Residential REITs: Remain positive on AVB/EQR merger; proxy provides background details

Research evidence excerpt

Residential REITs: Remain positive on AVB/EQR merger; proxy provides background details

Accessible version

Residential REITs

Remain positive on AVB/EQR merger;

proxy provides background details

Industry Overview

AVB/EQR merger estimated to have a six year pay back 30 June 2026

EQR filed its S-4 which included a joint proxy statement/prospectus yesterday. As we’ve Equity

previously written, we have a favorable view on the deal rationale and have a Buy rating United States

on both AVB and EQR. See our notes (Upgrading EQR to Buy and reiterate Buy on AVB REITs

following merger announcement and initial merger analysis, AvalonEquity? Why bigger Jana Galan

might be better for Apartment REITs) for more details. Initial synergies are primarily Research Analyst

driven by expense savings, quantified to be $175mil/net $125mil per year, and described BofAS+1 646 855-5042

in the consolidated pro forma financial statements for 2025 and 1Q26. AVB and EQR jana.galan@bofa.com

standalone projections for 2026 through 2030 are also provided. Aggregate transaction Jeffrey Spector

Research Analyst

and integration costs are expected to be $750mil, the quantum of which has been cited BofAS

as a negative by investors. +1 646 855 1363

jeff.spector@bofa.com

Third company was in the mix; “Company A” not disclosed AndrewResearch BergerAnalyst

AVB/EQR’s proxy states that another publicly traded company in the multifamily sector BofAS +1 646 855 1589

(“Company A”) had independently engaged with both EQR and AVB about a potential andrew.berger2@bofa.com

combination, with dialogue starting in May 2024 and December 2025, respectively. REITs Team

Company A was not disclosed. After unsuccessful discussions from what sounded like BofAS