net savings once local real estate tax reassessments are factored in. The newly formed entity will also possess a robust development pipeline, with $4.4 billion and 10,800 flats currently under construction alongside an extra $4.2 billion in future development rights.

Under the agreed terms, AvalonBay shareholders will receive 2.793 shares of Equity Residential common stock for each share they own. At closing, AvalonBay investors will hold approximately 51.2% of the combined group, while Equity Residential shareholders will retain roughly 48.8%. The board will be split evenly, featuring seven directors from each legacy business.

Benjamin Schall, President and Chief Executive Officer of AvalonBay, will lead the combined firm as Chief Executive. Equity Residential chief Mark J. Parrell will retire when the deal completes. The company will establish dual headquarters in Arlington and Chicago under a fresh corporate name.

“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. 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,” said Schall.

The tie-up is scheduled to close in the second half of 2026, subject to regulatory clearances and shareholder approvals.