Mid-America Apartment Communities Inc said it would buy Post Properties Inc for about $3.88 billion to create the largest publicly traded multifamily apartment real estate investment trust by units.
The combined company would have a market capitalization of about $17 billion, the companies said on Monday.
Post Properties shareholders will get 0.71 newly issued Mid-America Apartment shares for each share they own, the companies said.
The deal combines companies buoyed by the rising demand for rental properties, creating an entity with 317 properties and 105,000 multifamily units, concentrated in what MAA called “large and secondary markets within the high-growth Sunbelt region.”
Mid-America Apartment, based in Memphis, Tennessee, owns all or part of 254 multifamily properties and 79,496 units in 15 states, according to its website and Thomson Reuters data.
Atlanta-based Post Proprieties, has about 24,000 apartment units in more than 60 communities in Atlanta, Dallas, Washington, and Tampa, Florida, according to Thomson Reuters data.
The two companies said they expect to squeeze $20 million a year in cost savings and other operating efficiencies within 12 months of the merger completing.
Citigroup Global Markets Inc is the financial adviser to Mid-America Apartment, while JP Morgan is advising Post Properties.
The Wall Street Journal, which first reported the story, cited figures from Dealogic showing that the real estate has been one of the busiest sectors so far this year for mergers and acquisitions, generating $215 billion worth of deals. Much of that is due to increased pressure on profit margins now that the strong growth in rental prices has started to flatten out.