BEVERLY HILLS, CALIF. AND FORT WASHINGTON, PA. — Kennedy Wilson (NYSE: KW) has agreed to acquire the Toll Brothers Apartment Living platform from the national homebuilder for $347 million. The transaction is expected to close next month and will bring more than $5 billion of assets under management to Kennedy Wilson.
The acquisition includes ownership of 18 apartment and student housing properties valued at $2.2 billion, as well as management contracts for an additional 20 properties totaling $3 billion in value. Kennedy Wilson will also take control of — and assume the construction management responsibilities for — 29 development sites worth an estimated $3.6 billion.
Kennedy Wilson expects to make an initial investment of approximately $90 million in the acquired interests, which will be funded from existing Kennedy Wilson partners.
“This purchase helps create an unparalleled national platform within the rental housing space that totals over 80,000 units we own, finance or manage,” says William McMorrow, chairman and CEO of Kennedy Wilson.
As part of the transaction, Kennedy Wilson will acquire the Toll Brothers Apartment Living management team to oversee the existing portfolio, with plans to make offers to all current Toll Brothers’ employees.
Meanwhile, Toll Brothers Inc. (NYSE: TOL) plans to dispose of its remaining assets over time and exit the multifamily development business.
“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,” says Douglas Yearley Jr., chairman and CEO of Toll Brothers.
The deal also establishes a new, long-term partnership between Kennedy Wilson and Toll Brothers for future investments in rental and for-sale housing.
Kennedy Wilson’s consultation team for the acquisition included financial advisor J.P. Morgan Securities LLC and legal counsel Latham & Watkins. Toll Brothers retained Goldman Sachs & Co. LLC and Vestra Advisors as financial advisors, with Fried, Frank, Harris, Shriver & Jacobson LLP serving as legal counsel.
Beverly Hills-based investment firm Kennedy Wilson maintains $30 billion of assets under management in markets across the United States, the UK and Ireland. Kennedy Wilson’s stock price closed on Thursday, Sept. 18 at $8.89 per share, down from $11.14 a year ago, a decline of approximately 20.2 percent.
Toll Brothers, a Fortune 500 Company based in Fort Washington, is the nation’s leading builder of luxury homes in more than 60 markets across 24 states and Washington, D.C. The company’s stock price closed on Thursday at $139.84 per share, down from $153.12 a year ago, a decline of nearly 8.7 percent.
— Abby Cox