By Saabira Chaudhuri
Mid-America Apartment Communities Inc. (MAA) and Colonial Properties Trust (CLP)
have agreed to merge, creating a Sunbelt-focused real estate investment trust with
a total market capitalization of $8.6 billion.
The adjusted market capitalization is about $5.1 billion.
“The combination of MAA and Colonial Properties Trust will provide an enhanced competitive advantage across the Sunbelt region,” Mid-America Apartment Chief Executive H. Eric Bolton, Jr. said. “The scale of the combined company will support accelerated growth and deployment of capital across our high-growth Sunbelt markets.”
Under the terms of the agreement, each Colonial Properties Trust share will be converted into 0.36 of a newly issued Mid-America Apartment common share. On an adjusted basis, following the merger, former Mid-America Apartment shareholders will hold about 56% of the combined company and former Colonial Properties Trust equity holders will hold about 44%.
The transaction is expected to close during the third quarter.
The pair noted that their combination brings together two complementary multifamily portfolios with a combined asset base consisting of about 85,000 multifamily units in 285 properties. “The combined company will maintain strategic diversity across large and secondary markets within the high growth Sunbelt region of the U.S.,” said the pair in a statement.
The combined company’s ten largest markets will be Dallas/Ft. Worth, Atlanta, Austin, Raleigh, Charlotte, Nashville, Jacksonville, Tampa, Orlando and Houston.
Mr. Bolton will serve as CEO and board chairman of the combined company. Albert M. Campbell, III, Mid-America’s Financial Chief, will serve in the same role of the combined company, and Thomas L. Grimes Jr., Mid-America’s Operations Chief, will serve as the Operations Chief of the new company.
The company will retain the Mid-America name and will trade under the ticker symbol MAA. Following the close of the transaction, the combined company’s corporate headquarters will be located in Memphis, Tenn.
The pair said annual gross general and administrative savings will likely be about $25 million.
Shares of Colonial Properties closed Friday at $22.11 while those of Mid-America closed at $67.97. Both companies’ stocks were inactive in recent premarket trading.