Equity Residential (NYSE: EQR), an S&P 500 company focused on
the acquisition, development and management of residential rental
properties located in and around dynamic cities, and Toll Brothers,
Inc. (NYSE: TOL), the nation’s leading builder of luxury homes,
through its Toll Brothers Apartment Living division, today
announced the establishment of a strategic partnership to develop
new rental apartment communities in key U.S. markets. Through the
partnership, the parties initially intend to focus on selectively
acquiring and developing sites for apartment rental communities in
six metro markets where both parties have a significant or growing
presence: Atlanta; Austin; Boston; Denver; Orange County/San Diego;
and Seattle, as well as in Dallas-Fort Worth, a market that Equity
Residential has recently re-entered.
Over the next three years, Equity Residential
will invest 75% of the equity for each selected project and Toll
Brothers will invest 25%. It is expected that each project will
also be financed with approximately 60% leverage. Equity
Residential will have the option to acquire each property upon
stabilization. The parties have targeted an initial minimum
co-investment of approximately $750M in combined equity, or nearly
$1.9B capacity, assuming 60% leverage. These targets, which are
subject to identifying mutually acceptable properties, could
increase if additional opportunities are identified. Three
properties currently controlled by Toll Brothers, with a total
anticipated project cost of approximately $242 million, are
expected to jump-start the venture.
Toll Brothers will act as managing member of
each project, overseeing approvals, design and construction for
which it will receive development, construction management, and
financing fees, as well as a promoted interest to be realized upon
the sale of each property and has, with limited exceptions, agreed
to develop apartment projects exclusively with Equity Residential
in the designated metro markets. Equity Residential will receive
fees for property management, leasing and marketing services, as
well as construction oversight.
“We are delighted to be working again with Toll
Brothers and their experienced apartment development team, with
whom we’ve had a long and successful business relationship,” said
Mark J. Parrell, President and CEO of Equity Residential. “This
venture will marry Equity Residential’s market knowledge and
balance sheet strength with Toll Brothers’ existing deep
development capability to produce high quality apartment properties
in our expansion markets and predominantly suburban locations in
our existing markets that appeal to our affluent renter
demographic. We expect this venture to create significant
value for our shareholders, to accelerate our diversification
efforts and to allow us to efficiently scale up our development
efforts.”
“We are thrilled to join with Equity Residential
in this exciting partnership which offers tremendous benefit to
both of our organizations,” said Douglas C. Yearley, Jr., Chairman
and CEO of Toll Brothers. “This venture will increase the capital
efficiency of our Toll Brothers Apartment Living platform, allowing
us to develop more apartments with less capital. Having Equity
Residential co-investing with us at initial site acquisition and
being the likely purchaser of developed properties at stabilization
will enable our Apartment Living business to improve return on
equity and to generate a higher and more predictable income stream
through consistent and recurring fees and property sales.”
About Equity Residential
Equity Residential is committed to creating
communities where people thrive. The Company, a member of the
S&P 500, is focused on the acquisition, development and
management of residential properties located in and around dynamic
cities that attract high quality long-term renters. As of July 26,
2021, Equity Residential owns or has investments in 306 properties
consisting of 79,117 apartment units, with a significant presence
in Boston, New York, Washington, D.C., Seattle, San Francisco and
Southern California, and an expanding presence in Denver, Atlanta,
Dallas and Austin. For more information on Equity Residential,
please visit our website at www.equityapartments.com.
About Toll Brothers
Toll Brothers, Inc., a FORTUNE 500 Company, is
the nation's leading builder of luxury homes. The Company was
founded over 50 years ago in 1967 and became a public company in
1986. Its common stock is listed on the New York Stock Exchange
under the symbol “TOL.” The Company serves first-time, move-up,
empty-nester, active-adult, and second-home buyers, as well as
urban and suburban renters. Toll Brothers builds in 24 states:
Arizona, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Idaho, Illinois, Maryland, Massachusetts, Michigan,
Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania,
South Carolina, Tennessee, Texas, Utah, Virginia, and Washington,
as well as in the District of Columbia. The Company operates its
own architectural, engineering, mortgage, title, land development,
golf course development, smart home technology, and landscape
subsidiaries. The Company also operates its own lumber
distribution, house component assembly, and manufacturing
operations. For more information, please visit
www.tollbrothers.com.
About Toll Brothers Apartment
Living®
Toll Brothers Apartment Living is the wholly
owned apartment development division of Toll Brothers, Inc. (NYSE:
TOL). Toll Brothers Apartment Living is bringing the same quality,
value, and service familiar to luxury home buyers throughout the
country to upscale rental communities in select markets, including
Atlanta, Austin, Boston, Dallas, Denver, Los Angeles, New York,
Philadelphia, Phoenix, San Diego and Washington, DC. Toll Brothers
Apartment Living was ranked 11th largest apartment developer in the
U.S. in 2020 by the National Multi-Family Housing Council. The firm
has developed more than 7,900 units, has more than 5,300 units
under management and controls a national pipeline of more than
14,800 units. Toll Brothers Apartment Living communities combine
the energy of vibrant locations with unparalleled amenities,
resident services, design, and the expertise of the nation’s
leading builder of luxury homes. For more information visit
TollBrothersApartmentLiving.com.
Forward-Looking Statements
In addition to historical information, this
press release contains forward-looking statements and information
within the meaning of the federal securities laws. These statements
are based on current expectations, estimates, projections and
assumptions made by management. While Equity Residential’s and Toll
Brothers’ management believe the assumptions underlying these
forward-looking statements are reasonable, such information is
inherently subject to uncertainties and may involve certain risks,
including, without limitation, changes in general market
conditions, including the rate of job growth and cost of labor and
construction material, the level of new multifamily construction
and development, competition and government regulation. In
addition, these forward-looking statements are subject to risks
related to the COVID-19 pandemic, many of which are unknown,
including the duration and severity of the pandemic, the extent of
the adverse health impact on the general population and on our
residents, customers and employees in particular, its impact on the
employment rate and the economy and the corresponding impact on our
residents’ and tenants’ ability to pay their rent on time or at
all, the extent and impact of governmental responses, the rollout
and effectiveness of vaccines and the impact of operational changes
we have implemented and may implement in response to the pandemic.
Other risks and uncertainties are described under the heading “Risk
Factors” in our Annual Reports on Form 10-K and subsequent periodic
reports filed with the Securities and Exchange Commission (SEC) and
available on our websites, www.equityapartments.com and
www.tollbrothers.com. Many of these uncertainties and risks are
difficult to predict and beyond management’s control.
Forward-looking statements are not a guarantee of future
performance, results or events. Equity Residential and Toll
Brothers assume no obligation to update or supplement
forward-looking statements that become untrue because of subsequent
events.
CONTACTS:
Marty McKenna, EQR: (312) 928-1901, mmckenna@eqr.com
Frederick Cooper, TOL: (215) 938-8312,
fcooper@tollbrothers.com
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