Independence Realty Trust (IRT) and Steadfast Apartment REIT (STAR) have announced that they have entered into a definitive merger agreement, in which IRT will serve as the continuing public company. The combined company is expected to have a pro forma equity market capitalization of approximately $4 billion and a pro forma total enterprise value of approximately $7 billion.
“The STAR team is excited for this milestone, as we engage in this strategic partnership with IRT,” says Rodney F. Emery, CEO of STAR. “We believe that our business combination will allow us to more effectively compete in the multifamily sector and realize greater earnings potential. This is a natural combination that is expected to uniquely position us to strengthen our presence in U.S. communities where we see substantial room for growth.”
Following the proposed merger, the company would manage a portfolio of approximately 38,000 units across 131 apartment communities in urban and suburban locations across 16 states, with a focus on the Sun Belt.
The portfolio’s 10 largest markets by unit count would be Atlanta; Columbus, Ohio; Dallas/Fort Worth; Denver; Houston; Indianapolis; Louisville, Kentucky; Memphis, Tennessee; Oklahoma City; and Raleigh-Durham, North Carolina.
The transaction is expected to strengthen IRT’s presence in the Sun Belt region, including core markets like Atlanta and Dallas, and expand its reach into new markets, including Denver and Nashville. The company will also gain a combined pipeline of approximately 20,000 units available for future redevelopment. Annual gross synergies are estimated to be approximately $28 million, plus $8 million in operational synergies, to be realized over the 12-month period following the closing of the merger.
“The combination of IRT and STAR’s highly complementary portfolios will create a leading multifamily REIT in the attractive Sun Belt region, that we believe will be well-positioned to unlock significant value and improve our market diversification,” says Scott F. Schaeffer, who will continue to lead IRT as chairman and CEO. “We expect to realize notable economies of scale and synergies, develop a more competitive operating platform, and further capitalize on our redevelopment initiative. We’re excited to partner with STAR and welcome their team, as we together plan to capture many opportunities in our high-growth markets and deliver value for our stakeholders for years to come.”
The parties expect the merger to close during the fourth quarter of 2021. The transaction has been unanimously approved by both boards of directors and is subject to approval from both IRT and STAR stockholders.
