AvalonBay Communities (AVB) Proxy filing summary

Executive summary

• Equity Residential and AvalonBay Communities agreed to a merger of equals, creating a leading multifamily REIT with over 180,000 apartments and a pro forma equity market capitalization of approximately $52 billion and enterprise value of $69 billion.

• The merger involves AvalonBay merging into a subsidiary of Equity Residential, with AvalonBay shareholders receiving 2.793 Equity Residential shares per AvalonBay share, and the combined company will be 51% owned by former AvalonBay stockholders and 49% by legacy Equity Residential shareholders.

• The transaction is structured to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code, and both companies intend to maintain REIT status.

• The combined company will have dual headquarters in Chicago and Arlington, operate under a new name, and be led by a 14-member board split evenly between the two companies, with Benjamin W. Schall as CEO and Stephen E. Sterrett as Chairman.

• The merger is expected to generate $175 million in gross operating synergies and $125 million in net annual synergies within 18 months, and is anticipated to be accretive to core FFO per share for both companies.

Voting matters and shareholder proposals

• Equity Residential shareholders will vote on: (1) the share issuance for the merger, (2) an amendment to increase authorized shares, and (3) adjournment if more time is needed for votes.

• AvalonBay stockholders will vote on: (1) approval of the merger, (2) a non-binding advisory vote on executive compensation related to the merger, and (3) adjournment if more time is needed for votes.

• Both boards unanimously recommend voting in favor of all proposals.

Board of directors and corporate governance

• The combined board will have 14 members, equally split between the two legacy boards.

• Key leadership roles are pre-designated, with a mix of executives from both companies.

• Board committees will also be equally composed, and the company will operate under a new name to be determined.