Mid-America Apartment Communities agreed to buy Post Properties for about $3.9bn, 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 yesterday. Annual gross synergies from the acquisition are expected to be about $20mn.
The combined firm will be focused “on the high-growth Sunbelt region of the country with significant competitive advantages to drive superior value for our shareholders, residents and employees,” H Eric Bolton Jr, MAA chairman and chief executive officer, said in the statement. It “will capture a broader market and sub-market footprint, with improved rental price-point diversification that will support an enhanced level of performance.”
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 US homeownership rate fell to 69.2%, 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 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.