Luxury segment niche
Toll Brothers (TOL) offers a variety of community types to home buyers in its targeted markets and has delivered approximately 74,000 homes worth $45 billion since fiscal 2000.
Although the majority of Toll Brothers’ (TOL) business is focused on move-up homes, the company also offers second-home, empty-nester, and active-adult product lines to its home buyers in the United States. The company refers to this segment as its Traditional Home Building Product.
Toll Brothers (TOL) also builds and sell homes in urban markets through Toll Brothers City Living. The products in this category include urban low-rise, mid-rise, and high-rise condos, as well as suburban high-density communities. Through Toll Brothers City Living, the company has a total of 43 mid-rise and high-rise towers built or under construction.
In addition, the company has offerings in the urban and suburban rental community markets. Through Toll Brothers Apartment Living and Toll Brothers Campus Living, the company manages 1,441 rental apartment units and is in the process of developing an additional 1,920 units.
Distressed real estate opportunities
In fiscal 2010, the company formed Gibraltar Capital and Asset Management to invest in distressed real estate opportunities. Gibraltar focuses primarily on residential loans and properties, land and developed lots, and commercial opportunities.
Ancillary businesses of Toll Brothers (TOL) include mortgage, title, golf course development and management, landscape, home security, architecture, engineering, and house component manufacturing. Toll Brothers doesn’t offer financial services products like its competitors Lennar (LEN), PulteGroup (PHM), and D.R. Horton (DHI).
Investors looking for diversification in the homebuilding sector can consider ETFs like the SPDR S&P Homebuilders ETF (XHB) and the iShares US Home Construction ETF (ITB). Toll Brothers (TOL) forms 7.78% the holdings of the iShares US Home Construction ETF (ITB).
We’ll explore Toll Brothers’ geographical diversification in the next part of this series.