American Homes 4 Rent and American Residential Properties, Inc. both announced on Thursday morning plans to merge into a combined company that is expected to own and manage more than 47 thousand residential single-family rental homes. The merger is expected to enhance the size of the largest publicly-traded single-family rental company, California-based American Homes 4 Rent, which prior to the merger owned approximately 38 thousand SFR properties.
The boards of both companies have approved a definitive agreement for a tax-free merger. The total value of the transaction is approximately 1 point 5 billion dollars. The merger is expected to close sometime in the first half of 2016. The total SFR home inventory of the combined company, which is expected to be more than 47 thousand properties, covers 22 states and is expected to have an equity market capitalization of approximately 5 point 5 billion dollars and an aggregate real estate cost basis of more than 8 billion dollars.
The amount of underwater mortgages in the U.S. continues to decline, but is not fully helping the housing market on the road to recovery, particularity in many large markets that were heavily impacted during crisis times, according to Zillow's Negative Equity Report. The negative equity rate nationwide fell in the third quarter to 13 point 4 percent in Q3, but Zillow noted that negative equity rates are usually close to 2 to 5 percent, making Q3’s rate a haunting reminder of the housing crash and the recovery that has yet to happen in some markets.