Equity Residential Agrees to Buy Evans Withycombe

Equity Residential Properties Trust, the second-largest U.S. real estate investment trust, continued its torrid acquisition pace Thursday, announcing a $1.06-billion deal to acquire Evans Withycombe Residential Inc.

The deal for Scottsdale, Ariz.-based Evans Withycombe solidifies Equity Residential’s position as the largest publicly held owner of apartment buildings in the country.

“Consolidation of this industry is critical for its evolution,” Samuel Zell, chairman of Equity Residential, said in a news release. “The size and liquidity of the combined entity means earnings velocity, which means opportunity for both [Equity] and Evans shareholders.”

Equity Residential, based in Chicago, has aggressively pursued an acquisition strategy.

In January, it announced plans to purchase New York-based Wellsford Residential Property Trust in a deal worth $1 billion. That was followed by an agreement in July to buy 48 properties from Rockville, Md.-based CAPREIT for $633 million. It has also made a number of smaller acquisitions this year.

Analysts said Equity’s strategy reflects a broader trend toward consolidation in apartment property ownership.

“The apartment sector is a little more mature than some of the other real estate sectors, and, real estate being cyclical, it’s a little bit tougher to grow out there,” said Philip Martin, an analyst at Everen Securities.

The merger will combine Evans’ portfolio of 55 apartment properties in Southern California and Arizona with Equity’s portfolio of 350 properties, resulting in a real estate investment trust with a total market capitalization of $7.6 billion, the companies said.

A real estate investment trust, usually traded publicly, manages a real estate portfolio to earn profits for shareholders.

In New York Stock Exchange trading, Equity Residential rose 25 cents to close at $30.75, and Evans Withycombe rose $1.67 to close at $23.73.

The deal, expected to be completed in December, calls for Evans shareholders to receive half an Equity share for each Evans share, the companies said. Under the agreement, Equity will issue 12.5 million common shares and operating partnership units. In addition, Equity will assume all of Evans’ outstanding debt of about $432 million, they said.