American Homes 4 Rent, the largest publicly traded U.S. single-family home landlord, agreed to acquire a smaller competitor, American Residential Properties Inc., in a deal valued at $1.5 billion, including debt.

The combined company will own more than 47,000 homes in 22 states and will have a stock-market value of $5.5 billion, according to a statement Thursday. American Homes 4 Rent will issue about 38 million shares and assume or repay about $800 million of American Residential Properties debt. Investors will get 1.135 shares or units of American Homes for each American Residential share they own. That values the target company at $19.01 a share, about 8.7% more than Wednesday's closing price.

Opportunities for investors to buy foreclosures or other discounted properties have diminished as U.S. home prices surged more than 30% from the 2012 low. Single-family landlords, which own rental houses scattered across the U.S., have been consolidating and buying real estate in bulk so they can operate more efficiently. Scale is critical to enable companies to drive returns and achieve a low cost of capital, Jade Rahmani, an analyst with Keefe Bruyette & Woods, said in a note to clients this week.

"The opportunity to grow efficiently in our markets has slowed," David Singelyn, chief executive officer of American Homes 4 Rent, said on a conference call with investors to discuss the transaction. "There is no way to effectively operate this business without scale."

As of Sept. 30, the Agoura Hills, Calif.-based company owned 38,377 single-family properties, about four times as many as American Residential, according to the statement.

American Residential shares rose 2% to close at $17.84. American Homes 4 Rent dropped 4.6%, the most since its August 2013 initial public offering, to $15.98.

American Residential, based in Scottsdale, Ariz., last week became a target of activist investor Jonathan Litt, who said the company was poorly managed and may need new directors to boost its value for shareholders. The stock is trading at about 15% below its May 2013 IPO price of $21.

"We are pleased the board of American Residential Properties has chosen to move forward with a transaction which we believe represents a positive outcome for all shareholders," Litt said in an emailed statement Thursday.

The deal is the latest in a string of recent transactions in the industry. In September, Starwood Waypoint Residential Trust and Colony American Homes, two of the largest U.S. single-family home landlords, said they would merge in an all-stock transaction. Large bulk deals among home-rental companies include Silver Bay Realty Trust Corp.’s purchase of almost 2,400 houses from The American Home for $263 million in April. American Homes 4 Rent in July 2014 bought more than 1,300 properties from Beazer Pre-Owned Rental Homes Inc.

American Homes 4 Rent's acquisition of American Residential Properties is expected to close in the first half of 2016. Upon completion, American Residential investors will own about 12.6% of the common shares and units of the combined company, according to the statement.

The top five markets for the combined company will be Dallas, Indianapolis, Atlanta, Charlotte and Chicago, Singelyn said. The average monthly rent for its homes will be $1,400.

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