Equity Residential, Toll Brothers Partner to Develop Residential Properties Throughout U.S., Including Southern California

Equity Residential, Toll Brothers, Toll Brothers Apartment Living, Atlanta, Austin, Boston, Denver, Orange County, San Diego, Seattle, Dallas-Fort Worth
Courtesy of Daniel Guerra

CHICAGO, Ill. and FORT WASHINGTON, Pa., Aug. 24, 2021– 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.