Morgan Stanley's ( MWD) Prime Property Fund agreed to acquire AMLI Residential Properties Trust ( AML) in a cash transaction that values the apartment owner at $37.75 a share.

Those terms give stockholders a 20.7% premium over the last close. The management team of AMLI, based in Chicago, will remain in place. Holders of limited partnership units in AMLI's operating partnership will also receive $37.75 in cash for each unit.

Based on the per-share price, the stock portion of the deal is valued around $969 million. The total consideration is around $2.1 billion, including AMLI's debt and preferred securities.

The companies expect to close the transaction in the first quarter. AMLI owns 75 apartment communities containing 28,356 apartment homes, with an additional 827 apartment homes under development or in leasing in three locations.

AMLI shares closed at $31.27 on Friday.