Founded in 1980, Grove currently has more than 6,000 apartment units in Connecticut, Maine, Massachusetts and Rhode Island. Under the $461-million agreement, Grove shareholders would receive about $17 per share in cash. The acquisition price includes $251 million in debt, of which Equity will assume some $244 million. Equity also has 19 multifamily properties in New England, but Navarro says he believes his company will continue to concentrate on the six-state region once the deal is completed. Structured as an UPREIT, Grove has traditionally targeted infill suburban locations, with a focus on acquiring and upgrading older properties.

New England "is our specialty," Navarro says. "It's part of the reason they bought our company, and I think they believe we can create value over the long term." To date, Grove Property Trust has been among the better-performing operations of its kind, with SNL Real Estate Securities Monthly estimating its total return during the past three years at 110%. It was also the 10th best performing REIT on a total return basis in 1999 and has a current market capitalization of $320 million.

Consolidation of the REIT industry has been on the upswing lately, partly due to the sector's recent struggles. Navarro believes the trend "makes a lot of sense," given that it can create economies of scale and provide greater operating efficiencies.