Merger Completed Between Single-Family Rental Giants

The merger between single-family rental giants American Homes 4 Rent (AH4R) and American Residential Properties, Inc. (ARPI), originally announced in early December, has been completed, according to an announcement from AH4R on Tuesday.

The merger was approved by the stockholders of ARPI at a meeting on February 26, 2016. The total value of the transaction is approximately $1.3 billion.

“We are delighted to announce the completion of our merger with American Residential Properties, further establishing American Homes 4 Rent as the largest publicly traded owner and operator of single-family rental homes,” said David Singelyn, CEO of AH4R. “American Residential Properties owned a high-quality portfolio of homes that fit strategically in our markets, offering significant opportunities to capture further operating efficiencies on the combined platform. Moving ahead, we look forward to the rapid integration of the two platforms and to creating additional value for the shareholders of the combined company, while strengthening our position as a premier company in the single-family rental sector.”

The transaction was completed with a fixed exchange ratio of 1.135 common shares or limited partnership units of AH4R for each share of ARPI, and ARPI merges into AH4R in a tax free exchange. ARPI shareholders will own 12.7 percent of the combined company. Meanwhile, AH4R will retain its corporate headquarters in Agoura Hills, California, while maintaining a presence in the Phoenix, Arizona, market, which was the home base for ARPI. AH4R will continue to trade common shares on the New York Stock Exchange under the ticker symbol AMH, while ARPI common stock will no longer trade on the NYSE, according to the announcement.

The merger enhances the size of the largest publicly traded single-family rental company. With the merger, AH4R now owns 47,000 homes in 22 states (the company owned approximately 38,000 single-family rental homes prior to the merger). AH4R now has at least 1,000 homes in each of 17 markets nationwide (representing about 81 percent of the homes in all markets) and at least 2,000 homes in each of eight markets, according to AH4R. The company has a total market capitalization of $8 billion and an aggregate real estate cost basis of approximately $8 billion.

The AH4R and ARPI transaction was one of two major mergers of single-family rental companies announced in 2015. In September, Starwood Waypoint Residential and Colony American Homes announced a definitive merger agreement which would combine the two companies in a stock-for-stock transaction. That combined company, which will be managed internationally, is expected to own and manage more than 30,000 single-family homes nationwide and have an asset value of about $7.7 billion when the transaction closes sometime in the first quarter of 2016.