Mid-America Apartment Communities Inc., a Memphis-based residential landlord, agreed to buy Colonial Properties Trust to create a real estate investment trust with a market value of about $5.1 billion.
Shareholders of Colonial, based in Birmingham, Alabama, will each receive 0.36 newly issued shares in MAA, the companies said in a statement. MAA shareholders will own about 56 percent of the combined company’s equity with Colonial owners holding the rest.
“The scale of the combined company will support accelerated growth,” MAA Chief Executive Officer H. Eric Bolton Jr. said in the statement. The deal will “drive higher margins as a result of synergies and advantages generated by the merger.”
U.S. apartment values have been rising since early 2010 after the housing crash spurred demand for rentals. The combined company will own about 85,000 multifamilty units in 285 properties in southern cities including Tampa, Florida; Charlotte, North Carolina; and Nashville, Tennessee.
The deal was unanimously approved by both boards and will result in gross savings of about $25 million a year once the companies are fully merged. The agreement is subject to approval of shareholders of both companies.
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