Mid-America Apartment Communities agreed to buy Post Properties for about $3.9 billion, forming a real estate investment trust with about 105,000 multifamily units amid rising demand for rental housing.
Post Properties investors will get 0.71 of a Mid-America share for each of their own, the companies said in a statement on Monday. Annual gross synergies from the acquisition are expected to be about $20 million.
The merger would create the largest publicly traded landlord by number of units, with a combined 105,008 apartments, largely in the U.S. Southeast, the companies said in a corporate filing. The combined company, with a market value of $17 billion, will have its largest share of net operating income coming from Atlanta, Dallas and Charlotte, North Carolina, where the firms project three-year employment growth to be above the national average.
“We see some of the strongest job growth and household formation than anywhere in the country,” H. Eric Bolton, Jr., the chief executive officer of Mid-America, said on a conference call Monday. “The longer-term value proposition, we think, is quite compelling.”
Apartment owners have benefited as first-time homebuyers struggle to find affordable properties as low mortgage rates and an improving job market spur competition for a tight supply of listings. In the second quarter, the U.S. homeownership rate fell to 69.2 percent, the lowest in more than 50 years.
At the same time, multifamily landlords including Equity Residential have contended with weakness in markets including Manhattan and San Francisco, where an apartment-construction boom has given residents more bargaining power and limited how much owners can raise rents. Equity Residential has cut its revenue forecast three times this year, and AvalonBay Communities Inc. gave renters lease-signing concessions worth $300,000 in the second quarter, four times more than in the year-earlier period.
Such challenges, along with slowing rent growth, may be spurring companies such as Mid-America and Atlanta-based Post Properties to merge to reduce costs. The combined company’s largest markets by unit count will include Atlanta, Dallas and Austin. Post Properties has several communities in Dallas and Addison, while Mid-America has several locations in North Texas, including Euless, Arlington, Grapevine and McKinney.