Toll Brothers Profile
Toll Brothers, Inc. designs, builds, markets, sells, and arranges financing for an array of luxury residential single-family detached home, attached home, master-planned, and urban low-, mid-, and high-rise communities. This is done principally on land the company develops and improves, as it continues to pursue its strategy of broadening its product lines, price points and geographic footprint.
The company caters to luxury first-time, move-up, empty-nester, active-adult and second-home buyers in the United States, as well as urban and suburban renters under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living. The company also designs, builds, markets, and sells high-density, high-rise urban luxury condominiums with third-party joint venture partners through Toll Brothers City Living (City Living). As of October 31, 2023, the company was operating in 24 states and in the District of Columbia.
In the five years ended October 31, 2023, the company delivered 46,701 homes from 931 communities, including 9,597 homes from 481 communities in fiscal 2023. As of October 31, 2023, the company had 930 communities in various stages of planning, development or operations containing approximately 70,700 home sites that it owned or controlled through options.
The company operates its own architectural, engineering, mortgage, title, land development, insurance, smart home technology, and landscaping subsidiaries. The company also develop master-planned and golf course communities, as well as operates, in certain regions, its own lumber distribution, house component assembly and manufacturing operations.
In addition to the company's residential for-sale business, it develops and operates urban and suburban for-rent apartment communities primarily through joint ventures. These projects are located in various metropolitan areas throughout the country and are generally being operated or developed (or the company expects will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living. As of October 31, 2023, the company or joint ventures in which it had an interest, controlled 44 land parcels as for-rent apartment projects containing approximately 22,200 planned units.
Communities and Homes
The company's home building communities are generally located in affluent suburban areas near major transit hubs and highways that provide access to employment and urban centers. They are generally located on land the company has either acquired and developed or acquired fully approved and, in some cases, improved.
As of October 31, 2023, the company was operating in the following major suburban and urban residential markets: Boston, Massachusetts metropolitan area; New Haven County, Connecticut; Westchester and Dutchess counties, New York; New York metropolitan area; Central and northern New Jersey; Philadelphia, Pennsylvania metropolitan area; Virginia and Maryland suburbs of Washington, D.C.; Delaware; Raleigh and Charlotte, North Carolina metropolitan areas; Nashville, Tennessee; Charleston, Greenville, Hilton Head and Myrtle Beach, South Carolina; Atlanta, Georgia metropolitan area; Southeast and southwest coasts and the Jacksonville, Orlando, and Tampa areas of Florida; Detroit, Michigan metropolitan area; Chicago, Illinois metropolitan area; Dallas, Houston, Austin, and San Antonio, Texas metropolitan areas; Denver, Colorado metropolitan area, Fort Collins and Colorado Springs, Colorado; Phoenix, Arizona metropolitan area; Las Vegas and Reno, Nevada metropolitan areas; Boise and Coeur d'Alene, Idaho metropolitan areas; Salt Lake City, Utah metropolitan area and St. George/Southern Utah; San Diego and Palm Springs, California; Los Angeles, California metropolitan area and Orange County; San Francisco Bay, Sacramento, and San Jose areas of northern California; Seattle, Spokane, and Clark County, Washington metropolitan areas; and Portland, Oregon metropolitan area.
The company develops individual stand-alone single-product communities, as well as multi-product, master-planned communities. The company's master-planned communities enable it to offer multiple home types and sizes to a broad range of move-up, first-time, empty-nester, active-adult, and second-home buyers.
Each of the company's detached home communities offers several home plans with the opportunity for home buyers to select various structural options and exterior styles. The company designs each community to fit existing land characteristics. The company strives to achieve diversity among architectural styles within a community by offering a variety of house models and several exterior design options for each model, preserving existing trees, foliage and other natural features whenever feasible, and curving street layouts to allow relatively few homes to be seen from any vantage point. The company's communities have attractive entrances with distinctive signage and landscaping. The company's added attention to detail gives each community a diversified neighborhood appearance that enhances home values.
The company's attached home communities generally offer one- to four-story homes, provide for select exterior options, and often include commonly owned recreational facilities, such as clubhouses, playing fields, swimming pools, and tennis courts.
The company is continuously developing new designs to replace or augment existing ones to ensure that its homes reflect current consumer tastes. Increasingly, the company is modifying designs and the number of options it provides in order to continue to offer its customers a curated experience while gaining efficiencies in the home building process, particularly in respect to its affordable luxury product. The company uses its own architectural staff and also engages unaffiliated architectural firms to develop new designs.
A wide selection of structural and finishing options are available to the company's home buyers for additional charges. The number and complexity of options available typically increase with the size and base sales price of the company's homes. Major options include home offices, fitness rooms, multi-generational living suites, finished basements, and spacious indoor/outdoor living areas. The company also offers numerous interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies.
The company markets its high-quality homes to both upscale luxury and affordable luxury home buyers. The company's luxury homes are marketed primarily to buyers who generally have previously owned a home and who are seeking to buy a larger or more desirable home - the so-called 'move-up' market. The company's affordable luxury homes are marketed primarily to more affluent first-time buyers.
The company continues to pursue growth initiatives by expanding its geographic footprint and by broadening the company's product lines and price points to appeal to buyers across the demographic spectrum. In addition to the company's traditional 'move-up' home buyer, it is focusing on the 'empty-nester' market, the millennial generation, and the affordable luxury buyer.
The company markets to the 'empty-nester' market, which has strong growth potential. The company has developed a number of home designs with features, such as single-story living and first-floor primary bedroom suites, as well as communities with recreational amenities, such as golf courses, marinas, pool complexes, country clubs, fitness and recreation centers that appeal to this category of home buyer. The company has integrated certain of these designs and features in some of its other home types and communities. As of October 31, 2022, the company was selling from 51 age-restricted active-adult communities, in which at least one home occupant must be at least 55 years of age.
With the millennial generation in its prime family formation years, the company also continues to focus on this group with its core suburban homes, affordable luxury offerings, urban condominiums and luxury rental apartment products.
The company, through its City Living brand, with third-party joint venture partners, is developing a number of high-density, high-rise urban luxury communities to serve affluent move-up families, empty-nesters, and young professionals who are seeking to live in or close to major cities.
The company's City Living communities are generally high-rise condominiums that take an extended period of time to construct. The company generally starts selling homes in these communities after construction has commenced. By the time construction has been completed, the company typically has a significant number of homes under contract with buyers in backlog. Once construction has been completed, the homes in backlog in these communities are generally delivered quickly. Because of the larger upfront costs and longer development time periods associated with high-rise projects, the company is developing, and expects to continue to, develop all future City Living communities through joint ventures with third parties.
As of October 31, 2023, the company was selling homes from 370 communities.
As of October 31, 2023, significant site improvements had not yet commenced on approximately 15,000 of the 25,220 available home sites. Of the 25,220 available home sites, approximately 8,700 were not yet owned by the company but were controlled through options.
Of the company's 432 operating communities as of October 31, 2023, a total of 370 communities were offering homes for sale; with the remaining consisting primarily of sold out communities where not all homes had been completed and delivered. Of the 370 communities in which homes were being offered for sale as of October 31, 2023, a total of 304 were detached home communities and 66 were attached home communities.
As of October 31, 2023, the company had 3,026 quick move-in homes in various stages of construction in its communities, of which 1,460 were affordable luxury homes, 1,011 were luxury homes, and 555 were active-adult homes.
Community Development
The company acts as a general contractor for substantially all of its communities. Subcontractors perform all home construction and land development work, generally under fixed-price contracts. The company generally has multiple sources for the materials it purchases. The company's construction managers coordinate subcontracting activities and supervise all aspects of construction work and quality control.
Marketing and Sales
A significant portion of the company's sales is derived from the introduction of customers to the company's communities by local real estate agents, to whom the company pays a real estate agent commission.
Customer Mortgage Financing
The company maintains relationships with a diversified group of mortgage financial institutions, many of which are among the largest in the industry.
The company's mortgage subsidiary, Toll Brothers Mortgage Company (TBMC), provides mortgage financing for a portion of its home closings. The company's mortgage subsidiary determines whether the home buyer qualifies for the mortgage that the home buyer is seeking based upon information provided by the home buyer and other sources. For those home buyers who qualify, the company's mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions.
Seasonality
The company's quarterly operating results typically fluctuate with the seasons. A significant portion of the company's agreements of sale are generally entered into with customers in the winter and spring months.
Investments in Unconsolidated Entities
The company has investments in joint ventures to develop lots for the joint venture participants and for sale to outside builders ('Land Development Joint Ventures'); to develop for-sale homes ('Home Building Joint Ventures'); to develop luxury for-rent residential apartments and single family homes, and commercial space ('Rental Property Joint Ventures'); and to provide financing and land banking for residential builders and developers for the acquisition and development of land and home sites ('Gibraltar Joint Ventures').
Land Development Joint Ventures
As of October 31, 2023, the company had investments in 16 Land Development Joint Ventures to develop land. Some of these Land Development Joint Ventures develop land for the sole use of the venture participants, including the company, and others develop land for sale to the joint venture participants and to unrelated builders.
As of October 31, 2023, the company's Land Development Joint Ventures owned approximately 25,800 home sites.
As of October 31, 2023, the company had agreed to acquire 332 home sites from three of its Land Development Joint Ventures. In addition, the company expects to purchase approximately 8,200 additional home sites over a number of years from several of these joint ventures. The company counts lots in these joint ventures as optioned lots if it has a contractual right to acquire them.
Home Building Joint Ventures
As of October 31, 2023, the company had an aggregate $65.3 million of investments in its Home Building Joint Ventures to develop luxury for-sale homes.
Rental Property Joint Ventures
As of October 31, 2023, the company had an aggregate of $531.8 million of investments in 43 Rental Property Joint Ventures. As of October 31, 2023, the company or joint ventures in which it had an interest controlled 44 land parcels that are planned as for-rent apartment projects containing approximately 22,200 units. These projects are located in multiple metropolitan areas throughout the country and are being operated or developed (or the company expects will be developed) with partners under the brand names Toll Brothers Apartment Living and Toll Brothers Campus Living.
As of October 31, 2023, the company had approximately 3,400 units in for-rent apartment projects that were occupied or ready for occupancy, 3,400 units in the lease-up stage, 9,900 units in the design phase or under development, and 5,500 units in the planning stage. Of the 22,200 units as of October 31, 2023, 14,500 were owned by joint ventures in which the company had an interest, approximately 1,800 were owned by the company, and 5,900 were under contract to be purchased by the company.
Gibraltar Joint Ventures
The company, through Gibraltar, has several ventures with an institutional investor to provide financing and land banking to residential buildings and developers. The company has an approximate 25% interest in these ventures. These ventures finance builders' and developers' acquisition and development of land and home sites and pursue other complementary investment strategies.
History
Toll Brothers, Inc. was founded in 1967. The company was incorporated in Delaware in 1986.
