Steadfast Apartment REIT announces $3.3bn merger

Steadfast Apartment REIT announces $3.3bn merger

Steadfast Apartment REIT, Inc. (“STAR”), Steadfast Income REIT, Inc. (“SIR”) and Steadfast Apartment REIT III, Inc. (“STAR III”) have entered into definitive merger agreements pursuant to which STAR would acquire SIR and STAR III in separate stock-for-stock, tax-free transactions, creating a combined company with approximately $3.3 billion in gross real estate assets.

The transactions are expected to close in the first quarter of 2020, subject to certain closing conditions, including the approval of the respective mergers by SIR and STAR III stockholders. The merger transactions are expected to close concurrently but are not conditioned on the consummation of each other.

If the mergers were to occur today, the combined company’s portfolio would consist of 71 properties in 14 states with an average effective rent of $1,158. Based on occupancy as of June 30, 2019, the combined company’s portfolio is expected to have an occupancy rate of 94%, an average age of 20 years and gross real estate assets of $3.3 billion.

The merger agreements were negotiated on behalf of STAR, SIR and STAR III by their respective special committees, each of which is composed exclusively of independent directors, along with each special committees’ independent financial and legal advisors. Each of the special committees recommended approval of the merger agreements to their respective Boards of Directors, each of which unanimously approved entry into the merger agreements.

“We believe the strategic merger of these three highly complementary portfolios with similar investment strategies will create an enhanced and diversified portfolio, concentrated in high growth markets,” said Rodney F. Emery, Chairman of STAR, SIR and STAR III. “We believe the enhanced size, scale and prominence of the combined portfolio will greatly improve our access to attractive capital sources, which can be used to drive future growth opportunities and potentially deliver enhanced liquidity options to stockholders.”

“This transaction would allow each company’s stockholders to participate in the potential benefits of a larger, stronger combined company,” said Ella Neyland, President of STAR, SIR and STAR III. “We look forward to pursuing additional value creation opportunities as a stronger company with increased cash flow, improved diversification and an improved balance sheet.”

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