Start by inverting the question. Instead of “why did AvalonBay and Equity Residential merge,” ask “what would have to be true for them not to merge.” For them not to merge, the stock would need to trade at or above net asset value, so management could issue equity and grow through acquisition without dilution. The dividend payout ratio would need room, so the company could fund development internally without external capital. The cost of capital would need to sit below the cap rate on new buildings, so the engine kept turning. None of those things were true. Both stocks had traded 13-20% below NAV for over a year. Payout ratios climbed from 65-70% historically to roughly 85% today. The cost of capital flipped above the asset yield in 2022 and has not flipped back. So the inversion answers itself. The merger isn’t a choice. It is the only move the structure leaves on the table once the other moves stopped working.