🚨Toll Brothers has sold its multifamily platform to Kennedy Wilson for $347 M, transferring 18 stabilized properties and 29 development sites totaling ~$5 B AUM. Toll redeploys capital to homebuilding, while Kennedy Wilson expands to ~80,000 units owned or managed. The acquisition comes as apartment fundamentals improve: Q2 vacancy fell to 4.1% and rent growth turned positive. For CRE, the move shows capital rotation — developers reducing balance-sheet risk while long-term investors deploy into rentals ahead of expected rate relief.
Sale price: $347 M for ~$5 B AUM multifamily platform (Sept 2025)
Vacancy rate: 4.1%, Q2 2025 (down from 4.8% in Q1).
Effective rent growth: +1.2% YoY, Q2 2025 (first >1% in two years)
10-Year Treasury yield: ~4.1%, Sept 2025
Loan Performance. Stabilized properties underwritten near 5–6% cap rates should service debt at 6–7% all-in coupons. Lease-up assets carry higher DSCR risk, requiring careful phasing and rate caps.
Demand Dynamics. With 188k units absorbed in Q2 2025, renter demand remains strong despite rate pressure. Concessions may persist through 2025 but taper as supply moderates.
Asset Strategies. Toll shifts to asset-light, while Kennedy Wilson scales via JV equity. For owners, this suggests evaluating non-core holdings for sale or JV.
Capital Markets. Transaction values imply cap rates near peak, with scope for compression if Fed cuts persist. Private equity’s co-investment shows liquidity still flows to multifamily.
Rates high, but Fed cut signals easing path.
Multifamily rent growth is rebounding, unlike office.
Developers eye exits; operators scale pipelines.
Private capital fills gaps left by retreating builders.
🛠 Operator’s Lens
Refi. Stabilized assets should lock refis if spreads compress; keep interest rate caps in place.
Value-Add. Build contingencies into lease-up projects (12–18 months) with realistic absorption.
Development. Secure construction loans now; rate swaps essential.
Lender POV. Banks will benchmark DSCR to Kennedy Wilson’s execution — successful integration may loosen credit for similar deals.
Watch October Fed meeting for further cuts — potential boost to NOI multiples.
Toll’s $3 B in remaining assets could test investor depth.
Expect more divestitures from homebuilders as liquidity outweighs rental exposure.
Commercial Observer, Glenside Local, CBRE, COSTAR
