Private equity firm Lone Star Funds said it had agreed to buy real estate investment trust (REIT) Home Properties Inc (HME.N) for about $7.6 billion, including debt.
Shares of Home Properties, which owns and operates apartment communities in the suburbs of major metropolitan areas mainly along the U.S. East Coast, rose 2.7 percent to $74.70 in early trading on Monday.
Lone Star, which invests in real estate, equity, credit, and other financial assets, offered to buy Home Properties for $75.23 per share in cash, a 3.4 percent premium to the stock's Friday close.
The deal will give Lone Star an additional 121 communities with 41,917 apartment units and is the company's second large apartment purchase since it bought a 64-property, 20,439-unit portfolio for $1.8 billion in 2014.
Home Properties will also sell up to six properties valued at $908 million to UDR Inc, a Highlands Ranch, Colorado-based REIT, in a separate transaction.
The Lone Star bid comes with a "go shop" provision, under which Home Properties can solicit alternative proposals from third parties in the next 30 days.
Home Properties will become a private company after the deal closes at the end of the year, the REIT said.
BofA Merrill Lynch and Houlihan Lokey are advising Home Properties, while Goldman Sachs & Co is Lone Star's financial adviser.
Lone Star has already received $6.1 billion of fully committed financing from Goldman Sachs, the company said.
Up to Friday's close, Home Properties' shares had risen about 11 percent this year, outperforming a 3.3 percent fall in the Dow Jones U.S. Real Estate Investment Trusts Index .DJUSRI.
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