Two real estate investment trusts specializing in luxury apartments announced Sunday that they would merge.
Bay Apartment Communities, Inc. of San Jose is buying Avalon Properties, Inc. of Alexandria, Va. The merger, including preferred stock and debt, is valued at about $2 billion.The surviving company will be named Avalon Bay Communities Inc.
In a press release Sunday, Avalon Properties said its shareholders will receive 0.7683 Bay Apartment Communities common shares for each Avalon common share they own. Avalon's preferred shareholders will receive comparable preferred shares of Bay as a result of the merger.
Avalon Bay Communities will have an immediate total market capitalization of $3.7 billion and a portfolio of 140 communities with 40,506 apartment homes in 15 states and the District of Columbia.
Avalon Properties said the merger, which has been unanimously approved by the boards of both companies and is expected to close in June 1998, has been structured as a tax-free transaction.