Independence Realty Trust is merging with Centerspace to grow its portfolio by nearly 30% and expand it into a 44,000-unit multifamily REIT. 

IRT will acquire 47 communities with a combined 10,456 units in six states from Centerspace in an all-stock deal that will give the REIT an $8.1B enterprise value, the firm disclosed Wednesday.

Each Centerspace share will be swapped for 3,800 shares of IRT in the deal, which will leave Centerspace shareholders with roughly 22% of the merged company’s combined equity. The deal will create roughly 67.6 million new IRT shares. 

Centerspace’s portfolio is entirely in the Mountain West and Midwest, while IRT has a 79% concentration in the Sun Belt. The deal will shift IRT’s share of Sun Belt exposure to 58% of the portfolio, with 27% in the Midwest and the remaining in the Mountain West, according to a filing with the Securities and Exchange Commission.

“By pairing our high-growth Sunbelt portfolio — which remains our largest exposure and primary growth engine — with Centerspace’s stable Midwest and recovering Mountain West communities, we are building a platform in markets that have historically delivered above-average NOI growth with lower volatility,” IRT CEO Scott Schaeffer said in a statement. 

The combined portfolio will be roughly 95% leased with an average monthly rent of $1,628, higher than IRT’s independent average of $1,593 per month.

The deal is expected to close in the fourth quarter, pending shareholder approval. IRT leadership will take over management of the portfolio and expand its board of directors by two seats that will come from Centerspace. 

Schaeffer will continue to lead the board, and Jim Sebra will stay in place as IRT’s chief financial officer. IRT didn’t say whether any Centerspace executives would be joining the team, but it did say it had identified opportunities for corporate cost savings.

“This transaction delivers compelling value for Centerspace shareholders, who will benefit from participation in a larger, more efficient enterprise with enhanced access to capital markets, and a meaningful reduction in leverage,” Centerspace CEO Anne Olson said. “We are excited for our shareholders to participate in the long-term upside of the combined company.”

Shares in Centerspace were trading up more than 10% early Wednesday, while IRT was trading down by more than 2%.

The deal is neutral on debt, and IRT management expects it to be immediately accretive, with $24M of “identified annual synergies,” $19M of which is at the corporate level, with the remaining being saved at the property level.

The planned merger is the latest in a string of consolidation in the multifamily space as landlords face pressure from slow rent growth and rising costs. 

Also on Wednesday, Indianapolis-based Milhaus announced it had completed its acquisition of investment firm Broadshore Capital Partners. That deal followed a July merger between developer and investment firm Milhaus and Newport Beach, California-based SRG Residential that expanded its portfolio to more than 50,000 apartments under third-party management in 21 markets.  

Earlier this month, Milwaukee-based Mandel Group agreed to sell most of its portfolio to Cottonwood Communities in a $600M deal that combined the two companies’ property management platforms. That deal left Mandel with a $900M portfolio while growing Cottonwood's portfolio to 13,400 apartments in 16 states. 

Last month, AvalonBay Communities and Equity Residential merged to create Vivmark Residential, creating a massive REIT with 184,000 units across the U.S.