American Homes 4 Rent (NYSE:AMH) and American Residential Properties, Inc. (NYSE:ARPI) Merge

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American Homes 4 Rent (NYSE:AMH) this morning has announced that they will be merging in a tax-free transaction with American Residential Properties, Inc. (NYSE:ARPI). The value of the deal, in which American Homes 4 Rent (NYSE:AMH) will issue approximately 38 million shares to ARPI as well as pay off around $800 million in their debt, is worth $1.5 billion. Both company are expecting the merger to close in the first half of next year. Combined, the new entity will own around 47,000 homes in 22 different states, equating to an aggregate real estate cost basis surpassing $8 billion.

“We are delighted to announce our agreement to combine with American Residential Properties, further establishing American Homes 4 Rent as the largest publicly-traded owner and operator of single family rental homes. American Residential Properties has a high quality portfolio of homes which fit strategically in our markets, offering significant opportunities to capture further operating efficiencies on the combined platform,” explained David Singelyn, Chief Executive Officer of American Homes 4 Rent. “Moving ahead, we look forward to creating additional value for the shareholders of the combined company while strengthening our position as a premier company in the single-family rental sector.” The stock decreased 0.24% or $0.04 during the last trading session, hitting $16.75. Approximately shares traded hands. AMH shares have declined 0.83% since April 30, 2015 and are currently downtrending. It has underperformed the S&P500 by 0.63%.

From a total of 2 analysts covering American Homes 4 Rent (NYSE:AMH) stock, 2 rate it a “Buy”, 0 a “Sell”, and 0 a “Hold”. This means that 100% of the ratings are positive. The highest target price is $19 while the lowest target price is $19. The mean of all analyst targets is $19 which is 13.43% above today’s ($16.75) stock price. American Homes 4 Rent was the topic of 3 analyst reports since August 10, 2015 according to the firm StockzIntelligence Inc. Zacks upgraded shares on August 18 to a “Sell” rating.

The institutional sentiment increased to 1.17 in Q2 2015. It’s up 0.05, from 1.12 in 2015Q1. The ratio improved, as 31 funds sold all their American Homes 4 Rent shares they owned while 50 reduced their positions. 24 funds bought stakes while 71 increased their total positions. Institutions now own 165.73 million shares which is 6.86% more than the previous share count of 155.09 million in 2015Q1.

Long Pond Capital Lp holds 8.64% of its total portfolio in American Homes 4 Rent, equating to 14.71 million shares. Starwood Real Estate Securities Llc owns 952,140 shares representing 5.36% of their total US portfolio. Moreover, Ejf Capital Llc has 4.28% of their total portfolio invested in the company, equating to 7.24 million shares. The United Kingdom-based Algebris Investments (Uk) Llp has a total of 1.99% of their portfolio invested in the stock. Clearbridge Llc, a Maryland-based fund reported 6.56 million shares owned.

American Homes 4 Rent is an internally managed real estate investment trust . The company has a market cap of $3.49 billion. The Firm focuses on acquiring, renovating, leasing and operating single-family homes as rental properties. It currently has negative earnings. The Firm has an integrated operating platform that consists of personnel engaged in property management, acquisitions, construction, marketing, leasing, financial and administrative functions.

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