UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13
OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 20, 2026
AVALONBAY
COMMUNITIES, INC.
(Exact name of registrant as specified in its
charter)
|
Maryland
(State or other jurisdiction
of incorporation
or organization) |
1-12672
(Commission File
Number) |
77-0404318
(I.R.S. Employer
Identification No.) |
4040 Wilson Blvd., Suite 1000
Arlington,
Virginia 22203
(Address of principal executive offices)(Zip
code)
(703)
329-6300
(Registrant’s telephone number, including
area code)
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of
the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
| Common Stock, par value $0.01 per share |
|
AVB |
|
New York Stock Exchange |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or
Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ¨
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 20, 2026, AvalonBay Communities, Inc., a Maryland corporation
(“AvalonBay”), Equity Residential, a Maryland real estate investment trust (“Equity Residential”), ERP Operating
Limited Partnership, an Illinois limited partnership (the “ERP Operating Partnership”), and Canopy Merger Sub LLC, a Maryland
limited liability company and a direct wholly owned subsidiary of Equity Residential (“Merger Sub”), entered into an Agreement
and Plan of Merger (the “Merger Agreement”). Capitalized terms used but not defined herein have the meanings ascribed to them
in the Merger Agreement.
The Merger Agreement provides for the combination of Equity Residential
and AvalonBay in an all-stock merger-of-equals transaction upon the terms and subject to the conditions set forth in the Merger Agreement.
The combined company will operate under a new name to be announced prior to the closing of the Transactions (as defined below) (the “closing”).
The Board of Trustees of Equity Residential (the “Equity Residential Board”) and the Board of Directors of AvalonBay (the
“AvalonBay Board”) have each unanimously approved the Merger Agreement and the Transactions.
Upon the terms and subject to the conditions of the Merger Agreement,
(i) on the closing date but prior to the Effective Time (as defined below), AvalonBay will contribute certain assets set forth in an exhibit
to the Merger Agreement (the “Asset Contribution”) in exchange for units of partnership interest in the ERP Operating Partnership
(“OP Units”) that have, in the aggregate, a value equal to the fair market value of such contributed assets and (ii) following
the Asset Contribution and at the Effective Time, AvalonBay will merge with and into Merger Sub, with Merger Sub being the surviving entity
(the “Merger” and, together with the Asset Contribution and the other transactions contemplated by the Merger Agreement, the
“Transactions”). The AvalonBay Board has unanimously (a) determined and declared the Merger Agreement and the Transactions
fair to, advisable and in the best interests of AvalonBay and its stockholders, (b) approved and deemed advisable the execution and
delivery of the Merger Agreement, the performance by AvalonBay of its covenants and agreements contained therein and the consummation
of the Transactions, (c) directed that the approval of the Merger be submitted for consideration at a meeting of AvalonBay’s
stockholders and (d) resolved to recommend that AvalonBay’s stockholders vote in favor of the approval of the Merger and to
include such recommendation in the Joint Proxy Statement/Prospectus contemplated by the Merger Agreement.
Merger Consideration
Pursuant to the terms and subject to the conditions in the Merger Agreement,
at the effective time of the Merger (the “Effective Time”), by virtue of the Merger, each outstanding share of common stock
of AvalonBay, par value $0.01 per share (“AvalonBay Common Stock”), issued and outstanding immediately prior to the Effective
Time will automatically be cancelled, retired and will cease to exist, and will be converted into the right to receive 2.793 (the “Exchange
Ratio”) common shares of beneficial interest, $0.01 par value per share, of Equity Residential (“Equity Residential Common
Shares”), plus the right, if any, to receive cash in lieu of fractional Equity Residential Common Shares, if any, into which such
AvalonBay Common Stock would have been converted.
Post-Closing Governance
AvalonBay and Equity Residential have also agreed to certain governance-related
matters. At the Effective Time, the Board of Trustees of the combined company will have fourteen members, consisting of (a) seven members
of the Equity Residential Board as of immediately prior to the Effective Time, including David J. Neithercut and Stephen E. Sterrett,
and (b) seven members of the AvalonBay Board as of immediately prior to the Effective Time, including Timothy J. Naughton and Benjamin
W. Schall. In addition, effective as of the Effective Time, Stephen E. Sterrett will be appointed to serve as Chairman of the Board
of Trustees of the combined company, and Benjamin W. Schall will be appointed to serve as Chief Executive Officer of the combined company.
Treatment of AvalonBay Equity Awards
Pursuant to the terms and conditions of the Merger Agreement, as of
the Effective Time, each award of restricted shares of AvalonBay Common Stock that vest on the basis of time (each, an “AvalonBay
Restricted Share Award”) granted under an AvalonBay equity plan outstanding immediately prior to the Effective Time (subject to
certain exceptions), by virtue of the Merger, will be converted into an award of restricted Equity Residential Common Shares that is subject
solely to time-based vesting conditions (each, an “Equity Residential Time-Vesting Restricted Share Award”) with respect to
a number of Equity Residential Common Shares, rounded to the nearest whole number of shares, equal to the product of (i) the number
of shares of AvalonBay Common Stock subject to such AvalonBay Restricted Share Award immediately prior to the Effective Time and (ii) the
Exchange Ratio, subject to and in accordance with the terms of the applicable AvalonBay equity plan and AvalonBay Restricted Share Award
agreement in effect immediately prior to the Effective Time (including vesting schedule, retirement provisions, double-trigger vesting
acceleration entitlements and payment of dividend entitlements).
Each award with respect to shares of AvalonBay Common Stock that vest
on the basis of the achievement of applicable performance goals (each, an “AvalonBay Performance Award”) granted under an
AvalonBay equity plan outstanding immediately prior to the Effective Time, by virtue of the Merger, will be converted into an Equity Residential
Time-Vesting Restricted Share Award or an award of OP Units in the ERP Operating Partnership designated as a “Restricted Unit”
in the ERP Operating Partnership’s partnership agreement (each, an “Equity Residential Time Vesting Restricted Unit Award”)
with respect to a number of Equity Residential Common Shares, rounded to the nearest whole number of shares, equal to the product of (i)
the number of shares of AvalonBay Common Stock subject to such AvalonBay Performance Award immediately prior to the Effective Time, determined
by deeming any performance-based vesting criteria applicable to such AvalonBay Performance Award to be achieved based on the greater of
target performance and the actual level of performance (as calculated as of the latest practicable date prior to the Effective Time and
certified by the Compensation Committee of the AvalonBay Board prior to the Effective Time) and (ii) the Exchange Ratio, subject to and
in accordance with the terms of the applicable AvalonBay equity plan and form of AvalonBay Restricted Share Award agreement in effect
immediately prior to the Effective Time, including the time-based vesting schedule that was associated with that AvalonBay Performance
Award but with such other terms as are associated with the form of AvalonBay Restricted Share Award, including retirement provisions and
double-trigger vesting acceleration entitlements. Each holder of an AvalonBay Performance Award will also receive a payment in cash equal
to cumulative dividends paid by AvalonBay with respect to the shares of AvalonBay Common Stock deemed earned from the date of grant of
the AvalonBay Performance Award through the Effective Time.
Each award with respect to shares of AvalonBay Common Stock deferred
pursuant to the AvalonBay Directors’ Deferred Compensation Plan (each, an “AvalonBay Deferred Unit Award”) outstanding
immediately prior to the Effective Time, by virtue of the Merger, will be converted into a number of Equity Residential Common Shares,
rounded to the nearest whole number of shares, equal to the product of (i) the number of shares of AvalonBay Common Stock subject to such
AvalonBay Deferred Unit Award immediately prior to the Effective Time (inclusive of any dividends paid on shares of AvalonBay Common Stock
that have been reinvested and credited in the form of additional AvalonBay Deferred Unit Awards) and (ii) the Exchange Ratio, subject
to and in accordance with the terms of the AvalonBay Directors’ Deferred Compensation Plan, in a manner that complies with the requirements
of Section 409A (“Section 409A”) of the Internal Revenue Code (the “Code”).
Each option to purchase a number of shares of AvalonBay Common Stock
at a specific price per share (each, an “AvalonBay Option”) outstanding immediately prior to the Effective Time, by virtue
of the Merger, will be converted into an option to purchase a number of Equity Residential Common Shares at a specific price per share
(each, an “Equity Residential Option”) with respect to a number of Equity Residential Common Shares equal to the product,
rounded down to the nearest whole number of shares, of (i) the number of shares of AvalonBay Common Stock subject to such AvalonBay Option
immediately prior to the Effective Time and (ii) the Exchange Ratio, and with an exercise price per share, rounded up to the nearest whole
cent, equal to (A) the exercise price per share of AvalonBay Common Stock of such AvalonBay Option immediately prior to the Effective
Time divided by (B) the Exchange Ratio (each, an “Adjusted Equity Residential Option”). Each Adjusted Equity Residential Option
will continue to be subject to the terms of the applicable AvalonBay equity plan and AvalonBay Option award agreement in effect immediately
prior to the Effective Time, including the applicable vesting schedule, retirement provisions and double-trigger vesting acceleration
entitlements. The exercise price and the number of Equity Residential Common Shares subject to such Adjusted Equity Residential Options
will be determined in a manner consistent with the requirements of Section 409A.
Treatment of Equity Residential Equity Awards
Each Equity Residential Time-Vesting Restricted Share Award, Equity
Residential Time-Vesting Restricted Unit Award and Equity Residential Option granted under an Equity Residential equity plan outstanding
immediately prior to the Effective Time (subject to certain exceptions) will remain outstanding and continue to be subject to the terms
and conditions of the applicable Equity Residential equity plan and individual award agreement in effect immediately prior to the Effective
Time, including the applicable vesting schedule, retirement provisions and double-trigger vesting acceleration entitlements.
Each award of restricted Equity Residential Common Shares that is subject
to both time-based and performance-based vesting conditions (each, an “Equity Residential LTI Restricted Share Award”) and
each award of OP Units in the ERP Operating Partnership designated as a “Restricted Unit” in the ERP Operating Partnership’s
partnership agreement that is subject to both time-based and performance-based vesting conditions (each, an “Equity Residential
LTI Restricted Unit Award”) granted under an Equity Residential equity plan outstanding immediately prior to the Effective Time
will be deemed earned, with the applicable performance-based vesting conditions deemed to be achieved based on the greater of target performance
and the actual level of performance (as calculated as of the latest practicable date prior to the Effective Time and certified by the
Compensation Committee of the Equity Residential Board prior to the Effective Time) and any such earned Equity Residential LTI Restricted
Share Award and each Equity Residential LTI Restricted Unit Award will remain outstanding and continue to be subject to the terms and
conditions of the applicable Equity Residential equity plan and individual award agreement in effect immediately prior to the Effective
Time, including the applicable time-based vesting schedule, retirement provisions and double-trigger vesting acceleration entitlements.
All dividend equivalents owed with respect to such earned Equity Residential LTI Restricted Share Awards and earned Equity Residential
LTI Restricted Unit Awards will be paid promptly in accordance with applicable award terms.
Representations, Warranties and Covenants
The Merger Agreement contains representations and warranties from each
of AvalonBay and Equity Residential. Additionally, the Merger Agreement provides for pre-closing covenants of each of AvalonBay and Equity
Residential, including (i) to use commercially reasonable efforts to carry on their respective businesses in all material respects in
the ordinary course, consistent with past practice (subject to certain exceptions); (ii) to hold a meeting of AvalonBay’s stockholders
and Equity Residential’s shareholders to obtain the requisite approvals contemplated by the Merger Agreement, as applicable; (iii)
not to solicit proposals relating to alternative business combination transactions; and (iv) subject to certain exceptions, not to enter
into any discussion concerning, or provide confidential information in connection with, alternative business combination transactions.
Closing Conditions
The consummation of the Transactions is subject to certain customary
closing conditions, including, among others: (i) approval by AvalonBay’s stockholders of the Merger and approval by Equity Residential’s
shareholders of the issuance of Equity Residential Common Shares in the Merger; (ii) the absence of a law or order restraining, enjoining,
rendering illegal or otherwise prohibiting the consummation of the Merger; (iii) the effectiveness of a registration statement on Form
S-4 that will be filed by Equity Residential for the issuance of Equity Residential Common Shares in the Merger; (iv) the authorization
of the listing of the Equity Residential Common Shares on the New York Stock Exchange to be issued in the Merger, subject only to official
notice of issuance; (v) the accuracy of the representations and warranties of AvalonBay and Equity Residential as of the signing date
and as of the closing date (subject to certain qualifications); (vi) material compliance with each party’s covenants; (vii) the
receipt by each of AvalonBay and Equity Residential of tax opinions that the Merger will qualify as a “reorganization” within
the meaning of Section 368(a) of the Code, (viii) the receipt by AvalonBay of an opinion relating to the status of Equity Residential
as a real estate investment trust (“REIT”) under the Code and receipt by Equity Residential of an opinion relating to the
status of AvalonBay as a REIT under the Code and (ix) other customary conditions as specified in the Merger Agreement.
Termination
The Merger Agreement contains provisions granting each of AvalonBay
and Equity Residential the right to terminate the Merger Agreement under specified circumstances, including: (i) if the Merger is not
completed by May 20, 2027; (ii) if either AvalonBay’s stockholders fail to approve the Merger or Equity Residential’s shareholders
fail to approve of the share issuance in connection with the Merger; (iii) if a governmental entity of competent jurisdiction has issued
a final, non-appealable order, decree or ruling in each case permanently restraining, enjoining or otherwise prohibiting or making illegal
the consummation of the Merger; (iv) if the other party has breached its representations, warranties or covenants in the Merger Agreement,
subject to certain conditions; or (v) if the other party’s board has changed its recommendation in connection with the Merger. Upon
a termination of the Merger Agreement, under certain circumstances, AvalonBay will be required to pay a termination fee to Equity Residential
of the lesser of approximately $1.070 billion or the maximum amount that could be paid to Equity Residential without causing it to
fail to meet the REIT requirements for such year. Upon a termination of the Merger Agreement, under certain circumstances, Equity Residential
will be required to pay a termination fee to AvalonBay of the lesser of approximately $1.005 billion or the maximum amount that could
be paid to AvalonBay without causing it to fail to meet the REIT requirements for such year.
Dividends
During the term of the Merger Agreement, AvalonBay and Equity Residential
may not pay dividends or distributions without the prior written consent of the other party, other than in enumerated instances, including
the payment of (i) regular quarterly dividends (x) in respect of AvalonBay Common Stock at a rate not in excess of $1.78 per share,
per quarter, and (y) as required to be made in respect of limited partner interests of AvalonBay’s subsidiary partnership structured
as a DownREIT, (ii) regular quarterly dividends (x) in respect of Equity Residential Common Shares at a rate not in excess of
$0.7025 per share, per quarter, (y) pursuant to the terms of the Equity Residential Series K Preferred Shares and (z) as required
to be made in respect of OP Units, and (iii) distributions required for each of AvalonBay and Equity Residential to maintain their
respective status as a REIT under the Code or to avoid the incurrence of any entity-level income or excise tax. AvalonBay and Equity Residential
also agreed to take such actions as are necessary to ensure that the holders of AvalonBay Common Stock and Equity Residential Common Shares
each receive dividends covering the same periods prior to the closing date and to cooperate such that, beginning with the quarterly dividend
for the third quarter of 2026, their respective quarterly dividends will have the same record date and payment date.
The foregoing description of the Merger Agreement and the Transactions
does not purport to be complete and is subject to and qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached hereto as Exhibit 2.1 and which is incorporated by reference herein.
The Merger Agreement has been included to provide security holders
and investors with information regarding its terms. It is not intended to provide any other factual information about AvalonBay, Equity
Residential or any other person. The representations, warranties and covenants contained in the Merger Agreement were made solely for
purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, may be
subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes
of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the contracting parties that differ from those applicable to security holders. Security
holders and investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties
and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of AvalonBay or Equity Residential.
Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement,
which subsequent information may or may not be fully reflected in AvalonBay’s or Equity Residential’s public disclosures.
| Item 7.01 | Regulation FD Disclosure. |
On May 21, 2026, Equity Residential and AvalonBay issued a joint press
release announcing that they had entered into the Merger Agreement. A copy of the joint press release is attached hereto as Exhibit 99.1
and incorporated by reference herein.
Also on May 21, 2026, Equity Residential and AvalonBay released a joint
investor presentation. A copy of the joint investor presentation is attached hereto as Exhibit 99.2 and incorporated by reference herein.
The information contained in this Item 7.01 on Form 8-K is being furnished
and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any registration
statement or other document filed by AvalonBay under the Securities Act of 1933, as amended (the “Securities Act”), or the
Exchange Act, except as otherwise expressly stated in such filing. In addition, the information contained in this Item 7.01 on Form 8-K
will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of
Regulation FD.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
|
Exhibit
No. |
|
Description |
| 2.1 |
|
Agreement and Plan of Merger, dated as of May 20, 2026, by and among AvalonBay Communities, Inc., Equity Residential, ERP Operating Limited Partnership and Canopy Merger Sub LLC.* |
| 99.1 |
|
Joint Press Release, dated May 21, 2026. |
| 99.2 |
|
Joint Investor Presentation, dated May 21, 2026. |
| 104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Schedules and exhibits have been omitted pursuant to Instruction
4 of Item 1.01 of Form 8-K and Item 601(a)(5) of Regulation S-K. AvalonBay agrees to furnish supplementally a copy of such schedules
and exhibits, or any section thereof, to the Securities and Exchange Commission (the “SEC”) upon request; provided, however,
that AvalonBay may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, for any schedules so furnished.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act Securities Act, and Section 21E of the Exchange Act,
which are based on current expectations, estimates and projections about the industry and markets in which AvalonBay and Equity Residential
operate, as well as beliefs and assumptions of AvalonBay and Equity Residential. Words such as “anticipate,” “become,”
“believe,” “could,” “estimate,” “expect,” “forecast,” “intend,”
“may,” “outlook,” “plan,” “potential,” “possible,” “predict,”
“project,” “target,” “seek,” “shall,” “should,” “will,” or “would,”
including variations of such words and similar expressions, are intended to identify forward-looking statements. All statements that address
operating performance, events or developments that AvalonBay and Equity Residential expects or anticipates will occur in the future are
forward-looking statements, including statements relating to any possible transaction between AvalonBay and Equity Residential, multifamily
market conditions, development, redevelopment, acquisition or disposition activity, general conditions in the geographic areas where AvalonBay
and Equity Residential operate and AvalonBay’s and Equity Residential’s respective debt, capital structure and financial position.
Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions
and other factors that are difficult to predict and may cause the actual results to differ materially from future results expressed or
implied by such forward-looking statements.
Important factors, risks and uncertainties that
could cause actual results to differ materially from such plans, estimates or expectations include but are not limited to: (i) the
parties’ ability to complete the proposed transaction on the proposed terms or on the anticipated timeline, or at all, including
risks and uncertainties related to AvalonBay’s and Equity Residential’s ability to obtain the required respective stockholder
approval, and the parties’ ability to satisfy the other conditions to consummating the proposed transaction; (ii) the inability
to realize the anticipated benefits of the proposed transaction, including as a result of delay in completing the proposed transaction;
(iii) the risk that AvalonBay’s and Equity Residential’s businesses will not be integrated successfully or that such integration
may be more difficult, time-consuming or costly than expected; (iv) significant transaction costs and/or unknown or inestimable liabilities;
(v) potential litigation relating to the proposed transaction that could be instituted against AvalonBay, Equity Residential or their
trustees, directors, managers or officers, including resulting expense or delay and the effects of any outcomes related thereto; (vi) the
risk that disruptions from the proposed transaction, including diverting the attention of AvalonBay and Equity Residential management
from ongoing business operations, will harm AvalonBay’s and Equity Residential’s businesses during the pendency of the proposed
transaction or otherwise; (vii) certain restrictions during the pendency of the business combination that may impact AvalonBay’s
and Equity Residential’s ability to pursue certain business opportunities or strategic transactions; (viii) the possibility
that the business combination may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
(ix) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including
in circumstances requiring AvalonBay and Equity Residential to pay a termination fee; (x) the effect of the announcement of the proposed
transaction on the ability of AvalonBay and Equity Residential to operate their respective businesses and retain and hire key personnel,
and to maintain favorable business relationships; (xi) risks related to the market value of Equity Residential Common Shares to be issued
in the proposed transaction; (xii) other risks related to the completion of the proposed transaction and actions related thereto; (xiii) potential
business uncertainty, including changes to existing business relationships, during the pendency of the business combination or otherwise
that could affect AvalonBay’s and Equity Residential’s financial performance; (xiv) other risks related to the completion
of the proposed transaction and actions related thereto; (xv) legislative, regulatory and economic developments, including the level
of new multifamily communities construction and development, government regulations and competition; (xvi) unpredictability and severity
of local, regional, national and international economic, political and catastrophic climates, conditions and events, including but not
limited to acts of terrorism, outbreaks of war or hostilities or pandemics, as well as management’s response to any of the aforementioned
factors; (xvii) changes in global financial markets, interest rates and foreign currency exchange rates; (xviii) increased or unanticipated
competition affecting AvalonBay’s and Equity Residential’s properties; (xix) risks associated with acquisitions, dispositions,
development and redevelopment of properties; (xx) increased costs of labor and construction material; (xxi) maintenance of real estate
investment trust status, tax structuring and changes in income tax laws and rates; (xxii) environmental uncertainties, including risks
of natural disasters; (xxiii) those risks and uncertainties set forth in AvalonBay’s and Equity Residential’s Annual Reports
on Form 10-K for the year ended December 31, 2025 under the headings “Forward-Looking Statements” and “Risk Factors,”
as such risk factors may be amended, supplemented or superseded from time to time by other reports filed by AvalonBay and Equity Residential,
as the case may be, with the SEC from time to time, which are available via the SEC’s website at www.sec.gov; and (xxiv) those risks
that will be described in the Registration Statement and Joint Proxy Statement/Prospectus (each as defined below) that will be filed with
the SEC in connection with the proposed transaction and available from the sources indicated below. There can be no assurance that the
proposed transaction will be completed, or if it is completed, that it will close within the anticipated time period. These factors should
not be construed as exhaustive and should be read in conjunction with the other forward-looking statements. Forward-looking statements
relate only to events as of the date on which the statements are made. Neither AvalonBay nor Equity Residential undertakes any obligation
to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments
or otherwise. If one or more of these or other risks or uncertainties materialize, or if AvalonBay’s and Equity Residential’s
underlying assumptions prove to be incorrect, AvalonBay’s, Equity Residential’s and the combined company’s actual results
may vary materially from what AvalonBay and Equity Residential may have expressed or implied by these forward-looking statements. AvalonBay
and Equity Residential caution not to place undue reliance on any of AvalonBay’s or Equity Residential’s forward-looking statements.
Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may
affect AvalonBay or Equity Residential.
No Offer or Solicitation
This communication is for informational purposes
only and is not intended to, and shall not, constitute an offer to sell or the solicitation of an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any offer, solicitation or sale of securities
in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section
10 of the Securities Act.
Important Additional Information and Where
to Find It
In connection with the proposed transaction between
AvalonBay and Equity Residential, Equity Residential intends to file with the SEC a registration statement on Form S-4 (the “Registration
Statement”) that will include a joint proxy statement of AvalonBay and Equity Residential that also constitutes a prospectus of
Equity Residential (the “Joint Proxy Statement/Prospectus”). A definitive Joint Proxy Statement/Prospectus will be mailed
to AvalonBay’s stockholders and Equity Residential’s shareholders seeking their respective approval of the proposed transaction
and other related matters. Each of AvalonBay and Equity Residential may also file other relevant documents with the SEC regarding the
proposed transaction. This communication is not a substitute for the Registration Statement, Joint Proxy Statement/Prospectus or any other
document that AvalonBay and Equity Residential (as applicable) may file with the SEC in connection with the proposed transaction. BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF AVALONBAY AND Equity
Residential ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS
AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS
WHEN THEY BECOME AVAILABLE WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus
(when they become available) and other documents filed with the SEC by AvalonBay and Equity Residential, which contain important information,
through the website maintained by the SEC at www.sec.gov. The documents filed by AvalonBay with the SEC may be obtained free of charge
by accessing the “Investor” section of AvalonBay’s website at www.avalonbay.com or by writing to AvalonBay, 4040 Wilson
Blvd., Suite 1000, Arlington, Virginia 22203, Attention: Corporate Secretary (Legal Department) or by email at investor_relations@avalonbay.com.
The documents filed by Equity Residential with the SEC may be obtained free of charge by accessing “Filings – SEC Filings”
in the “Investor” section of Equity Residential’s website at www.equityapartments.com, by writing to Equity Residential
– Investor Relations, Two North Riverside Plaza, Suite 500, Chicago, Illinois 60606, by telephone at 1-888-879-6356 or by email
at investorrelations@eqr.com.
Participants in the Solicitation
AvalonBay, Equity Residential, and certain of
their respective trustees, directors and executive officers may be deemed to be participants in the solicitation of proxies from AvalonBay’s
and Equity Residential’s stockholders in respect of the proposed transaction. Information about the directors and executive officers
of AvalonBay, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in AvalonBay’s
proxy statement for its 2026 Annual Meeting of Stockholders under the headings “Director Nominees,” “Transactions with
Related Persons, Promoters and Certain Control Persons,” “Director Compensation,” “Director Compensation Table,”
“Compensation Discussion and Analysis,” “Executive Compensation Tables” and “Officers, Stock Ownership and
Other Information,” which was filed with the SEC on April 6, 2026, and in AvalonBay’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2025, which was filed with the SEC on February 27, 2026. Information about the trustees
and executive officers of Equity Residential, including a description of their direct or indirect interests, by security holdings or otherwise,
is set forth in Equity Residential’s proxy statement for its 2026 Annual Meeting of Shareholders under the headings “Biographical
Information and Qualifications of Trustees,” “Biographical Information of Executives,” “Common Share Ownership
of Trustees and Executives,” “Compensation Discussion and Analysis,” “Executive Compensation” and “Trustee
Compensation,” which was filed with the SEC on April 14, 2026, and in Equity Residential’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2025, which was filed with the SEC on February 13, 2026. To the extent holdings of AvalonBay’s
securities by its directors and executive officers have changed since the amounts set forth in AvalonBay’s definitive proxy statement
for its 2026 Annual Meeting of Stockholders or the holdings of Equity Residential’s securities by its trustees or executive officers
have changed since the amounts set forth in Equity Residential’s definitive proxy statement for its 2026 Annual Meeting of Shareholders,
such changes have been or will be reflected on an Initial Statement of Beneficial Ownership of Securities on Form 3, Statement of Changes
in Beneficial Ownership on Form 4, or Annual Statement of Changes in Beneficial Ownership on Form 5, in each case filed with the SEC and
available on the SEC’s website at www.sec.gov. Other information regarding the participants in the proxy solicitations and a description
of their direct and indirect interests, by security holdings or otherwise, will be contained in the Registration Statement, the Joint
Proxy Statement/Prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials
become available. Investors and security holders should read the Registration Statement and the Joint Proxy Statement/Prospectus carefully
when they become available before making any voting or investment decisions. Investors may obtain free copies of these documents from
AvalonBay or Equity Residential using the sources indicated above.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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AVALONBAY COMMUNITIES, INC. |
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| Dated: May 21, 2026 |
By: |
/s/ Kevin P. O’Shea |
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Kevin P. O’Shea |
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Chief Financial Officer |
