REAL ESTATE NEWS

Kennedy Wilson is boosting its residential portfolio by agreeing to acquire Toll Brothers’ Apartment Living platform for $347 million.

The deal means Kennedy will obtain general partner interests in a combined 18 student housing and apartment assets. The investment firm will also manage another 20 residential properties on behalf of Toll Brothers. These all account for $5.2 billion in assets under management.

Plus, the Beverly Hills-based firm would get an additional 29 sites that are in some stage of development.

Assuming the full deal completes, it would raise Kennedy's total assets under management by about $8.8 billion. Moreover, Kennedy said it plans to make an initial roughly $90 million investment in the acquired assets.

As for Toll Brothers, the move marks the end of an era for the company. The luxury home builder intends to exit multifamily. But the two sides expect to build a long-term relationship in housing. Toll Brothers will still refer rental opportunities, while Kennedy will return the favor with for-sale housing. The two firms envision this will create "shared deal flow."

Kennedy anticipates making offers to all Toll Brothers employees to retain them, with the entire executive team expected to join.

“We are thrilled to welcome the best-in-class team at Toll Brothers Apartment Living to Kennedy Wilson and to further accelerate the growth of our investment management business and multifamily development capabilities at a time when the country is in true need of new, high-quality housing,” William McMorrow, chairman and CEO of Kennedy, said in a statement.

“This purchase helps create an unparalleled national platform within the rental housing space that totals over 80,000 units we own, finance or manage, and solidifies Kennedy Wilson’s fully integrated capabilities across real estate development, acquisitions, and asset management along with a market-leading housing-focused credit platform.”

With the purchase subject to closing conditions, the deal is expected to be completed in October.

Across the apartment market nationwide, rents have continued to be sluggish. In fact, a report from Realtor noted that August marked the 25th straight month that rents dipped. Prices were down 2.2 percent year-over-year in August to $1,713. The results come as renters are looking to move for better value.

Source: GlobeSt/ALM