EQR + AVB Combines GLP Efficiencies to Accelerate FCF Growth

Research evidence excerpt

EQR + AVB Combines GLP Efficiencies to Accelerate FCF Growth

back to the mutual 70

respect experience during the Archstone consummation over a decade ago. We think the 68

portfolios line up well, including Sunbelt diversification and reduction of Coastal exposure 66

strategies. We see minimal cost-of-capital advantages as both maintain strong credit 64

metrics and bond followings. 2H26 anticipated closing and the new dividend to be $2.81/ 62

share, which is EQR's payout. 60

congratulate AVB CEO Ben Schall on leading the new company and wish 58 ◦We

EQR CEO Mark Parrell the best in retirement. We have "worked" with Mark for two May-2556 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26

decades, watching his career progress and have learned much from his leadership

Source: Bloomberg

style.

• Market reaction since deal first reported on April 29. We presume the deal was

indicated as a trial balloon to gauge market interest. Since then, EQR's total return

has been 1.3% and AVB 1.3% versus the RMZ of 2.2%. While both companies slightly

underperformed REITs overall since, we believe it's even more critical for management

to articulate superior FFO and cash flow growth over the next several months and then

demonstrate post-closing.

• Don't expect counter bid and competitor thoughts. Given the near perfect strategic

overlap, we don't see any counter bid. We do expect more consolidation in apartments,

as part of our overall view on M&A in REITland either as a management exit for

the sellers or where combinations can provide improved profitability and cash flow

growth versus stand alone. Again, big for big sake isn't compelling. It comes down to

accelerating the dividend potential while maintaining good customer service.

• More thoughts, including political environment, on page 2.