PPS Post Properties, Inc. (delisted)

Real-estate investment trust MAA is nearing a deal to buy Post Properties Inc. for about $4 billion, bringing together two major apartment owners who have benefited from a boom in rental demand.

Post investors are to get 0.71 share of new MAA stock for each share they own in a deal that could be announced Monday, people familiar with the matter said.

On Friday, Post had a market valuation of $3.3 billion, while MAA's was nearly $8 billion. Shares of both companies have soared in recent years as investors have been drawn to their relatively rich payouts with interest rates at historic lows.

Apartment managers have also benefited from the housing recovery as rising home prices have turned many would-be buyers into renters. Nevertheless, rent growth has begun to slow, creating an incentive for mergers that bring expense reductions.

Year to date, real estate is the second-busiest sector for mergers and acquisitions globally with more than $215 billion of transactions announced, according to Dealogic.

Meanwhile, there have been more than $52 billion in deals among REITs, which can include apartment complexes, hotels and other types of businesses. REITs typically manage properties, collect rent and pass profits onto shareholders.

The merger would create the largest multifamily REIT by number of units, with about 105,000 across 317 properties, the people said. The new group would have deep exposure to the fast-growing Sunbelt region, in markets including Atlanta, Dallas, Houston and Washington, DC.

Bringing the two companies together is expected to produce so-called synergies—mainly cost savings—of about $20 million.

MAA owns or has stakes in more than 80,000 apartments in 15 states, according to its website. Buying Post would give it a portfolio of higher-yielding properties as average monthly rent per unit for Post is $1,483, compared with $1,031 for MAA.

MAA has grown by acquisition, bolstering its presence in the Sunbelt. In 2013, it bought Colonial Properties Trust in a $2.3 billion deal. At the time, it was the largest merger of publicly traded apartment-building firms since the housing and financial crises. Since the Colonial deal, MAA has selectively bought up other apartment complexes.

Post, based in Atlanta, is one of the U.S.'s largest developers and operators of upscale multifamily properties, according to its website. The company, which is also structured as a REIT, has more than 22,000 apartment units in its portfolio.

Post has a colorful history. It was founded in 1971 by John A. Williams, who served as CEO until 2002. Mr. Williams tried to regain control of the company after it removed him as chairman, launching a proxy fight for control of the board.

Mr. Williams lost the proxy battle in 2003, only to resurface in 2008, joining forces with a Montreal pension fund to make an unsolicited offer for the company. Post decided to put itself up for sale, but the timing coincided with weakening financial markets and no deal was reached.

MAA's Chief Executive Eric Bolton Jr. is to be CEO of the combined company, one of the people said. The company plans to retain the MAA name and locate its corporate headquarters in Memphis, where MAA is currently based, with a big presence in Atlanta and Dallas as well.

Current MAA equity investors are to own about 68% of the combined company, with Post shareholders owning the rest. The tax-deferred transaction is expected to close in the fourth quarter.

Write to Dana Mattioli at dana.mattioli@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

(END) Dow Jones Newswires

August 14, 2016 21:45 ET (01:45 GMT)

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