Dive Brief:
- Beverly Hills, California-based real estate investment company Kennedy Wilson is acquiring Toll Brothers Apartment Living platform, including its in-house development team and its interests in a portfolio of completed properties and assets under development, for $347 million, according to a Thursday press release. The transaction is expected to close in October.
- Kennedy Wilson will acquire Toll’s general interest in 18 apartment and student housing properties, totaling $2.2 billion of assets under management, and a pipeline of 29 sites in various stages of development, which could be worth approximately $3.6 billion if completed.
- Additionally, Kennedy Wilson will manage 20 apartment and student housing properties from the Fort Washington, Pennsylvania-based home builder, totaling over $3 billion in assets under management. Toll Brothers will sell those properties over time and exit the apartment business.
Dive Insight:
Kennedy Wilson expects to make an initial investment of approximately $90 million in the acquired interests.
“This purchase helps create an unparalleled national platform within the rental housing space that totals over 80,000 units we own, finance or manage, and solidifies Kennedy Wilson’s fully integrated capabilities across real estate development, acquisitions and asset management along with a market-leading housing-focused credit platform,” William McMorrow, chairman and CEO of Kennedy Wilson, said in the press release.
Kennedy Wilson plans to make offers to all employees of Toll Brothers Apartment Living and anticipates the entire executive team will join the company to oversee the existing portfolio and further grow the development platform.
As part of the deal, Kennedy Wilson will refer prospective for-sale housing opportunities to Toll Brothers. The builder will reciprocate with rental housing opportunities, creating a mutually beneficial pipeline of shared deal flow.
“This transaction will unlock significant capital for our stockholders, while allowing us to focus on our core homebuilding business and continue our transformation to a more asset-light homebuilder,” Douglas C. Yearley, Jr., chairman and CEO of Toll Brothers, said in the press release.
Kennedy Wilson has had an active year. In June, its investment management platform announced the acquisition of The Danforth in Seattle for $173 million.
In April, Kennedy Wilson launched a new real estate investment platform to provide preferred equity and mezzanine capital for multifamily and industrial sponsors in the U.S. with Tokyu Land US Corp., a subsidiary of large Japanese real estate developer Tokyu Land Corp.
Kennedy Wilson and Tokyu will target over $200 million in preferred equity investments and mezzanine loans to sponsors across multifamily and industrial projects nationwide. The platform’s target investment size will typically range between $10 million and $50 million.
Toll Brothers, like Miami-based public home building rival Lennar, made big bets on the apartment business in the 2010s, as home building slowed following the Global Financial Crisis, according to Multifamily Executive.
However, both companies have cooled on the sector in the 2020s. Charlotte, North Carolina-based Quarterra Group, the multifamily subsidiary of Lennar, has been scaling down its operations over the past couple of years.
In a deal that closed last June, New York City-based global investment firm KKR purchased 5,200 units from Quarterra for about $2.1 billion. In September, it sold another 1,400 apartments to QuadReal Property Group, a Vancouver, British Columbia-based global real estate investment, operating and development company.
Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.
