AvalonBay Communities Inc. (NYSE: AVB) and Equity Residential (NYSE: EQR) announced a definitive agreement to combine in an all-stock merger of equals. The transaction creates a company with approximately $52 billion in equity market capitalization and $69 billion in enterprise value, managing more than 180,000 rental apartments.

Under the agreement, AvalonBay shareholders will receive 2.793 shares of Equity Residential common stock for each AvalonBay share owned. Upon closing, AvalonBay shareholders will own approximately 51.2% and Equity Residential shareholders will own approximately 48.8% of the combined company.

Benjamin Schall, AvalonBay's chief executive officer, will serve as president and CEO of the combined company. Mark Parrell, Equity Residential's current CEO, will retire at transaction close. The combined company will operate under a new name with dual headquarters in Arlington, Virginia and Chicago, Illinois.

The companies project $175 million in gross synergies and $125 million in net synergies after real estate tax reassessments. The combined entity expects to pay an initial annualized dividend of $2.81 per share, equivalent to Equity Residential's existing dividend.

The combined company will have $4.4 billion worth of properties under construction, representing 10,800 apartments across 32 communities. The companies maintain a $4.2 billion development rights pipeline.

The board of the combined company will initially consist of seven trustees from each company. Steve Sterrett, current lead independent trustee of Equity Residential, will serve as chairman.

The transaction is expected to close in the second half of 2026, subject to shareholder approval from both companies and satisfaction of customary closing conditions. The agreement has received unanimous approval from both boards.

Goldman Sachs serves as lead financial advisor to AvalonBay, while Morgan Stanley and Centerview Partners advise Equity Residential. The transaction is expected to qualify as a tax-free reorganization for federal income tax purposes.