Independence Realty Trust to buy Centerspace in $8.1 billion all-stock multifamily deal
An all-stock agreement will merge Independence Realty Trust (IRT) and Centerspace into an $8.1 billion multifamily REIT with roughly 44,000 units spanning the Sun Belt, Midwest, and Mountain West. IRT will absorb 47…
Key takeaways
- Independence Realty Trust (IRT) will acquire Centerspace in an all-stock deal that creates an $8.1 billion multifamily REIT with roughly 44,000 units across the Sun Belt, Midwest, and Mountain West.
- IRT will absorb 47 Centerspace communities totaling 10,456 units in six states, growing its portfolio by nearly 30%.
- Each Centerspace share converts into 3,800 IRT shares, leaving Centerspace investors with about 22% of the merged company's equity and producing roughly 67.6 million new IRT shares.
- The deal is expected to be immediately accretive with $24 million in identified annual synergies and to reduce IRT's Sun Belt exposure from 79% to 58% of the combined portfolio.
- The transaction requires shareholder approval and is expected to close in the fourth quarter.
An all-stock agreement will merge Independence Realty Trust (IRT) and Centerspace into an $8.1 billion multifamily REIT with roughly 44,000 units spanning the Sun Belt, Midwest, and Mountain West. IRT will absorb 47 Centerspace communities totaling 10,456 units in six states, growing its portfolio by nearly 30%. The deal requires shareholder approval and is expected to close in the fourth quarter.
The terms
Each Centerspace share converts into 3,800 IRT shares, leaving Centerspace investors with roughly 22% of the merged company's combined equity. The transaction is expected to produce approximately 67.6 million new IRT shares. Management expects the deal to be immediately accretive and neutral on debt, with $24 million in what the company calls "identified annual synergies." Of that total, $19 million is at the corporate level, with the remainder in property-level savings, per an SEC filing.
IRT projects the combined portfolio will run at roughly 95% occupancy, carrying an average monthly rent of $1,628, above IRT's current average of $1,593.
The setup
The deal reshapes IRT's geographic footprint. Sun Belt exposure falls from 79% of the current book to 58% of the combined portfolio, while the Midwest adds a 27% weighting and Mountain West takes the balance. IRT CEO Scott Schaeffer cited historically above-average NOI growth and lower volatility in the Midwest and Mountain West markets as the rationale. Centerspace CEO Anne Olson pointed to scale, improved capital markets access, and a meaningful reduction in leverage as benefits for her shareholders.
Centerspace shares were trading up more than 10% early Wednesday. IRT was down more than 2%.
IRT leadership takes management control of the combined portfolio. Schaeffer remains board chair and Jim Sebra stays on as CFO. The board expands by two seats drawn from Centerspace's side. The company has identified opportunities for corporate cost savings but has not named any Centerspace executives joining the combined team.
The deal arrives in a period of active multifamily consolidation, with landlords facing pressure from slow rent growth and rising costs. Earlier this month, Milwaukee-based Mandel Group agreed to sell most of its portfolio to Cottonwood Communities in a $600 million transaction, growing Cottonwood to 13,400 apartments in 16 states. On Wednesday, Indianapolis-based Milhaus separately completed its acquisition of investment firm Broadshore Capital Partners, following a July merger with SRG Residential that brought its management platform to more than 50,000 apartments in 21 markets.
What to watch
Shareholder approval gates the fourth-quarter close. The proxy filing is the next confirmable milestone.
Related reading
Filed via finance.yahoo.com