AVB & EQR Pair Up In Merger Of Equals

Research evidence excerpt

AVB & EQR Pair Up In Merger Of Equals

n an AFFO basis by roughly 6% although the timing of the savings will be key as to whether it fully impacts

’27 or ’28 estimates. Keep reading for additional details on the deal including management transition and other

considerations of the transaction.

1. Deal terms – AVB and EQR have agreed to merge in an all stock deal in which EQR will issue 2.793 shares for

each share of AVB which will create a pro forma company with more than 180k apartment homes across 13

markets. The combined market cap of the company will be $52bn with a total enterprise value of roughly $70bn

including the roughly $17.5bn of mostly unsecured debt at both companies.

2. C-Suite – In this true merger of equals, AVB’s existing CEO Ben Schall will assume the CEO mantle of the

combined company with the rest of the C-Suite and the new name of the combined company announced prior to

closing. The press release did state that the new management team would represent both organizations and we

can see key folks from both organizations assuming top roles in the newly combined organization.

3. Balance Sheet – Since both companies have very strong credit profiles (AVB and EQR are both rated A- by S&P

Global) and their credit spreads on existing debt that are very close to one another, we don’t expect any issues to

arise from the rating agencies in this combination. If anything, the slightly enhanced EBITDA profile and the

combined platform could modestly lower credit spreads as the inherent risk of development is dampened by the

sheer size of the combined platform and EQR’s relatively small development pipeline.

4. Strategic Rationale – While the economics of the deal are fairly straight forward, the bigger question for investors