The registration statement details a $1 billion-plus breakup fee on each side, a preserved Equity Residential dividend, and dueling fairness opinions from rival bank syndicates.

June 30, 2026

Equity Residential and AvalonBay Communities have laid out the full mechanics of their merger of equals, setting the stage for shareholder votes at both companies and disclosing deal protections, dividend plans, and advisor opinions that were absent from the initial announcement of the combination.

The preliminary joint proxy statement and prospectus was submitted on June 29, 2026, and remains subject to completion. It governs the all-stock transaction the two apartment owners struck under a merger agreement dated May 20, 2026, and follows earlier disclosures on the executive leadership of the combined company and the internal employee guidance issued during integration planning.

Deal Structure and Consideration

Under the agreed terms, AvalonBay stockholders will receive 2.793 Equity Residential common shares for each AvalonBay share, with cash paid in lieu of fractional shares. The exchange ratio is fixed and will not adjust for movements in either company’s stock price before closing, leaving AvalonBay holders exposed to the value of Equity Residential shares through completion. Existing Equity Residential shares remain unchanged.

The transaction is structured in two steps:

1. Immediately before the merger becomes effective, AvalonBay will contribute certain assets to ERP Operating Partnership, Equity Residential’s operating partnership, in exchange for partnership units equal in value to the contributed assets.
2. AvalonBay will then merge into Canopy Merger Sub LLC, a wholly owned Equity Residential subsidiary, which survives the combination.

The arrangement reflects the standard umbrella-partnership REIT framework, allowing the asset transfer to occur on a tax-efficient basis. The proxy statement leaves the precise post-merger ownership split blank pending a final share count, but the companies have previously indicated a near-even division consistent with a merger of equals. The combined entity will carry a pro forma equity market capitalization of roughly $52 billion and an enterprise value of approximately $69 billion, with more than 180,000 apartments.

Governance and the New Entity

The combined company will maintain dual headquarters in Chicago and Arlington, Virginia, and will adopt a new name to be agreed before closing. Both boards unanimously approved the agreement. Consistent with the previously disclosed leadership plan, AvalonBay chief executive Benjamin Schall will lead the combined company; the proxy lists Mark Parrell as Equity Residential’s current president and chief executive.

Shareholder Approvals Required

Each company will convene a virtual special meeting, with record dates still to be set. The companies intend to hold the meetings on the same date once the registration statement is declared effective, and to coordinate their record dates.

The two votes carry different thresholds:

• Equity Residential needs approval of its share issuance from a majority of votes cast by holders present or represented by proxy. It is also asking shareholders to amend its declaration of trust to increase the number of authorized common shares — a necessary step to issue the stock funding the merger consideration.
• AvalonBay faces a higher bar: its merger proposal requires the affirmative vote of holders of at least a majority of all outstanding shares, meaning abstentions effectively count against the deal.

Dividends and Deal Economics

The combined company expects to pay an initial annualized dividend of $2.81 per share, matching Equity Residential’s current rate and representing an increase over AvalonBay’s existing yield, subject to board discretion. Both companies intend to continue paying their regular dividends through closing. For income-focused AvalonBay holders, the exchange ratio and the higher Equity Residential payout combine to shape the effective distribution they will receive in the merged entity.

The companies estimate aggregate transaction and integration costs of approximately $750 million, spanning real estate transfer taxes, advisory and professional fees, financing costs, and change-in-control and severance payments for departing executives.

Deal Protections

The agreement includes substantial reciprocal breakup fees. Equity Residential could owe AvalonBay a termination fee of up to $1.005 billion, while AvalonBay could owe Equity Residential up to $1.070 billion, depending on the circumstances of any termination. The roughly symmetrical fees are characteristic of a merger of equals where neither side is positioned as acquirer, and they raise the cost of either board accepting a competing bid.

Competing Advisor Syndicates

Each company assembled its own banking roster. Equity Residential retained Morgan Stanley and Centerview Partners as lead financial advisors, with BofA Securities as an additional advisor. AvalonBay engaged Goldman Sachs as lead advisor, supported by J.P. Morgan and Wells Fargo.

Morgan Stanley delivered a written opinion dated May 20, 2026, that the exchange ratio was fair from a financial point of view to Equity Residential. Goldman Sachs provided a corresponding opinion to the AvalonBay board addressing fairness to AvalonBay stockholders. Both opinions are attached as annexes. The dual lead-advisor structure underscores the arms-length posture each board adopted despite the friendly framing.

Background and Timing

The proxy statement notes the two companies’ shared history, including their 2013 division of the Archstone portfolio acquired from the estate of Lehman Brothers, and describes periodic informal industry contact between their management teams in the years since. The companies continue to target completion in the second half of 2026, subject to shareholder approvals and customary conditions, while cautioning that closing by any particular date, or at all, is not assured.