MAA to Buy Post Properties

ENLARGE

Apartment REITs have benefited from a surge in rental demand. Photo: Melissa Golden for The Wall Street Journal

Real-estate investment trust MAA on Monday said it agreed to buy Post Properties Inc. for about $3.88 billion in an all-stock deal combining a pair of Sunbelt apartment owners who have benefited from a boom in rental demand.

Post shares will be converted into 0.71 shares of newly issued MAA stock. The deal values Post shares at about $72.53, a 17% premium according to Friday’s closing prices. MAA stockholders will own about 67.7% and former Post shareholders will own about 32.3% of the combined company with a market capitalization of roughly $12 billion.

The tie-up was first reported Sunday by The Wall Street Journal.

The merger would create the largest multifamily REIT by number of units, with about 105,000 across 317 properties. The new group would have deep exposure to the fast-growing Sunbelt region, in markets including Atlanta, Dallas, Houston and Washington, DC. The companies estimate cost savings of about $20 million.

Shares of both companies have soared in recent years as investors have been drawn to their relatively rich payouts with interest rates at historic lows.

Apartment managers have also benefited from the housing recovery as rising home prices have turned many would-be buyers into renters. Nevertheless, rent growth has begun to slow, creating an incentive for mergers that bring expense reductions.

Year to date, real estate is the second-busiest sector for mergers and acquisitions globally with more than $215 billion of transactions announced, according to Dealogic.

Meanwhile, there have been more than $52 billion in deals among REITs, which can include apartment complexes, hotels and other types of businesses. REITs typically manage properties, collect rent and pass profits onto shareholders.

If the deal is abandoned, Post could be required to pay to MAA a termination fee of $117 million, and MAA could be required to pay to Post a termination fee of $245 million and reimburse MAA’s transaction expenses up to $10 million, according to a securities filing.

Write to Dana Mattioli at [email protected], Dana Cimilluca at [email protected] and Anne Steele at [email protected]

Corrections & Amplifications:
The deal values Post shares at about $72.53, a 17% premium according to Friday’s closing prices. An earlier version of this article misstated the premium.